Retailers, travel sites, and other threatened businesses need to get over their pity party and start thinking about customer needs.
The year ended with retailers howling at Amazon, travel sites claiming that Google is taking their lunch money, and AMR using bankruptcy as a strategic cost-control program. These businesses showed that they were focused on protecting their own interests, rather than delighting customers. They got it wrong.
These businesses forgot that their customers, rather than gaming the system, are the key to their success.
This problem isn't new. As far back as 1939, the science fiction writer Robert A. Heinlein wrote about a similar impulse in the short story "Life-Line:"
There has grown up in the minds of certain groups in this country the notion that because a man or a corporation has made a profit out of the public for a number of years, the government and the courts are charged with the duty of guaranteeing such profit in the future, even in the face of changing circumstances and contrary public interest.
Steven Denning writes in a Forbes magazine article, "In the real market, there is opportunity to build for the long run rather than to exploit short-term opportunities, so the real market has a chance to produce sustainability." He quotes Roger Martin, dean of the University of Toronto Rotman School of Management: "We must shift the focus of companies back to the customer and away from shareholder value."
How do other companies strive to delight their customers and build loyalty?
- They acknowledge their challenges and move forward. Both Google and Facebook agreed to 20 years of FTC privacy audits. The companies took hits because of the mistakes they'd made. However, the audits might work to their advantage by giving something of a federal imprimatur on their privacy practices. Instead of launching a public relations campaign about the unfairness of it all, they accepted their probation and went back to work.
Similarly, Google's move into the travel business was nearly tripped up by federal probes and chaotic relationships with airlines and other travel sites. The airlines demanded more booking links in exchange for flight data. Google complied, giving a boost to the airlines at the expense of other travel sites. As the Wall Street Journal points out, "There is no sign consumers are being harmed by Google's new features."
Martin describes the direct way Johnson & Johnson recovered from the Tylenol tampering and reestablished customer trust in the safety of its products. That response has become the textbook example of how to deal with a product and PR crisis.
They empower consumers. Fellow blogger Mitch Wagner writes that Amazon is playing a dangerous game by encouraging consumers to use its Price Check app to compare prices in stores. News reports about Amazon's promotion gave voice to every business owner who felt threatened. A few politicians joined in the outcry.
The only people who weren't complaining were consumers, who tripled their use of the app the weekend of the promotion. Customers could compare prices and decide whether a lower price was more important than the satisfaction of carrying their product home immediately.
They choose quality over raw growth. Outgoing IBM CEO Sam Palmisano sold the company's flagship PC business to Lenovo in 2002. (IBM is a sponsor of The CMO Site.) In a profile in Sunday's New York Times, Palmisano said he believed the company could build better products and services without the business. A decade later, both IBM and Lenovo are thriving.
If customers hear a message that businesses care only about themselves and their profit margins, they will respond in kind and chase the lower price. Meanwhile, Apple stores generate more profit per square foot than any other retailer.
Lawyers, lobbyists, and a bit of sympathetic outrage from business owners may win a few skirmishes, but berating consumers for their choices is no path to long-term success.
- Karl Hakkarainen is an independent consultant who works with organizations and professionals in healthcare, law, education, and social services for whom marketing is a novel and somewhat suspect venture. He applies his 30+ years of connected communications to help them tell their stories in ways that fit within their traditions and the laws of their professions. Karl is a graduate of Amherst College and of Mount Wachusett Community College.
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