“The Stupid Company” How British businesses throw away money by alienating consumers

SOCAPiE conference

2 October 2006

Philip Cullum

The case for customer satisfaction

Satisfied Starbucks customers spend $3,000, dissatisfied ones spend $200

Lifetime value of a satisfied BMW customer is $143,500

Active consumers

• Consumer switching levels have risen by 52% since 2000

• If 100 people have a bad experience, a retailer stands to lose between 32 and 36 current or potential customers

‘We read about this young couple who had changed their mortgage provider. It made us realise we weren’t bound to the same provider forever.’

‘As far as I was concerned, the company I was with couldn’t provide a reliable broadband service, so I went elsewhere.’

‘If you have experience of a good company you pass it on; if you have experience of a bad company, you make people aware.’

“Service rage”

• Two-thirds of UK consumers think customer service has not improved in the last five years

• Top of mind issues and sectors:

• Call centres, extended warranties, missed appointments, poor after-sales service, cold calling, automated services or being put on hold

• Financial services, telecoms, electrical retailers, garages

The consequences – consumer revenge

• Average company life expectancy is 12.5 years

• Just 21 years after the establishment of the FTSE 100 share index, two-thirds of the original 100 companies had fallen off the list.

• Chief executives on average stay in post for no more than about four years.

• The average tenure for chief marketing officers is 22.9 months.

Feeling what it’s like to be a customer

• Most people say they’d be happy to help companies improve if they thought anyone was listening, but that most of the time it’s easier to simply walk away.

• 70 per cent of consumers tell us that company bosses are out of touch, with no idea what it’s like to be a customer.

• NCC research over two years with 5,000+ consumers

1: Inflated expectations and broken promises

The Stupid Company over-promises and under-delivers

• Hyping up products which fail to meet the promise

• Advertising setting false expectations

‘[Travel websites highlight] the £1 bargains, and you go, you search for two hours and you then find it’s £60.’

5 ways companies get it wrong – consumers’ views

1. Inflated expectations and broken promises

2. Sell sell sell

3. Sneaky and dishonest

4. Impersonal and robotic

5. Incompetent and ineffectual

2: Sell sell sell

The Stupid Company is obsessive about making a sale.

• All about the sale, with poor after care - especially electrical retailers

‘Offering you the world when you’re a potential customer and then treating you like crap when you’re an existing customer.’

• Trying to sell you more when you get in touch - especially financial services and mobile phones

‘They’re not happy with just the one product, they want to go into every single product under the sun.’

2: Sell sell sell (cont’d)

• Aggressive marketing – intrusive and pushy ‘They’re constantly ringing you up, hassling you to buy this particular product, and they’re constantly sending you mail when you don’t want it, even when you’ve asked.’

• Chasing possible new customers rather looking after existing ones – introductory offers ‘If you go to a bank on lunchtime, and you want to pay something in, you’re there with half of the world, and while you’re standing in a queue, somebody is walking up and down, and looking at you, saying oh, I’d better target you, do you want some of that? Do you want some of that?’

• Ignoring potential markets Nut allergy sufferers, rail passengers, disadvantaged consumers

3: Sneaky and dishonest

The Stupid Company thinks it can succeed by misleading customers and being underhand and evasive.

• Deliberate mis-selling ‘They don’t explain the full price or options to you.’

• ‘Hidden costs’ and small print ‘They’re quick enough to write you letters saying only £19.99 or something a month and then at the very bottom when you read it all up you’re paying an absolute fortune.’

• Dragging their feet ‘Insurance companies, with claims, they just delay and delay things.’

3: Sneaky and dishonest (cont’d)

• Passing the buck ‘When you ring them up to complain because you’ve got a thing that’s faulty and they say, oh it’s not us, it’s the warranty company.’

•Junk mail

‘Putting things in envelopes, making it look like it’s more important than it is’

• Misleading advertising First Trust – ‘fees free’

4: Impersonal and robotic

The Stupid Company appears distant from consumers and deals with them in a clinical manner.

• Call centres/telephone systems

‘I think just about everyone in the world hates call centres and this automated drivel.’

‘Helplines that take ages to actually get through in the first place…There’s select this number and dial one for this, and two for that. And then all you get is a recorded message at the end of it, going back to lack of human contact again.’

5: Incompetent and ineffectual

The Stupid Company is slow moving, patronising and gets basic tasks wrong.

• Confuse & patronise – especially electrical retailers, garages, financial services ‘They baffle you with science.’ ‘Not being treated like a human being, they make you angry as they make you feel slightly stupid because they’re talking to you like you’re a child.’

• Inefficient, with poor follow-through ‘Why write one letter when five to me will keep them even busier?’ ‘They expect you to take a whole day off work to have something delivered.’

Getting smart – the consumer agenda for action

1. Provide continuity and ownership

2. Show respect and honesty

3. Give the personal touch

4. Reward existing customers

5. Provide aftercare

1: Provide continuity and ownership

• Ensure the same member of staff deals with an individual customer from start to finish

• Get the employee to provide contact details so that it is easy to get directly in touch with him or her again.

‘The call centres, the person could give you their name and reference number for future calls.’

‘Nice to have a stable workforce, nice to deal with the same people over X number of years rather than always finding there’s somebody different because they left last week, and you wonder why. The same as it’s nice to have a workforce of varying ages and ethnic groups.’

2: Show respect and honesty

• Be straight about things like delivery times

• Explain complex things simply

‘Be realistic with times and targets. Not telling you well yeah you can have it, it will be delivered on this day and then two weeks later it’s still not there.’

‘Don’t push them into a sale, let them make their own choice and give them help if they need it.’

‘Deliver on their promises and commitments.’

‘Talking to you like you’re an adult.’

4: Reward existing customers

• Provide incentives for customer loyalty

‘Acknowledge repeat business, so not this “get them on board and then forget about them”, which I think a lot of companies are guilty of.’

‘Probably where I’m most loyal is where I get the most feedback…Car companies and flight companies are always particularly good … They send you mail regularly to remind you what a fantastic purchase you made and how wonderful you are, and if there’s anything they can do for you, and don’t forget you’re part of this car club or this flight club … It makes you feel as if you’ve been valued.’

5: Provide aftercare

• Don’t forget about customers after they’ve bought something; instead check they are still happy.

• Consumers can be remarkably forgiving – if things are put right promptly.

‘Follow up calls are always nice, it shows that they’re not just going to deal with it and forget about it, follow up, make sure you’re happy, which some companies do, but not many, not nearly enough.’

‘When you crash your car, a good insurance company will be phoning up to make sure you’re okay, how’s the car, how’s it all going.’

Getting it right…

‘I love Asdabasically because everything is cheap and it’s reasonable prices, plus I get all my daughter’s clothes from there and again they’re reasonable and the staff are very happy to help you as well, and it’s a really nice supermarket… If you can’t find anything there’s always someone around on the shop floor to help.’

‘Julie who cuts my hairhas restyled it exactly as I asked and remembers everything I’ve told her in conversation from one visit to the next (about 8 weeks) so that we pick up where we left off. A different generation but I think of her as a friend.’

‘London Transportjust sent me a letter asking for my email address so they could send targeted communications about my regular journeys which I think is a really good idea.’

‘Treat your customer how you would like to be treated if you were the customer.’

p.cullum@ncc.org.uk

www.ncc.org.uk