When Customers Go on the Warpath

The terrible publicity recently experienced by one of SA’s mobile companies is probably just the start of a Great Consumer Backlash, and we can expect that it will get bigger and angrier if nothing is done. Should service standards get worse, I fear undeclared war could erupt, with consumers becoming increasingly antagonistic.

What happened? An unhappy customer displayed a considerably expensive banner denigrating the cell provider’s service levels on a Johannesburg highway, calling them “useless” and “the worst cell provider in SA.” I believe that this indicates a tipping point in our country. The customer who displayed the banner incurred significant costs when commissioning and positioning this attack, and ignored legal warnings to desist, so it all went to court. Even worse for the company, the judge ruled in favour of the customer’s display, and the company was very publicly embarrassed. In addition, a few months later the customer won the second round when another judge ordered the company to take action to remove the customer’s negative credit listing with credit bureau TransUnion. It was only at this stage that the company decided that it would be a good idea to discuss these issues around a table.

At one level, this shows the customer was – to put it bluntly – really the hell in, (even more so because the company accused his daughter of lying.) But this level of anger and frustration is no longer unusual. What was most telling was the negative reaction on various social media and internet news websites from thousands of other citizens and consumers. Close to 100% supported little David’s victory over the powerful Goliath – and started point out other problems with the company’s services.

Why was there such an overreaction? Government and corporations have under-estimated the impact once consumers begin to scream ‘We can’t take any more of this’. People go to war using protests and defiance campaigns to fight back. These include telling as many people as possible, attacking people who work in the company, defacing company property, withdrawing their business by boycotting products and even refusing to pay, and becoming very cynical, (indeed disdainful,) about all communications, marketing and advertising efforts. One only has to look at the public’s reaction to Sanral, SAA, and Eskom from the state’s bureaucracy, and Woolworths, First National Bank and Cell C as corporations, to name a few examples.

The perfect storm arises because the private sector is also vulnerable to collateral damage at a time when state enterprises charge more and deliver less. The Post Office has not delivered a thing for months because of the strike by the Communications Workers Union, but taxpayers will still be expected to pay up. SAA has been bailed out by taxpayers to the tune of R30bn in the past ten years. The losses and incompetences of national broadcaster SABC are the butt of ridicule.

Eskom can’t maintain regular electricity supplies, and seems to be unable to do its sums either. Tariffs may be going up another 13% because Eskom costs for the three years to 2011 were higher than projected. Eskom, supplier of 95% of the country’s power, was both a monopoly and an essential service. Public defiance is already making a mockery of Sanral’s projected e-toll cash flows. Even if e-toll compliance increases, the odds are motorists will flood alternative routes, creating chaos and making new spending on Johannesburg roads unavoidable.

The feeling of powerlessness over people and events is generally intolerable and unbearable to us. People and customers therefore have limited capacity to hit back, so they vent their frustration and sense of betrayal elsewhere. Knock-on effects in the private sector are beginning to come through, as customers look for other alternatives like on-line shopping.

This highlights the private sector dilemma. In a world where customers are becoming ever more demanding even while competitive rivalry heats up, companies simply cannot afford to be seen as bullying and abusing their customers – even when and if the customers are wrong! When the knowledge of what happens becomes public, millions of emotional customers resent the perceived bullying of the powerless by the powerful, and will always root for the customers that they have so much in common with.

But the worst is that companies pay a high price for this. Not only do they get a whole lot of really poor publicity and negative word of mouth, but they lose the current and future business of customers who are determined to fight back. Their marketing and sales efforts are ignored not only by current customers, but also future customers who may have considered doing business with the firm. The company then needs to offer increasingly better offers and dramatically lower prices to attract lost customers and retain those that are there.

Customers seem to be sabotaging, damaging and threatening to sue the business around every corner. People who work in the company are abused, so morale and motivation take a dive, and the job of managing your team becomes ever more difficult. These businesses become very vulnerable to competitors making seemingly better offers – especially in service experiences. And, of course, it costs a lot of money to investigate what went wrong and offer the customers some form of compensation for their trouble.

This is enormously expensive. In one famous American case study, an irate customer, Dave Carroll, from the band Sons of Maxwell, wrote and published a song “United Breaks Guitars,” after a negative experience with the airline. Apart from the media frenzy, and the fact that more than 16 million people watched his music video on YouTube, the company’s share price dropped almost overnight and the market capitalisation dropped by $180m. It has never recovered.

So what can a business do to avoid these disasters? Obviously, you cannot ignore it for that leads to accusations of apathy and indifference at best. There are probably six critical and immediate responses that need to happen to rectify the problem:

  • Talk to your customers, (even if it has to be via the media.) As brand expert Chris Moerdyk succinctly says, “Tell it all, tell it fast, and tell the truth.” This is the first rule of any positive PR campaign.
  • To repeat: A sense of urgency is essential. Dealing with problems and complaints with a sense of urgency has four benefits: First, the sooner you get the customer calm and rational, the sooner you can start to resolve the problem that is troubling them. Second, most arguments begin about small things that have the tendency to escalate, and even explode uncontrollably, as time passes. Third, it impresses the customer and others who observe the management of the complaint that you “dropped everything” to take care of the problem. (It was reported in the media that the CEO of the mobile company mentioned above was at a trade show in Cape Town, and wasn’t prepared to return to Johannesburg to take care of the crisis.) And finally, when you deal with problems quickly, the customer also forgets about it more quickly, and you can move on.
  • Show care and empathy. This is not the time for egos the size of Mount Everest. Humbling oneself needs to be easy – something that driven and ambitious executives find nearly impossible. There needs to be a genuine desire to help the customer and alleviate their anxiety/frustration.
  • Customers also want to hear that the company understands the rippling effects to them. Show that you understand the implications of this problem in their lives, and express a deep desire to remain “friends.”
  • Apologise, and thank the customer for giving your business a chance to sort it out. A heartfelt apology, counter-intuitively, does not make matters worse, but in fact mostly has the opposite effect. In one study in the USA, the researchers came to the conclusion that, “Apologies made by physicians for adverse medical events have been identified as a mitigating factor in whether patients decide to litigate.”
  • You cannot NOT solve the problem: Many businesses and managers are reluctant to sort out the customer’s issue because it will be “expensive.” As was obvious in the case of the cell phone provider, a short-sighted response is thousands times more expensive. Do what you can to minimise these not-obvious losses and sort out the problems.

Companies also need to realise that today it doesn’t matter, (to consumers at least,) what the truth is, and who was in the right. They are not always rational and logical, but they are rather emotional and irrational. Ignore these lessons at your peril, because customers and consumers have long memories and could carry a grudge for a very long time if they think you’re profiting from their pain.

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