A rash of recent corporate missteps (think Netflix and Bank of America) has got me thinking about the power of the customer again. Too often, companies forget that customers are really the reason that they are in business.
It all started for me when I got that Netflix notice last summer telling me that prices were going up. Boy do they regret that now. Last week its stock hit a low for the year and they had to issue new shares. For Netflix, they got so caught up in the rush of technology that they forgot what the customer really wants is the flexibility to choose the platform for his/her movie watching without having to pay more. Some customers still wanted to get DVDs in the mail. (Remember the mail. It’s that paper stuff which comes every day and often contains an unexpected surprise.) They liked holding the product in their hand and knowing that you could just flip it into the DVD player on Friday night when you were ready to relax. What Netflix forgot was that streaming may be great and may save Netflix money, lower its costs and increase profits, but not all its customers were tech savvy enough to stream movies. That’s where the real outrage began. By not respecting their customer, they seriously took their eye off the ball. The result was a meteoric drop in share price and the defection of over one million customers and counting.
Imagine that it took all of that to finally deliver the message to Netflix CEO Reed Hastings who abandoned the company split, but is still tone deaf enough to be keeping the higher prices with no tangible new customer benefit.
Bank of America made the same mistake with its recent launch then rollback of its $5 debit card fee. It announced the fee in October and the protests immediately started. One customer actually gathered more than 300,000 online signatures against the fee. It also prompted the recent Bank Transfer Day where customers of big national banks were urged to switch to local, community banks. As the Los Angeles Times put it, “The uproar against BofA illustrates the deep-seated anger and resentment many Americans feel over the sagging economy.” Finally, on November 2, Bank of America scrapped the fee and said, “We have listened to our customers very closely.” That’s the understatement of the year.
So how can these corporate missteps be avoided? It’s not easy, especially when the company is flying high and you truly begin to believe that you are invincible.
Yet, that’s exactly the time to take a good hard look at your customer relationships.
When you forget who helped get you there, that’s when you are the most vulnerable. Instead of trying to squeeze more out of the customer, think about how to reward them for their loyalty. That’s the moment of truth when you can truly create a bullet-proof bond with your customers.