Saturday, August 09, 2008

What is happening to THE CUSTOMER

Remember the Customer Revolution? The lofty corporate announcements that customer is king? And always right. The lovely things said about quality, the great commitments made towards customer service and the theories about the loyalty effect - the way to continued business survival through loving thy customer.

The fact is that most companies forget the poor customer first whenever there is an economic downturn. He still pays the bill, yes, but it seems that whenever whatever hits the fan, he is asked to mop up. It is 'counter-intuitive' - indeed it is. That's the problem of seeing the world through numbers and contract codes - they were not on Noah's boat, we forget!

Consider this. This August, the holiday season is already looking grim in the UK. Mortgage approvals are at half their last year levels, and home repossessions have doubled. Inflation is 4%, double their target levels, Petrol is £1.19 a litre - up from 85p same time last year, and recession is more than a theoretical possibility. Every bank - in the Europe and United States - has taken a hit and governments are paralysed from the lack of mandate [Bush has 5 more months left in office and Brown, possibly, even fewer].

In the middle of all this, some customers still decide to take a holiday. They are brave, optimistic souls, the kinds which keep the wheels running, the world going. However, they defied the code set upon them by businesses - they chose to compare prices using a tool, which is now commonplace, Price Comparison Sites. They found the best prices from RyanAir, the impossibly arrogant Irish budget airline, which sometimes forget that aircraft run on petrol and assume they can fly themselves. However, that is besides the point - these doubly-brave customers [for taking a holiday, and leaving the fate of their holiday in the hands of RyanAir] then decide to book their tickets.

So, if you are to write the end of this story, what will you write? That RyanAir sends them bouquets of flowers? Or they are given honorary memberships of RyanAir Hall of Fame? The first row of seats were named after them? Or, at least, Michael O'Leary himself sends a personal email to each one of them? Isn't that what all the business fables - of Nordstrom, of Virgin - tell you?

Well, the real end of this story is not so pleasant. RyanAir actually decided to cancel their bookings. Because they came through Price Comparison Sites, which apparently were not permitted to display RyanAir prices! I anticipate the question, and must clarify that RyanAir, of course, got paid - in full. But they just don't like the fact that the customers looked at the price comparison sites.

And, there is more. They refund the money for cancelled bookings to the price comparison sites, and not to the customer who actually paid. The RyanAir statement says that it is up to the Price Comparison sites to refund the money to the customers. How much more bizarre can this become?

Budget Airlines always have a problem with their prices. Remember the time, not so long back, when they advertised attractive prices without mentioning the tax. They have started advertising 'Inclusive Of Tax' prices only after being forced to do so by a Court Order. And, immediately after starting that, they started charging extra for bags and the chance to scramble into the aircraft first, and I am told that they are looking into ways of charging more [How about paying for access to toilets during flights?].

So, instinctively, they want to cheat the customer. They don't like them to compare prices. They are ready to go as far as penalising those who even chose them, after a comparison. The customers' cardinal sin, as far I can gather, was to look around, when they should be irretrievably married to RyanAir.

This is abhorrent behaviour. Agreed, some price comparison sites may have crossed the line by pulling RyanAir data when they were not allowed to. In that case, the airline, going by any usual ethical or behavioural standards, should have accepted existing bookings, but stopped the practise and sued the sites. In the worst possible scenario, when this isn't acceptable to an egoist boss [which RyanAir surely has], the airline should have refunded the money back to the customers direct and sued the sites. Ryanair does neither - they cancel the bookings, sue the sites but refund the money to them! They show that they are actually angry with the customer because they compared the prices.

What is, then, happening to the CUSTOMER? In the middle of this severe downturn, he is still paying the bills, but that's really not enough. Companies like Ryanair, which built a business exploiting a gap in monopolies, have become monopolistic themselves. They don't care about the customer - they want to cheat and rob them. Not surprising that Jessica Stillman writes that the Harris Poll's annual survey of Public Attitudes to twenty industries put Airlines at the bottom of heap, along with cable companies and Pharmaceuticals (you can read the post here). This is done in America - I am sure Airlines will fare even worse in Britain after the price-fixing scandal at BA and the pricing disputes that don't seem to die down.

Before I finish, I shall present another perspective. I am wrong when I said that the customers are usually forgotten in the middle of a downturn. It is actually the other way round - forgetting the customers bring about downturns. The downturns are customers' payback time - to arrogant companies and bad bosses. Once the score is settled and these companies disappear, those who cared about customers survive - to the next boom - till the time they become complacent and forget the customers again. Call it the Customer Attitude Cycle or any other name - this is one of the key things businesses need to crack, and they prove that they are hopelessly bad at it.

No comments:

Popular Posts

How To Live

"Far better it is to dare mighty things, to win glorious triumphs even though checkered by failure, than to rank with those poor spirits who neither enjoy nor suffer much because they live in the grey twilight that knows neither victory nor defeat."

- Theodore Roosevelt

Last Words

We shall not cease from exploration
And the end of all our exploring
Will be to arrive where we started
And know the place for the first time.

- T S Eliot

Creative Commons License

AddThis