Week 14

“Dealing with Customers

Companies cannot exist without the trust and patronage of their customers. At the
same time, caveat emptor—let the buyer beware—remains many a customer’s
attitude in light of the recent scandals that have rocked the business world. What is
the antidote to customer suspicion? Management must find ways to earn and keep
the trust of their customers over the long term. Building a reputation for ethical
decisions can go a long way toward building trust among customers.

Nonetheless, when things go wrong, many companies initially try to deny or

deflect responsibility, contributing to the crisis in customer confidence. Instead,
experts stress the importance of quickly acknowledging the problem and publicly
issuing a sincere, clear apology. America West Airlines for example, made
headlines not long ago because two of its pilots were accused of preparing to fly a
plane while apparently under the influence of alcohol. Months later, a passenger
was removed from an America West flight after she joked about the airline’s
pilots. The Today Show invited the passenger and an America West executive to
discuss the incident on national television. Rather than trying to explain or excuse
the airline’s behavior, the executive stated “I’m here primarily to apologize… We
overreacted.” The passenger responded by saying “I appreciate the apology. I’m
sympathetic to America West right now. I know they’re going through a tough
time.”

Companies rarely deal with all customers in exactly the same way. In part, the
differences reflect different purchasing volumes and related service costs. But
companies sometimes face decisions about pricing and other issues that are driven
more by marketing or financial priorities leading to ethical questions. For instance,
Cingular and Verizon among other wireless telephone service providers are
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promoting prepaid plans to less credit -worthy customers at higher per-minute
charges than those paid by customers with better credit histories. Is it ethical to set
higher prices for less credit-worthy customers who often have lower incomes than
more credit-worthy customers?

For their part, customer groups disagree with a company’s decisions sometimes
use boycotts and other campaigns to promote change through financial pressure,
public embarrassment and other methods. As one example, The National Council
of Women’s Organizations called on Coca-Cola and other sponsors of the Masters
Tournament to pressure the Augusta National Golf Club to admit female workers;
it also asked CBS not to air the event. The group might have boycotted the
sponsors’ products if the companies refused to withdraw their support of their
tournament until the golf club allowed women members. Considering the women
buy 80% of all U.S. consumer products, an effective boycott could have hurt these
companies’ sales and reputations. Although Coca-Cola held talks with the council,
the Augusta National Golf Club responded by dropping the tournament’s corporate
sponsors to relieve the pressure on them. Is it ethical for corporate sponsors to
support an organization or event seen a discriminatory by a sizable customer
group? From the companies’ perspective, is it ethical for customers to exert this
kind of pressure?” (Wood, 2004: 21-22).

Discussion:

“Management must find ways to earn and keep the trust of their customers over the
long term. Building a reputation for ethical decisions can go a long way toward
building trust among customers.”

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Imagine you are at the head of a big multinational company. What policies could
you introduce to build customer loyalty and sustain trust levels in the long run?