This submission from dazzling Florida life coach and general mischief-maker Tim Brownson tackles that thorny but important subject often relegated to the “maybe later” pile, known to the unfortunate as customer disservice.
The Short-Term Hitmen
A guest submission by Tim Brownson.
I doubt you have ever read a post before where somebody starts with an unknown quote by an unknown person at an unknown time, but now you have. Congratulations – life doesn’t get much edgier than this.
There was once a guy that was head or at least very high up of one of the US mobile carriers. I don’t know which one, but to be honest, it doesn’t really matter. He was being interviewed by somebody about something when he was asked a question I forget that invoked an answer a bit like this one:
“When somebody signs up for a 2 year contract with us, we know we will lose that customer at the end of the period and we don’t really mind as long as we don’t hear from them in the meantime.”
I don’t know what I was eating/drinking/playing with at the time, but I’m sure I would have choked/spat out/ceased playing out of sheer surprise. Was he being serious? Was he high? Was that gravy on my crotch?
The part I can clearly remember is that the conversation was about ‘churn’ in the telecoms business. Churn is the process of customers moving from one carrier to another each time their contract expires and sometimes even before that time. Churn is an issue for a lot of industries such as the financial sector with credit cards and mortgages, the airway industry both short and long haul and of course cheese manufacturers.
One of the reasons why US cell companies struggle to hold on to their customers is because every single one of the major carriers has a less than stellar record of customer service. What happens is that after 2 years of being used and abused by their cell phone company, customers go looking for another supplier just hoping and praying they’ll be better. Of course the bargains that are offered to new customers sweeten the deal, but they are nothing that can’t be offered by the present supplier to retain the business.
Everybody that has worked in the corporate world for more than 6 hours knows that it is cheaper to retain a current customer than attract a new one. We’re not talking fractions here either because, depending on which set of stats you want to believe, that figure is between 5 and 9 times cheaper!
So what stops the CEO of CrapCell Corp standing up at the shareholders meeting and making an announcement like this?
“As of 1 January 2009 we are going to bring all our customer service operations back in-house. We’re going to make a point of becoming a company that is known across North America and then Europe as the best for customer service. We’re going to treat our customers with respect and we’re going to start to build life long relationships with both private and corporate clients. We know that people don’t really want to move carriers and go through the grief of changing or even porting their number, being credit checked and changing payment details with their bank. So we’re going to offer our very best deals to people that re-new their contracts. We want to recognize their loyalty to us, not penalize it. That is how we feel we can grow the business by developing an actual win/win scenario rather than just talking about one.”
At this stage my naïve guess would be that all the shareholders are nodding in agreement and looking excited at the thought of owning stock in a company that is about to rule the world, or at least the telecoms world. Then the statement would continue:
“We understand that to carry through on this ambitious and worthwhile plan there will be some short-term pain. We’ll have to invest in people, infrastructure and marketing like never before.”
Audience: Murmur, murmur.
“That may well mean that there will be no dividends…”
Audience: MURMUR, MURMUR
“…for the next 2 years and we may actually see a drop off in stock value as we go through some difficult restructuring.”
Audience: String him up. Kill him! Who’s got the rope?
At this point the stockholders and investors storm the stage, insert a spike in the ass of the CEO and march triumphantly down the street holding aloft a rather uncomfortable, distressed and red-faced CEO.
So what went wrong? It seemed like everything was going swimmingly until the CEO announced a short-term hit.
And there you have it in a nutshell: a short-term hit.
It seems to me that businesses are driven, or more accurately paralysed by short-termism. They want results now because stockholders and investors want results now. They’re desperate to keep their stockholders and shareholders happy because they have the power to take away the jobs of ambitious, brave and long-sighted CEOs. Consequently, ambitious, brave and long-sighted CEOs are about as widespread as positively tested athletes gracefully admitting they took performance-enhancing drugs to help them win gold medals.
Short-termism is a difficult cycle to break, especially for large publicly-owned companies. It often requires a change of mindset, investment and the willingness to ride out a storm. As we sail merrily into the wind of what could well become a worldwide recession, is there a more sensible long-term option?
It’s easy to say ‘twas ever thus and it will remain so and maybe that is the reality. Perhaps I’m just a naïve fool, but I think there are signs that subtle changes are occurring. People seem to be less tolerant of large corporations making huge profits without actually offering a credible product/service. I don’t want to go all woo-woo and start talking about collective consciousness because I’ll probably be asked to leave the site, but maybe that’s where the shift needs to happen?
About today’s guest author
Tim Brownson is a lovable life coach who writes at A Daring Adventure. Check out his site, giggle until your sides split and then hire him today.
