Who stumbles and who thrives after economic and natural disasters is not random. The businesses that thrive are those that take the opportunity to redefine the relationships with their customers for the better. An opportunity to equalise that relationship, and taking a step back from a situation that, all too often, creates hostages out of customers.
The idea of ‘customers as hostages’ was first defined by Thomas Jones and W Earl Sasser in their Apostle model from 1995. “Hostages are stuck,” they wrote. “These individuals experience the worst the company has to offer and must accept it. Many companies operating in a monopolistic environment see little reason to respond to the plight of hostages. After all, these customers can’t go anywhere. So why bother to correct the problems?”
This attitude has seen many businesses survive, at least while customers are willing to accept the monopoly in exchange for a service that works and, ideally, one that offers value. The problems start when it doesn’t.
The decline of the American car industry took place over decades, but coalesced in just five years. In the 1960s, outside of the major metropolitan areas, it was tough to buy imported cars in the USA: in 1965 there were 5,846 imported car dealers in the country and 30,991 domestic dealers. In 1967, imports made up just 9% of total car sales. But five years later, in 1972, they had nearly doubled to 16%.
Yet, domestic car brands were still acting like monopolies. So, by the early 1980s, those customers had freed themselves and were buying foreign imports in the millions.
It’s much harder and less acceptable to hold customers hostage in the digital world. When Jones and Sasser first explained their hostage concept, being disappointed by retailers was accepted as part of how things were. Alternatives were harder to find and slower to respond.
Today, there’s so little commitment needed compared to the buying process of 25 years ago, and we expect satisfaction in return for very little work. There’s little to stop us from going somewhere else. The Zero Moment of Truth means the delay between deciding we need something and starting to look for it, can be mere minutes.
That makes it easy for the seller to fail. For example, when I needed a wine rack for my fridge, it took about five minutes to find the right one, checkout, choose next-day delivery and add my card details. Except there was an issue with the retailer’s payment system and I couldn’t complete the purchase. I could have waited but then I would have become a hostage to the retailer’s ability to fix things. So, I didn’t. I bought the rack from Amazon instead.
Why do customers still end up as hostages in today’s digital world? The complacency of businesses plays a big part, especially for holders of monopolies or in markets where customer apathy means switching rates are low, such as banks and telecoms. Big businesses become complacent and arrogant, and even ignorant of their own power, not realising the control they had over their customer until it’s too late. In today’s highly-disrupted markets, that can happen quickly. We used to think ‘quickly’ meant years. Now, ‘quickly’ means weeks or even days.
After COVID-19, we will be in a different world. Businesses that have served communities and customers when they most needed it will be the survivors. Adapting to what customers need (and right now it is a need), rather than ignoring them or trying to push businesses priorities, is the attitude brands should always have adopted.
This is a chance to change the way customers are treated, to create experiences and services that fulfil their needs and treat them with respect. Release your hostages, and they will stay with you for years.
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