When Companies Should Fail

(Podcast Version) America has become so obsessed with its financial crisis that people are forgetting the basic lessons of economics. You remember economics, don’t you? It’s the science of how markets work. Yet everyone is acting like it’s a “strange reason” why companies are losing money, people are losing their jobs, customers are fleeing their products and services. We all know that “customers are sitting on the sideline,” but nobody is willing to really ask why. We all just assume it’s because “credit is frozen,” whatever that means. And everywhere we turn, people are saying somebody must do something - fast, soon, now - because the market downturn is assumed to be “a fluke” - it’s “happening” to good companies and good people through no fault of their own. As if the laws of supply and demand - and the customer - didn’t apply to the “modern” economy.

Nobody is asking the basic question: Should these companies fail?

When can it be said that a company “should” fail? When customers say so. It’s really that simple. Customers are the perfect feedback system for your company’s performance. Their decision to purchase your goods and services - or not to - is the instant, immediate and only meaningful evaluation of your organization. Surveys, marketing and testimonials are useless. Nothing happens unless you can make a sale. It is therefore an economic principle that your profits - or lack of them - are the most objective measurement of your company’s performance.

And the only indication of whether or not you should continue to be in business.

Take the airline industry. They love to blame everyone else for their problems. Regulation. Soaring oil prices. Their competitors. And most pernicious of all: the customer. Has anyone ever asked that the reason customers won’t pay more - or at all - for airline service is that they can barely tolerate (and frequently decide not to) the service offered?

A concrete example may help. A half an hour ago I tried to check into a United flight in Boston. My office had purchased the ticket - directly from United’s website - using one of our our company credit cards, two weeks ago. We do this every day, nearly, and have for more than fifteen years. In fact, it’s the system the airlines have set into place - it’s their process. They didn’t want to pay travel agents; and they don’t want you to call and speak to someone on the phone. They discourage every other form of ticket purchase and virtually require you to purchase online. In fact, I just got off another plane a few days ago - another internet purchase - and today makes my 50th flight this year. Needless to say, I know the drill.

Not today, however. United’s process failed its customer at every level. First - because they don’t want to hire people to actually interact with the customer - they force you to “self-service” check in. So you go up to a computer (while actual people are on the other side of the kiosks but don’t look you in the eye; they only want to interact with your baggage) and you have to print your own tickets. The “usual” procedure is to enter your confirmation number or slide any credit card into the machine; verify your name and flight. Presto - you have a ticket.

Not today. Today, United decided that if I didn’t have the ACTUAL credit card used to purchase the ticket, I’d have to miss the flight or purchase another FULL FARE LAST MINUTE ticket. Here’s how the interaction went:

Computer: Sorry - I can’t help you. See a real person.

Customer Ferrara: OK, excuse me, real person? The machine can’t do it’s job. Can you help?

United Rep: Oh, did it ask you for your credit card?

Customer Ferrara: Yes, but I don’t have that. The company makes the purchase using their own card number. But I can verify just about everything else - who I am, show other credit cards, the confirmation number, my seat number, even the color of the plane!

United Rep: Well, that’s too bad. If you don’t have the credit card, you have to purchase another ticket.

Customer Ferrara: What? That’s insane.

United Rep: If you don’t like it, you can check with my supervisor. He’s down there (vaguely points, then turns away).

Customer Ferrara proceeds down the kiosks and asks a cluster of United Reps: Who is the supervisor here, please? (Blank stares in the headlights; a pause, then someone points to a man who is backed up against the wall and refuses to come forward during the entire conversation).

United Supervisor: What’s the problem?

Customer Ferrara: Your computer won’t check me in, because I don’t have the credit card used to purchase the ticket.

United Supervisor: That’s our policy. It’s a fraud check. If you don’t have the card, you will have to purchase a whole new ticket.

Customer Ferrara: Is that the only option? There’s probably no way for me to get the card from our Accounting department at this hour of the day while standing here in line…

United Supervisor. No card, no ticket. You have to consider United’s viewpoint. We’re trying to protect ourselves against fraud.

Customer Ferrara: Pardon me? Is it my job to consider United’s perspective, or United’s job to consider the customer’s perspective.

United Supervisor: (No answer. Silence. No eye contact).

Walking away, I look around to make sure I haven’t slipped through the time-space continuum to an alternate universe where the customer service policy is “Screw the customer!” I return to the kiosks again. I take out my Blackberry and call my office. Quickly, I get someone in accounting and say the following: I will hand the phone to someone here at the airport. I want you to tell them whatever they want to hear so I can get on the plane. They want to verify that you actually used the credit card to purchase my ticket for me. Just agree to whatever they say.

I say this in FRONT of the United Rep; she hears the entire thing. She doesn’t bat an eyelash. I hand her my phone. She asks my office if they purchased ticket; she says, yes, ok, uh-huh. Hands me the phone.

Then issues me my ticket.

United Rep: Will you be checking bags?

Customer Ferrara (through gritted teeth): Yes, one bag.

United Rep: That’s $15 extra. Would you like to pay using your credit card?

————–

There’s no need to wrap up the story - because everyone reading this has had the SAME experience with a company recently. Maybe a telephone company, automobile dealer, real estate brokerage, or just the coffee shop. The level if insanity has become the norm. Customer service has become a myth - something we once heard the Founding Fathers discussed amongst themselves, but certainly a fad that has long-since gone out of style.

Maybe this is why companies are failing today. Maybe customers just don’t WANT to do business with them - especially when they have scarce extra hard-earned dollars and what they get in return is peanuts - no, not even that any more on today’s flights. Maybe companies should fail - if it takes 57 hours for the average real estate agent to respond to a customer who inquires by email. Maybe companies should fail - if they can only offer overpriced property listings for sale. Maybe companies should fail - if they turn a blind eye to housing sustainability - in the blind pursuit of a commission using government money in the name of “affordability.” United’s lesson isn’t just a story of bad airlines - or coffee shops or computer companies - it’s the story of many companies in many industries. And too many of them are in my industry, the real estate industry.

Could it be that today’s economic crisis isn’t only because of the banks, or the dollar or booms or busts? Is today’s crisis of companies the only way disappointed and disgusted customers could finally make themselves heard - by pulling their money from the markets rather than put up with one more company who has forgotten that the customer matters? At least in one case - mine - that will be the case, as it will be a cold day in some United’s corporate boardrooms before I willingly pay for another bad experience with their customer dis-service staff.

Oh, and of course, my flight is delayed….

- Matthew