CAMBRIDGE LETTER
Is the customer king?
BILL KIRKMAN
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For even the largest institutions, goodwill is a valuable asset which would be foolish to underestimate.
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DERMOT TATLOW/BLOOMBERG NEWS
Most of us tend to like the benefits brought about by big institutions.
FROM time to time — far too frequently — I am telephoned by a cold caller inviting me to change my telephone service, or gas, or electricity supplier. I do not like being rude, but I like even less being badgered and harried. I therefore reply, briefly and brusquely, that I am not interested, and ring off.
Obviously I am not the only person to whom this happens. It is an all too common aspect of modern life in the United Kingdom. It is a reflection, in my view, of a combination of aggressive salesmanship and contempt for potential customers.
That reaction may be extreme, but it is an indication of the way in which large institutions behave, and the effect which that behaviour has on the public. It goes a long way to explain why large institutions do not engender trust, let alone affection.
Banks are high on the list of the disliked institutions. When I first opened an account, over half a century ago, I knew the manager of the small town branch where it was (and oddly enough, still is) held. Now, of course, cards have largely replaced people. No one in the branch which I occasionally visit has the faintest idea who I am. In fairness, the service which I receive is satisfactory, but it is quite clear that the bank has no real interest in whether or not I use it. It has far better ways of making money.
It is not surprising that public reaction to the announcement of record profits in 2004 by two major banks — HSBC and RBS (Royal Bank of Scotland, which also owns Nat West) — is more concerned with the level of directors' pay than with a sense of shared pleasure at "my" bank's success.
The `Sudan 1' scare
The large supermarkets are similarly removed from any real sense of personal association with their customers. Of course they study their customers' tastes and respond to them, but it is a statistical rather than a human relationship. The news this week that a cancer-causing additive — Sudan 1 — has been found in hundreds of processed foods has led to accusations that both supermarkets and manufacturers have been failing in their duty. Strong criticism of them has come from Sir John Krebs, the distinguished scientist who is chairman of the Food Standards Agency.
There is very little sympathy for the firms concerned. The relationship is a relationship of "them and us". Sir John Krebs's assertion, in an interview with The Observer, that "it is the responsibility of the food industry to check their products and not to include ingredients that are illegal and pose a risk to their customers" will doubtless confirm many people in their feeling that the supermarkets, like other big institutions, do not care much about their customers. They are felt to be remote from ordinary people in a way that the traditional village shop never could be.
Reactions of this kind are not rational. We all tend to like the benefits brought by the big institutions — from out of season vegetables and a huge variety of good wines in the supermarket to the convenience of credit cards and mortgages offered by the banks. Liking the benefits, however, does not imply liking the provider.
Cost and convenience have long been on the side of the big institutions. We can go shopping in the supermarket at midnight if we wish. We cannot do that in the village shops. In fact, in my family we buy most of our food locally, because we are lucky enough to have shops selling good quality products, and because we enjoy being recognised, and greeted by name. For many people that is not practicable. In many places the good local shops do not exist, the lifestyle of the customers makes this approach unrealistic, and so on.
The big institutions are probably safe for the foreseeable future. They should, however, be aware of the dangers of complacency (which has already given severe blows to the reputation and success of some leading supermarkets, and some banks). A cavalier attitude to safety will probably not destroy confidence irrevocably. Irritating people by cold calling, or, the reverse of that, responding to calls from customers with mechanised reply systems which assure us that "your call is valuable to us" — but not valuable enough to stop us being held in a long and costly queue — will probably not produce fatal damage.
For even the largest institutions, however, good will is a valuable asset which it would be foolish to underestimate.
Bill Kirkman is an Emeritus Fellow of Wolfson College, Cambridge, U.K. E-mail him at: wpk1000@hotmail.com
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