The perils of market power

There’s no greater misfortune for a brand than to be the only game in town.

(Photo: Flying Colours Ltd/Getty)

Everybody loves a Top 20 list, especially if it’s a list of losers. Thus my delight when the American Customer Satisfaction Index for the first half of 2011 hit the presses a few weeks ago. Despite being an America-only study, it’s still an interesting barometer of consumer sentiment, particularly when so much coverage features headlines like “America’s most hated companies.” Schadenfreude-y fun at the very least, and there’s always the chance we marketers might learn something. The publishers of the study do their best to help, pointing out specific customer-service experience deficiencies for each of the hall-of-shamers. Yup, it’s hard for a company to be loved if it’s in the habit of making its customers mad.

But as with so much of this kind of data, it’s tempting to focus on the gnarly trees and how much different and worse theirs are than yours, and miss the forest, which is where the real lesson might be. A look at this list as a whole reveals something altogether more interesting than who had the greatest number of grumpy customers: of the worst 20 companies in the index, seven were telecommunications companies, five were airlines, and four were public utilities. The outliers were two banks, a health-benefits company and Facebook, about which more in a minute.

What they have in common is hard to miss: for the most part, these companies go to market unopposed. Either they’re simply monopolies, or they’re such tightly regulated, low-margin businesses as to be de facto cartels, cartels that sell things we can’t do without. One way or another, every one of these companies has a deeply asymmetrical relationship with its customers, so much so that there’s no dividend in trying to make them happy. And so, whether we’re getting dinged by a “system access” fee or our flight is overbooked or our hydro is interrupted without compensation, we have no choice but to shake our fists skyward in mute rage and then maybe lash out at a conveniently sullen barista to restore our sense of dominion over commerce.

No choice, that is, until suddenly there is one. This characterizes two of the most interesting marketing stories of the moment, the troubles facing Research In Motion, and the recent eruption of an alternative to Facebook, the clever new Google Plus. Both of these enterprises, if not in strict fact then by popular consensus, have enjoyed long careers as the only serious players in their respective games. Both of them got there by executing with only technical competence, and both regarded their end-users as little more than cogs in the machinery of their business models (almost certainly how Facebook achieved Most Hated status). Neither of them ever bothered with whether people loved them or not. It just didn’t matter, at least not until a real alternative caused those people to look at the status quo more critically, by which time the only defense available to the marketer was the product itself, the very thing the new competitor had improved upon.

No greater misfortune can befall a brand than to be the only game in town. You get fat and complacent, your customers reflexively, silently hate you, and you’re a sitting duck for the day when the competition arrives. Today, I don’t think there’s a business extant where marketers can afford to operate as if they’ll never have to contend with consumer choice. Every corporation has to behave as if it were fighting for survival, as if its customers could walk out the door at any minute. Because you never know when that door might appear. And, contrary to conventional wisdom, it’s not easier to beg forgiveness than it is to be liked in the first place.

However these two stories turn out, it seems clear that BlackBerry will never again be the world’s default smartphone, and that Mark Zuckerberg’s vision of an über-Internet has taken a torpedo to the bow. If you want someone’s money, it’s always a mistake to take them for granted, no matter how much you think they need you.

Bruce Philp is a brand consultant, author and blogger at