Checking out a footnote in a recent magazine article, I found my way to a Harvard Business Review article published in 2007 called “Companies and the customers who hate them.”
I have a nasty feeling that I’m the only person in the world who hasn’t already discovered it.Â But just in case you haven’t seen it either, here’s a link:Â http://www.slideshare.net/grapplica/companies-and-the-customers-who-hate-them.
Anyway, it’s brilliant.Â Basically, it lays into all sorts of service companies – telecoms, utilities, financial services – for making their deliberate strategy of making their biggest profits out of the customers who make the worst purchases from them.Â It says that such companies have a mind-setÂ which is to do with “extracting value” from customers rather than “adding value” to their dealings with them – and that eventually this approach must rebound on companies and bring about their own destruction.
Let’s face it, there are hundreds of examples of this kind of behaviour in financial services, but the sort of thing we’re talking about is the sort of little drama that’s blown up in the ISA market recently to do with the millions of customers who’ve been lured in by short-term promotional rates and now find they’re enjoying their ISA tax benefits on a product that’s now paying them 0.1% p.a.Â But you could equally well choose Payment Protection Insurance, or credit cards’ order-of-payment policies, or overseas payments made in sterling at preposterous exchange rates, or hidden charges buried deep in investment funds’ TERs, or….well, as I say, you could choose hundreds of things.
In FSA jargon, all this is primarily the result of “information assymetry.”Â The FSA’s perception is that consumers suffer because they’re too stupid and disengaged to understand what’s happening to them, so in the long run the only solution is to increase their “financial capability” until they become canny enough to resist.
Reading the article, you start by feeling a jolt of recognition at the precision with which some of our industry’s worst habits and behaviours are filleted and skewered;Â but then, instead of feeling mildly contemptuous to consumers who are silly enough to fall for our innumerable tricks, you go on to feel a cold rage towards all those in the industry playing their part in carrying on like this.
It seems to me that it’s just not good enough to blame consumers for what happens to them.Â Forgive me if the analogy’s in bad taste, but it does seem to me to be a response not dissimilar to blaming a woman in a short skirt for being raped:Â I think we generally understand now that the blame for rape lies with the rapist and not with the victim.
There are two questions you have to ask yourself.Â First, although the authors are clearly and devastatingly right in their analysis of what’s happening, are they equally right about what they claim are the inevitable consequences (i.e. that sooner or later consumers will become so angered about their treatment that they’ll desert the companies concerned in droves)?Â And second, insofar as all of us working in financial services marketing are playing our own parts in this shoddy behaviour, how long are we willing to carry on doing so without complaint or protest?
Still not easy to answer the former.Â Consumers may be getting angrier and angrier, and they may be hating their mistreatment more and more.Â On the whole, though, the depressing reality seems to be that they grumble but stay put, very likely on the basis that in financial services they don’t believe things will be any better anywhere else.Â If the internet generations turn out to be a little less inert, or indeed more ert, then I’ll be delighted.
As for the latter, I guess we can only answer that question for ourselves as individuals.Â Speaking for myself, this little bleat of protest should be taken as a sign that – continuing the goaty analogy – I’m getting towards the end of my tether.