Is the customer always right?

Source: AFR 24 September, 2024, p. 1Source: AFR 24 September, 2024, p. 1

Our newsletter this month is about how organisations can deepen their understanding of customers as a stakeholder.

Woolworths and Coles have lost 3% or around $4 billion from their market value this week, with the ACCC claiming that the supermarkets were telling customers they were dropping prices when they were actually increasing them.

What is so interesting about this case is how the ACCC relied heavily on the detective work of customers using their social media accounts instead of the ACCC's typical "mystery shopping" exercises.

As Chair Gina Cass-Gottlieb noted, "When we looked at social media, we found hundreds of reports on X, TikTok, Reddit. Lot's on Reddit....Some of the people on social media were doing their own monitoring in effect, and it was a very key indicator for us".

Customer issues have impacted the reputation of banks caught charging dead people money, the aged care sector malnourishing and neglecting elderly Australians, or Qantas' 'ghost flights' (see our summary of Qantas governance review here), and are finding savvy ways to digitally disrupt such as Buycott app to vote with their wallet and mobilise through Facebook groups (200,000 people on Cash is King).

Do boards and management have their finger on customer trends to manage these risks and opportunities to maximise the customer experience?

Below are some key questions:

1. What are the lag indicators of our customers? Customer satisfaction, customer sales

2. What are the leading indicators? Net Promoter Score, sales pipeline, raw complaints data

3. What direct exposure do board members have to customers? Site visits, sitting in call centres

4. What are customers saying on social media and websites? Can we track through dashboards?

5. Does our organisation have a customer Advocate? This is standard industry practice in banking where the advocate reports to the CEO or Group Executive

6. Do we have a customer Advisory board? This is mandatory for the aged care sector and good practice by companies like IAG where directors are present in meetings

7. Should we establish a customer Charter? See utilities like Sydney Water or AGL

8. What are our customer Remediation approaches (Internal or external dispute resolution)? Such as scams, cyber, 

9. How is Remuneration structured to support the right culture for servicing clients? Some organisations are increasing weight of customer and reputation metrics in STI and LTI