Marketing Mondays: Collaborative Incompetence, or How To Kill Your Company Slowly

[Introducing a new segment on Smithereens - Marketing Mondays will kick off your week with new insights on sales, advertising and branding, starting today. I hope you enjoy it.]

As any marketing guru  or branding expert  will tell you, the best kind of marketing is really good customer service. Clients who feel appreciated, important, listened to, catered to and satisfied pull out their wallets and purchase. Clients who feel used, ignored, unimportant and unfulfilled pull out their phones and call your competitors. 

More than great commercials, clever slogans and celebrity endorsements, the customer experience is what will truly dictate the long-term success of your brand. As construction marketing blogger (and my boss) Mark Buckshon writes, the bottom line is this: "You will not have a sustainable business unless you deliver the goods and your clients are truly impressed with your service."

Well, that's how it's supposed to be, at least. But, you might be wondering, if that's the case... then why do some big companies seem to get away with offering mediocre products and services without consequence?  Do branding rules only apply to the little guys?

I often wonder the same thing.

Why is it, for example, that when I use the self-checkout terminal at the grocery store, or when I pay for my parking in an attendant-less lot, the payment terminals are happy to accept and differentiate between a twenty and a ten-dollar bill; but when I want to deposit cash at my bank's ATM, it has to be in all together in an envelope and may be held for days because "the contents must be verified"? 

    

And why is it that my cellular provider is willing to offer me unlimited evenings and weekend minutes, but won't provide me a way to track the usage that really matters - my limited daily minutes? While we're on the topic, why are Canadian wireless voice and data prices leaps and bounds higher  than prices for the same services south of the border?

Why do these companies get away with such mediocrity? The answer, I think, is.. because they can. 

Or rather, because they think they can.

Explaining Collaborative Incompetence

Collaborative Incompetence is a term I have coined to describe when multiple companies in the same niche appear to have come to a short-sighted realization that in order to remain viable, they don't need to be the best-of-breed, they only need to... not be worse than everyone else. 

To illustrate the concept, imagine only 10 students were going to write the SAT exam this year, and the entire weighting and bell-curving was going to be based on that small pool. Now in order to succeed, those students have two choices; a) they can either study and practice and strive to be the best, or b) they could all collude and arrange to be equally incompetent together! 

Because each score is only graded against the "top" score in the group, these students can effectively ace the SAT just by not scoring significantly poorer than everyone else who isn't trying.

The same principle holds true sometimes in business. 

Take the earlier bank example for instance - they don't feel any pressing need to make my life easier by accepting and crediting my cash deposits instantly for two reasons:

1. Every day they can put my money on hold is a day they can invest my money interest-free, and 


2. They're pretty sure nobody else in the industry is going to do it, either.

And it's that second reason that is the real source of the problem here, because that attitude is what causes companies to make purely profit-centred decisions instead of customer-centred ones. 

Here in Canada, there are really only a handful of major banks - the so-called Big 5  of Royal, Scotia, TD, Bank of Montreal and CIBC. If each one of these major institutions can be sure, either explicitly or implicitly, that none of the others is going to offer that particular convenience to their customer, then what is the incentive for them to do so? Why incur additional infrastructure costs and change the way they do business when everything seems to be going swimmingly? More to the point: Why disrupt the status quo? 

While the banking system in the United States is far more decentralized than it is here, they too have problems with ownership concentration, and as a few recent Consumerist  posts  show, Americans are no more immune to annoying anti-customer behaviour from the largest US financial institutions.

Ideally, the forces of the free market should preclude this type of behaviour, because, as we established in the first paragraph, dissatisfied customers can simply take their business elsewhere. Unfortunately, though, this mechanism doesn't work very well when the industry oligarchs seem content to pass business around in a circle indefinitely. 

Think for a moment about the cell phone example I gave earlier - how many people do you know who have switched from one cable provider or telco to another, and another, only to find that they are all equally despicable? I have personally had cellular, landline, cable and internet services with all three of the major telecom companies in Canada (Rogers, Telus, Bell ), each time switching because of some egregious display of customer disservice, only to find that this is (sadly) the industry norm. 

The providers must assume we will eventually just give up and stop taking our business elsewhere because the substantial headache of switching is not worth the marginal benefit.  I hate to admit it worked on me, but it did - I've reluctantly accepted that my current provider might be the lesser of three evils, and have stayed put for awhile. 

Even though there are more active companies in the market in the US and this has some effect on prices, the larger ones still seem to have this poor customer service attitude to some extent. (Check out this so-bad-it's-almost-funny list of articles  about Verizon customer mistreatment on Consumerist.)

But Every Empire Falls Eventually

At first glance, the companies who tend to get away with this kind of poor customer service may seem to be sitting pretty, but the reality is that settling for mediocrity is always a short-sighted endeavour for any business, no matter how big or established. 

Eventually, someone will get so sick of whatever problems are currently not being addressed by the old guard, and they will stop at nothing to disrupt the very status quo that the latter was working so diligently to preserve. 

It wasn't so long ago that those same banks tried to get away with paying measly interest on our savings accounts - until upstart ING came into the market  and disrupted the trend, forcing interest rates up.

And if rumours about a possibe T-Mobile entrance  to the Canadian telecom landscape turn out to be true, the current telco triumvirate will have to take a good, hard look at how they treat their customers as well. In fact, the entrance of upstart no-frills cell provider Koodoo Mobile has already prompted some changes in pay-as-you-go rates from Rogers and Belus.  

History is littered with examples of companies who clung to the old way of doing things so long that they became irrelevant, while new technologies and new companies moved in and stole market share.  The steady fall of the Recording Industry Association of America  (RIAA) with the rise of the MP3 and file-sharing comes to mind. Once King-of-the-Web Yahoo losing its grip to Google  is another example. (And look where they are now.) 

Other companies may not try to displace the industry fixtures, per se, but they will move in and provide services to segments of the population that the latter ignores. 

The lack of minute-tracking tools for mobility accounts is a good example: the situation is evidently just as bad with the US telcos, bad enough to inspire young startup Skydeck to step in to give wireless users a whole host of tools that the wireless providers should be offering. (Alas, Skydeck hasn't launched in Canada yet.)

The point is, even the mighty can fall and any company that believes it can survive and thrive by doing what it has always done is sadly mistaken. 

So What Can We Learn From All This

Chances are, if you run a business, it's not in the Fortune 500 and it doesn't belong to an exclusive and lucrative legal cartel. (Well maybe it is and maybe it does - if so you may contact me to inquire about advertising rates.) 

But if you're running your own small business and trying to market it effectively, what does all this have to do with you anyway?

Well, I think there is a very simple lesson to be learned here for any business, big or small: complacency is a poison pill. 

It doesn't matter if you are running an international financial institution or a local bakery, if you don't strive to exceed your customers' expectations and innovate in your field, you are doomed to fade into irrelevance eventually. 

Because in the long run there is simply no immunity afforded for incompetence, collaborative or otherwise.

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