A Consumer Advocate’s Advice to Corporate America

By Allen Banez 

August 2010

At times like these, when consumers are watching their spending very closely, companies need to rededicate themselves to improving their levels of service. While American consumers claw their way out of a protracted recession that has witnessed some of the lowest levels of consumer confidence and spending in decades, companies are searching for innovative ways to stand out and expand their customer base. 

Usual corporate reaction to weak sales revolves around creating new and better products. Innovation has been central to this approach. The launch of Apple's new iPad is a good example of how a company will try to jumpstart sales in a down economy. Other more traditional interventions include bundling new products, offering incentive deals, lowering prices, tacking on added features and bonus.

These solutions demonstrate a predictable reaction to hard times and certainly look better than doing nothing but they can also negatively impact the bottom line by reducing net margins, even when volume sales increase. Trying to navigate a large or small company successfully out of a recession can be tricky, no doubt. However, there is one approach that often ends up on the boardroom floor in the panic to reduce costs; namely, safeguard your existing customer base.

As a professional consumer advocate, I always hear corporate executives boast about their quality products and excellent customer service, but a company's Achilles heel when a slowdown hits is its customers' temptation to move to cheaper products or services regardless of reputation. The temptation for customers to jump ship runs highest among organizations where a customer relationship has not been cultivated. 

While developing and investing in this relationship is nothing new to modern American corporations, the techniques used to foster a stronger customer bond are not given much attention. It seems relationship building is a luxury of boon economies and surpluses when, in fact, companies need to invest the most in their customer relationships when wallets are the hardest to open.

The majority of customer service representatives that my consumer advocacy firm deals with have forgotten that the way for a business to be successful in the long run is to focus on satisfying the consumer. Today's customer service representatives have become short-term thinkers in the business world. They only care about increasing productivity and saving the company money for today. 

This approach will not work over an extended period as there are too many competitors in the marketplace. Couple this mindset with today's economic climate and many companies have a perfect storm in the making that will result in a loss of its most loyal customer base. So, how does a company strengthen its ties with the consumer?