HOW MUCH INEPTITUDE WILL THE CONSUMER TOLERATE?
by Martin Grunstein

I have just had a frustrating experience with a bank!

I understand this does not make me a unique individual.

But due to the ineptitude of the bank’s lending officer, I almost lost a property that my family had their hearts set on!

Again, being on the receiving end of a BIG stuff up by a bank doesn’t create a ripple of surprise when you tell your story to friends or anyone who’ll listen. In fact, you often hear more and bigger stories back from the people you’re trying to astound with the level of ineptitude you’ve been a victim of!

But what IS interesting is that people telling the stories, like myself, continue to deal with that bank. And why is that? Surprisingly, the answer has nothing to do with marketing and much more to do with human nature (which in my opinion is what marketing is all about anyway) reflected in a simple adage - “It’s better the devil you know than the devil you don’t know”. No matter how inept your contact is at your bank, there is no guarantee the contact at a different bank is going to be any less inept. So we stay with the inept person we know.

Is that strange in the context of human behaviour? Actually, it’s not. For example, when people go to conferences, they sit with people they know rather than people they don’t know. Now, I don’t specifically mean friends they know, just people they know. In fact, most people would rather sit next to someone that they know but don’t particularly like rather than sit next to someone they don’t know (better the devil you know....). Can you relate to that?

Let’s now apply this concept of human behaviour to the real world marketplace.

How much ineptitude will the consumer tolerate? The amount of ineptitude that makes the competitor a perceived credible alternative. And that is different for each consumer.

If you just read the above statement once, it sounds very basic and not very insightful. But, if you read it the context of the rest of this article, I assure you it will impact the way you view your competitive situation.

When, I’m angry with a bank I look at alternatives and apart from a couple of lateral alternatives, if I have a business and a private account to run, the competition is another major bank and the general perception is that they are all just about as good or bad as each other, therefore, better the devil you know.....

However, let’s look at what happens when circumstances change.

I was doing some work in the telecommunications industry around the time that Optus launched onto the market. Telecom (as they were called at the time) lost 15% of its business in N.S.W. to Optus. Despite the proliferation of price advertising at the time, the overwhelming majority of people who went to Optus left because they had a grudge against Telecom and would have gone to Optus even if they were more expensive. There was finally a perceived credible alternative.

Monopolies are rare but in all sized businesses, the skill of the game as a new entrant or growing business is to provide this perceived credible alternative. And the key here is the word PERCEIVED.

I have heard people at seminars tell me amazing stories of the lengths to which they have gone to punish businesses who treated them poorly. One man said he drove over 150 kilometers rather than buy a car from his arrogant local dealer; a lady told me she walks an extra half a kilometer to get her lunch every day so she doesn’t have to give her money to the rude person in the sandwich shop next to her office; a lady told me she goes to a hairdresser a suburb away from where she lives because one of the juniors at her local salon told her that her hairstyle looked terrible and she should try something different (she’d had the same hairstyle for twenty years); a couple said they’d not buy the home they’d fallen in love with rather than give commission to the sleazy real estate agent listing the property. Stories like these are common and I’m sure you have a couple of your own. I know I do.

The important thing to learn from this is that what is a substitute, or a perceived credible alternative as I referred to it previously, is subjective. One person will drive 150 kilometers to punish a car dealer, another won’t; one person will walk half a kilometer to punish a rude sandwich bar manager, another won’t. The key from a marketer’s point of view for a growing business is to provide as credible an alternative as possible to the market leader and keep attacking the leader’s weaknesses.

A perfect example I heard at a conference was that Dick Smith in building his electronics empire (which was one of the fastest growing businesses in Australian history) had a strategy. He always opened a new Dick Smith Electronics store as close as possible to an existing electronics store that was providing poor service. That way he had a natural flow of new customers from day one.

Of course, sometimes you have to create the discontent in the existing customers’ minds. A new launderer had an opening offer of 20% less than the existing provider. The existing provider’s response was to match price to wipe the new guy out. The new launderer found a way to create discontent. He told the customers who rejected him because the incumbent had matched price - “If he’s dropped his price after all these years just because I came into the market, he must have been ripping you off in the past. Why don’t you ask him to refund you the 20% he’s been overcharging you for the last ten years?” And do you know what? A number of those customers thought about it and gave the new launderer the business because he had created the discontent that made him a credible alternative.

This concept applies to many areas. For example, a lot of people were surprised that, after the “cash for comments” scandal of the late nineties when both John Laws and Alan Jones were found guilty of duping their audiences by giving their sponsors’ preferred opinions as their own, amazingly their ratings were almost unaffected. I believe their continued ratings success was not so much a function of their audiences being blindly loyal or very stupid, it was a function of the fact that in breakfast and morning radio there was no perceived credible alternative. Their listeners had to listen to SOMEONE on the radio and even though they might have been peeved at the announcers’ behaviour, there was nobody else offering a similar, acceptable alternative in the minds of those listeners. Again, better the devil you know......
We’ve talked about how growing businesses can attack existing arrogant business. What about the existing business? How does it stay strong in the face of competition?

Firstly, don’t rest on your laurels. A solid market share today doesn’t guarantee a solid market share tomorrow. A technological advantage can be duplicated; a location advantage can be wiped out by a competitor moving in to the area; a people advantage can be lost by an employee going to work for the competition.

The intelligent strategy is to keep your levels of service and recognition high even if there is no immediate threat. The more goodwill you create by recognising your customers now, the less likely they are to consider your competition tomorrow. Things like thank you cards; remembering customers’ names; recognition functions for top customers; how’s things phone calls to talk to them when you’re not selling them something all add to the goodwill of the relationship and build your buffer zone to the existing or potential competitor who will try to position themselves as a credible alternative.

I don’t care if you do it for the right reason - because you genuinely care about your customers - or for the wrong reason - because you are scared someone is going to steal your customers - the important thing is to JUST DO IT.

Martin Grunstein’s results with over 500 companies across 100 industries have made him Australia’s most in-demand speaker on Outstanding Customer Service. He is contactable on (02) 96623322 or emailĀ martin@martingrunstein.com.au.

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Martin Grunstein

Address:
35 Cottenham Avenue
Kensington NSW 2033 Australia

Phone:
02 9662 3322

Mobile:
0414 933 249

Fax:
02 9662 4004

Email:
martin@martingrunstein.com.au