The people at GoodGuide Inc. have created a mobile phone app that, unlike some previous apps discussed on our blog, actually helps make the world a better place. GoodGuide’s app enables users to select from among 120,000 products those that are healthiest, best to the environment, and most socially responsible. Users need only scan in the bar code of an item and then the GoodGuide ranks that item on a scale of 1-10. The scale is also customizable so that each consumer can make the best choices for his or her individual needs. Products users can choose from range from light bulbs to jeans to sunscreen.
GoodGuide was created by Dara O’Rourke, a UC Berkeley professor, and he’s amassed a team of experts – chemists, toxicologists, nutritionists, and sociologists – to help create a strong database of products. Their goal is to help users quickly evaluate and compare products in order to enable customers, wherever they are, to put their values where their money is.
The GoodGuide app is precisely the kind of technology-fueled people power we need. Society is setting a higher standard for corporations, and this provides new transparency, making it easier to find good products and support worthy companies.
The recent debacles experienced by Netflix, Bank of America, and Verizon all make it apparent that the old adage ”buyer beware” is beginning to give way to “seller take care.” Each of these companies very publicly reversed course in 2011 after announcing decisions that displeased their customers.
Technology-fueled people power, years in the making, has come of age.
Netflix’s July decision to dramatically raise prices and its September announcement of a (short-lived) plan to split its DVD and streaming packages into separate services were both unmitigated disasters for the company, resulting in a 75% decline in its stock price and a loss of over 800,000 subscribers. Although “the social media cries were nearly deafening,” it doesn’t seem that there was any organized effort to punish Netflix for its less-than-stellar efforts to “improve” its customers’ experience.
The same cannot be said, however, for Bank of America and Verizon. Take for example, this email message from Molly Katchpole at Change.org:
Molly again, with huge news:
Verizon just announced that it’s not going to charge customers a fee to pay our bills online.
Two nights ago, I started a petition on Change.org telling Verizon that it can’t nickel and dime customers like me with new fees. Within hours, more than 130,000 of us signed the petition. (Thanks, by the way — you’re amazing!)
It took months of hard work to get Bank of America to drop its $5 debit card fee, but Verizon backed down in less than 24 hours. Turns out people like you and me are getting more powerful by the day.
Congrats, and happy New Year!
P.S. The Change.org team asked me to remind you that it’s super easy to change something in your community. You can start your own petition in about 2 minutes – just click here. (Seriously, you should do it. Do it!)
As I was saying, seller take care.
Amazon focuses on low prices, selection, and convenience. In selling books, CDs, and many other products, Amazon provides customers with high-tech, low-touch, and highly reliable service. The giant online retailer also has taken steps to improve the service level of partner merchants, including user ratings to keep merchants on their toes and a program to ship items on behalf of partners. BusinessWeek reported in 2009 that Amazon was the top company in customer service. In short, Amazon has a lot going for it.
Amazon recently offered customers another way to save money: the Price Check app. Go into your local bookstore, browse around, scan into your mobile device the barcode of an item you’d like, share the in-store price, and order it for less from Amazon. In short: spy and help Amazon build a database of pricing information from thousands of stores.
There is a negative effect associated with this app that needs to be explored: the social cost associated with helping a giant become a leviathan. Amazon can often offer items for a couple of bucks cheaper than your neighborhood store because they don’t have to pay high rent in a high traffic downtown store. Amazon.com often doesn’t have to pay state tax because they only have a physical presence in four states. Because there is no state tax collected on many purchases, those are fire trucks, library books, and school teachers your state goes without. Financially supporting your local community is challenging to do when you buy exclusively online.
The lowest price does not always equal the best deal. Customers can rely on bookseller expertise – especially when those sellers get to know you personally. The experience of an alluring book store atmosphere with enticing book covers just inches away is difficult to replicate staring at a screen from a desk under fluorescent lighting. Salon.com’s Will Doig captures the appeal of bookstores succinctly: “To many, the store itself is seen as at least as important to the community as the product it sells.” Online retailers cannot easily offer the pleasure of hearing authors read from their books in person.
Amazon’s Price Check app is crossing over into bad company behavior. Good companies ensure that their employees, their customers, and the environment all win when business is transacted. This cannot be done when one company asks customers to exploit the resources of a competitor. Many others agree – hence the rise of the “Occupy Amazon” movement.
All companies need to be cautious not to overstep their bounds – customers are sensitive to this and can turn on them quickly in this social media era of Twitter, Facebook, and public blogging. Amazon has done well by their customers and has earned a place in the market. But it has gone too far with its Price Check app, and has damaged its reputation in doing so.
The ongoing decline in Groupon’s expected IPO value points to a fundamental, but unspoken, economic truth; competing on lower prices alone is a lousy business model.
Yes it’s true that a part of the decline in Groupon’s IPO value is attributable to rapid emergence of competitors.
But more fundamentally, Groupon’s customers – merchants – are discovering that the one-time customers who come to them through Groupon deals are exactly that. One-time customers.
They are not returning to become loyal customers, and so the hoped-for result – a growing customer base – isn’t happening, significantly decreasing the attraction of offering a Groupon-style deal.
Another piece of evidence that there really are no silver bullets.
Developing a loyal customer base requires doing the hard work necessary to EARN a loyal customer base. That involves being a Good Company – one that is a good seller, as well as a good employer and good steward of the community and environment.
Recent media coverage of the financial woes of companies like Bank of America and Goldman Sachs (see, for example, coverage from the Wall Street Journal and New York Times) often misses an important point – almost certainly part of their current troubles can be traced to their “less than worthy” behavior in the past.
- Bank of America’s undistinguished record as an employer, seller and steward – we assigned it a “C” on the Good Company Index® – has done little to earn the loyalty of its customers.
- Goldman Sachs well-documented (and penalized) money-making-schemes – that put its own interests ahead of its client – is also not a formula for earning customer support in tough times.
These firms’ focus on being big and dominant – some might call it “greed” – has caused them to lose focus on their fundamental reason for being, which is to create value for customers and society.
They are now paying the price for losing sight of that.
Netflix announced huge price increases in July, leading hundreds of thousands of customers to cancel their subscriptions to the company’s DVD and video streaming services. After the company disclosed the extent of its customer losses, the company’s price plunged 26 percent in two days.
So on Sunday, Netflix CEO Reed Hastings sent out a much-discussed email and blog post in which he acknowledged that customers felt the company “lacked respect and humility” with the pricing and service changes. Hastings admitted “sliding into arrogance” and offered a “sincere apology.”
Good start – exactly what you’d like to hear from a company that truly listens to its customers and tries to do right by them.
And then? He announced the price increases would remain in place and the DVD service would get a new name (“Qwikster”) and would no longer be integrated with the streaming service (“Netflix”). (This, of course, potentially creates dramatic new inconvenience for remaining customers, who apparently will need need to maintain and manage two video queues, one for DVDs and one for streaming.)
Hmm. Not what customers were looking to hear.
Online comments on Twitter were heavily negative. Salon.com’s Mary Beth Williams summed things up by tweeting, “So Netflix’s plan to win us back is an email…saying ‘I messed up’ and a name change to QWIKSTER? Gosh, I’m sold!”
Seeking transparency through clear communications and a willingness to admit mistakes are both admirable qualities in a company. Still, they’re not ends in themselves, and this is where Netflix seems to have fallen down again by not truly listening to what its customers were saying.
Most fundamentally, a good seller recognizes the importance of (1) customer trust, (2) delivering services at a fair price, and (3) quality of its services. Netflix fails in all three areas. Its customers complained loudly about the first two of those when the price increase was announced – and ironically, are likely to begin complaining about the third now that Netflix has made its services less convenient – as part of its “apology.”
By now, business executives have heard the message many times over: Do right by your employees or face long-term trouble. Usually the argument centers on the need to motivate workers so they are productive and serve customers well.
But there are new twists to the treat-talent-well advice.
Increasingly, consumers and investors care that companies care for their workers. The latest evidence of this comes from advertising firm Young & Rubicam and a paper published earlier this year by Y&R executive John Gerzema and journalist Michael D’Antonio. The authors found that between 2005 and 2009, U.S. consumers expressed a nearly fourfold increase in their preference for companies, brands and products that show kindness in both their operations and their encounters with customers. The research, which involved some 16,000 U.S. respondents, also discovered that nearly two-thirds of consumers avoided companies whose values contradicted their own.
According to Gerzema and D’Antonio, these finding point to a broad “Spend Shift” movement where consumers—partly in response to economic hard times—want better citizenship from the companies in their lives:
“People are returning to old-fashioned values to build new lives of purpose and connection. They also realize that how they spend their money is a form of power, and are moving from mindless consumption to mindful consumption, increasingly taking care to purchase goods and services from sellers that meet their standards and reflect their values.”
Some are skeptical of this sort of consumer research. People don’t always do as they say they do in surveys—this may be especially true in research about spending habits.
But there are harder data points backing the need for a soft company heart. In writing Good Company, my co-authors and I found a variety of studies tying corporate social responsibility—including good employee relations—to positive financial outcomes.
Our own research on the publically traded Fortune 100 also showed the connection. We rated Fortune 100 firms on their records as employers, sellers and stewards of society and the planet, and then compared those rankings with stock market performance. The results? Worthiness pays off. Companies in the same industry with higher scores on our Good Company Index™—that is, companies that have behaved better—substantially outperformed their peers in the stock market.
Not surprising, investors, besides consumers, are gravitating to companies that treat all their stakeholders well. The value of assets linked to the Dow Jones Sustainability Indexes—which list the most sustainable large public companies in the world—grew from about $1.5 billion at the end of 2000 to more than $8 billion at the close of 2009.
It is easy in the current context of high unemployment for businesses to pay less attention to worker needs and desires—like pay raises, job security and career development opportunities.
But demands for decent, generous treatment of workers are now coming from investors and consumers besides employees, their advocates and forward-thinking workplace consultants. Smart companies will not only hear the message; they will crank up the kindness.
This post originally appeared at Ed’s Work in Progress blog at Workforce.com.