Monday, January 30, 2012

Who Speaks for Costa in Crisis?

We have yet to hear in a major way from the CEO of Carnival Corporation regarding the shipwreck of the Costa Concordia off the coast of Italy, despite the fact that Carnival owns the Costa Line. Rather, Pier Luigi Foschi, the CEO of Costa’s Italian unit, has been the company’s face to the public, and he has blamed the ship’s captain for the tragedy.

The issue is whether CEO Micky Arison, founder and builder of Carnival, should be the lead spokesman with the press and other third parties…rather than the CEO of a subsidiary unit. Arison believes in giving great independence to his business unit heads, according to a story in the Wall Street Journal on January 23. The question is whether this will be best for his business, one of the biggest brands in the marketplace, over the long-term.

By maintaining a low public profile, the WSJ notes, Arison hopes he can distance the Carnival brand name, and thereby the safety issue, from the Costa disaster. Carnival has 101 ships, and only 15 sail under the Costa brand. “If he talks, Carnival is speaking,” the story points out, and Arison is not granting interviews. He has, however, tweeted his sadness over what occurred and his vows to help all victims; recently he offered $14,000 per victim.

Here’s how I see it. Arison’s hands-off approach has some merit from a management standpoint, but does it hold up with the public? Booz & Company, the leading management consulting firm, found in its recent CEO study that the CEO has longer tenure at companies like this – 6.9 years on average vs. 4.9 at more operational type firms. These types of CEOs also generally bring higher returns for their shareholders, the Booz study notes.

But even Warren Buffet, who has a management style similar to Arison’s (but on a grander level), at risk of a tarnished reputation, had to speak out on the questionable ethics of his heir apparent concerning a company he proposed that Buffet acquire. The heir apparent was forced to resign. But that was all happening at the corporate level and did not involve subsidiaries.

In this case, we have brand protection, safety and shareholder value issues that cross the parent. Speaking out when the spotlight is on you is most likely the action I would recommend in the U.S., where the public respects mea culpa and wants to hear from the top guy. But this situation is not black and white. Arison’s attempt to keep a low profile, thereby protecting the Carnival brand name and putting the focus on Costa and its CEO, might work for a while. But as the lawsuits mount and the trial of the captain takes place, it will be hard for Arison to escape demanding journalists, cameras and lights.

Labels: , ,

Thursday, January 26, 2012

Time Warner Cable's “Customer Appreciation” Blunder

Paul Lee, an intern at our firm, is the guest author of this insightful blog on the recent communications fracas between Time Warner Cable and Madison Square Garden (MSG).

On New Year’s Day, after failing to come to terms on a new contract, Time Warner Cable blacked out all MSG Network channels, leaving approximately 1.7 million Time Warner Cable customers in the Greater New York area unable to watch their beloved Knicks, Rangers, Devils and Islanders on television.

The public battle between the two parties has grown increasingly intense and, as usual, customers are being used as pawns in the fight for negotiating leverage. When faced with the threat of being blacked out, MSG immediately began airing commercials urging Time Warner Cable customers to switch television carriers. Time Warner Cable countered by airing retaliatory spots criticizing MSG’s steep contract demands. Then, MSG upped the ante by arranging Knicks and Rangers “viewing parties” at various restaurants and bars throughout New York City, which induced Time Warner Cable into committing an extremely costly blunder at a very critical time.

As part of an ill-conceived attempt to “one-up” MSG, Time Warner Cable launched a contest to send “10 lucky winners” to Charlotte, North Carolina to see the Knicks play the Charlotte Bobcats at the Time Warner Cable Arena. They went on an all-out blitz to promote the sweepstakes, airing frequent commercials on multiple channels and even running full-page ads in New York City newspapers.

Time Warner Cable officials described the sweepstakes as a “customer appreciation gesture,” but my recent conversations with numerous Time Warner Cable customers indicate that the contest made them feel less appreciated than ever. Customers described feeling antagonized and alienated upon seeing ads for the sweepstakes, and many even felt insulted. It’s not hard to see why. The contest — a raffle for tickets to attend a Knicks road game at Time Warner Cable's namesake arena — came off as a cheap and cynical attempt to buy customer loyalty and, unfortunately for Time Warner Cable, their carelessness has dealt a damaging blow to their credibility in a very sensitive situation.

There is a simple lesson to be learned from Time Warner Cable's customer appreciation blunder: never underestimate the intelligence of your customers – especially in the internet era – and never let the apparent brilliance of an idea blind you from seeing unintended negative consequences. When engaged in sensitive situations affecting a large number of customers — such as a contract standoff — it’s crucial for companies to make sure that their customers feel appreciated, but raffles and other cheap marketing gimmicks are rarely the solution.

Companies should stick to communicating openly and honestly with their customers. They should keep customers informed about their position, express a deep commitment to finding a resolution and find real, substantive ways to deliver value in the interim. These are the safest and most effective ways to sustain the confidence and loyalty of your customers in highly sensitive situations.

Labels: , , , ,

Monday, January 23, 2012

The Internet as Leader

I’ve been fascinated with the amazing worldwide expansion of the Occupy Wall Street movement, and yet have seen very little coverage of how it happened.

Was there a leader driving this protest into major countries throughout the world? Where has the money come from? Is there a governing body making decisions that enabled the group to grow?

Based on cursory research, I can find no single leader driving this movement. It is a true child of the internet. It seems to have all started with a blog posted by the Canadian-based Adbusters Foundation urging that there be a protest against greed and to encourage greater income equality. The protest suggestion was restated in an email sent by Adbusters to its list and it was “spontaneously taken up by all peoples of the world,” according to Micah White, senior editor of Adbusters Magazine.

It is unique to have a spreading movement managed without an adept leader at the helm. The Occupy group, however, attributes its governance to a General Assembly — it says no one leader runs it; rather, various people speak and lead at different times. Thus, it appears to be the epitome of democracy, unlike most other protest movements.

It is my conclusion, therefore, that the internet, in effect, is the leader. It has led the global expansion. It has influenced the very democratic approach because of its communications range and “all hands” approach. Certainly, without the internet, the participants would not be talking to each other and both encouraging and enabling a global conversation. Occupy’s very effective slogan, “We are the 99%,” is all over the internet, and it is motivational. The internet serves as a fundraiser and has helped collect over $750,000, applied to support the needs of the protesters.

Once again, communications is the power behind the throne.

Labels: , , , ,

Thursday, January 19, 2012

Communicating with EU Citizens

I am anything but an economist, but Standard + Poor’s recent credit rating downgrade of France and eight other eurozone countries got me thinking about this development from a communications angle. My question, throughout the entire euro crisis and all the interactions among the leadership, is this: what role have the people in the European Union played?

From a cursory scan of the media, it seems their part of the conversation is mostly confined to grumbling. The leaders of financially strong member nations (like Germany) continue to support the bailouts, despite complaints from their constituents about having to bear the lion’s share of the cost. And citizens of weaker nations (such as Greece and Ireland) are accepting austerity measures, despite widespread unhappiness about cuts in government services.

The European Parliament is an elected body, aware of its constituency and the value of two-way communications. But is it doing enough to garner public opinion in member states via town hall meetings, polling and individual meetings with local leaders and influencers? Is the European Union listening to all its stakeholders?

Our limited research shows no evidence of that kind of interaction (i.e., from a local citizen to the EU level).

While this was on my mind, I found an article, “EU Elites Keep Power from the People,” that first appeared in print in the International Herald Tribune on August 23. It hit on some of the issues I raise above. I felt vindicated. Andrea Römmele, a professor of Political Science and Communication at the Hertie School of Governance in Berlin, feels that true European leadership is missing. She was quoted in this article saying: “With so many national and European issues interlinked, there is a great need for Europe’s leaders to communicate to [with] their public and strengthen Europe.” A German philosopher taking part in the conversation accused “the political elites of reneging on their responsibility to bring Europe to its citizens.”

The article concludes that the Union’s doors have to be opened to accountability-oriented democracy if it is to emerge from this crisis. Once again, communications is the lever upon which success or failure turns.

Labels: , , , ,

Thursday, January 12, 2012

2011: 3 Top Online Rallies That Changed Corporate Policies

Bank of America: In October 2011, BofA announced its plan to charge customers $5 a month to use their debit cards, sparking a huge consumer uproar. (Even President Obama weighed in, using the BofA fee as evidence of the need for a strong consumer watchdog.) Online activists designated November 5 as "Bank Transfer Day," urging consumers with accounts at BofA and other big banks to switch to a small bank or credit union. On November 1st — after Wells Fargo, JPMorgan Chase and SunTrust rolled back their debit card fees — BofA did too, citing customer concerns and a "changing competitive marketplace.”

Netflix: In July 2011, Netflix announced that it would be eliminating its popular $9.99-a-month DVD rental/unlimited streaming plan and introducing two new options: Netflix for streaming movies and Qwikster for DVDs (1). Customers of both services would now have two bills to pay, instead of one. Outraged, 30% of Netflix subscribers canceled, planned to cancel or said they were likely to cancel their subscriptions. Netflix stock lost almost two-thirds of its value in the three months following the announcement. On October 11, Neflix reversed itself, announcing that Netflix would be the single source for both streaming and DVDs. Goodbye, Qwikster!

Verizon Wireless: On December 29, Verizon Wireless announced it planned to institute a $2 fee for one-time bill payments using a debit or credit card, either online or by telephone, effective January 15. Outraged again at being charged a fee to pay their bills, consumers rallied their friends online, collecting nearly 162,000 signatures on a petition. That apparently provoked a promise from the FCC to look into the matter — which was followed, almost immediately, by Verizon’s announcement that it was scrapping the so-called “convenience charge.”

(1) A plan that lets you rent one DVD at a time is now $7.99 a month, while unlimited streaming will also cost you $7.99 a month. If you want both one DVD at a time and unlimited streaming simultaneously, you will have to shell out $15.98 per month.

Labels: , , , , , ,

Monday, January 09, 2012

A Key To Top Performance

During this early part of January, New Year’s resolutions are still on my mind. And the resolution that is top-of-mind at the moment is this one: “I will consistently perform at a high level.” It applies to me as well as the more than 50 other people at Makovsky.

The key point within that resolution is the word “consistently.” To me it means regularly, steadily, always and with no variation. It is our principle to deliver high-level performance to our clients: regularly, steadily, always and without variation. But no matter what the business, all your stakeholders deserve it — whether staff, listeners or viewers, buyers, subordinates or whoever.

What brought this to mind is that, within the past two weeks, I saw the fantastic Broadway show, “Anything Goes,” the Cole Porter musical revival from the 30’s … TWICE. It stars Sutton Foster, who was praised, in the rave reviews when the show opened last spring, as a triple threat – singer, dancer and actress. And, indeed, she is an incredible performer. But every performer was a gem. The energy exuded by the cast was nothing short of remarkable! The second time I saw the show, it was a Wednesday night, following a Wednesday matinee performance. TWO in one day! Talk about hard work! The enthusiasm, the drive, the smiles, the spirit that the audience could feel brought standing ovations each time I saw the show. . This is consistent performance at a very high level.

So, no matter how you may personally feel, resolve to deliver optimum results to your clients or customers. If you are tired, depressed, sick or whatever, which could cause a less than stellar performance, make sure someone subs for you who can deliver what the client is paying for.

Labels: , , ,

Thursday, January 05, 2012

Trusting The Customer

The internet has brought customers to a new place. They want to be talked with, not lectured to. Slick salesmanship is out; dialogue and candor are in. Customers want to be leveled with. They really want to believe you … and they want you to trust them. There’s empirical evidence of that in a 2003 study of automotive buyers/suppliers by Professors Dyer and Chu, which found that the “least trusted” buyer incurred procurement costs six times higher than the “most trusted” buyer. No surprise, the least trusted companies were also the least profitable. According to author and consultant Dov Seidman, mutual trust between buyers and sellers “sets off an upward spiral of cooperative, value-creating behaviors.”

Every now and then one sees a sterling example of sellers trusting buyers — right where it could potentially hurt: at the point of sale. It happened to me last week when I was in Vermont visiting some friends over the New Year’s weekend.

My wife and I were tooling down a country road when we saw a barn with a big sign out front that said: “Vermont Maple Syrup.” Just what we were looking for! We drove into a little parking lot, turned off the motor, got out of the car and walked in. Much to our surprise this was the “honor system incorporated!” No sales staff. “Help yourself” was the modus operandi. Shelves of everything from jugs to tiny bottles of syrup. And there were related foods on other shelves, t-shirts and Vermont souvenirs. There was a table with a tablet, asking you to write down what you bought, the amount and the total cost, easily retrieved from the price on each item. Above the table was a round chute where you were to toss your money. And there was a box accessing change, if you needed it. We bought. We paid. And we were on to our next adventure in customer trust.

Enter the Vermont Country Store, a few miles from our previous stop. It is an emporium of the famous Vermont cheddar cheese, candies, dips, toys, clothes, robes, night shirts, and so on. You can taste your way through the store. It is really fun. So we paused at the candy department, a large section of everything from sugary junk to all the things you can’t resist. All kinds of stuff in large, open jars — possibly more than 100 of them — filled to the brim with gummy bears, malted milk balls, chocolate-covered coffee beans, cherry cordials, etc. There was no sign inviting you to taste the candies, but there were bags and scales — by implication an invitation to try and buy. There was no sales staff. The store was screaming out: “We trust you. Help yourself!” This is the honor system. The store was jammed with customers, and I found out it has been in business for years.

Trust is contagious. Trust is value. Trust is reputation.

Labels: , ,