Hank Barnes

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Hank Barnes
Research Director
1 years at Gartner
25 years IT Industry

Hank Barnes provides research and advisory services on go-to-market strategies for technology providers. He focuses on issues related to product marketing, positioning and customer experience. Read Full Bio

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Trust Erosion – Destroying a Business Through Stupidity

by Hank Barnes  |  November 12, 2013  |  6 Comments

This post is a bit of a personal rant, but I think (and hope) the stories will be a strong reminder for any business.

I am a big hockey fan with full season tickets for the Carolina Hurricanes.   In the sports business, there are two groups that are critical to financial success (beyond having a good team–that always helps draw fans)–corporate sponsors and season ticket holders.  In a smaller market like Raleigh, treating these groups well is a necessity.   Lately the Hurricane organization has been screwing that up in a big way and their errors could  jeopardize the long term health of the franchise.

distrust

It is all boils down to trust.  And they are taking action that makes it hard to trust them. And I am not talking about Snowden-oriented data concerns, I’m talking about basics of customer care.  Here are a few examples:

1. One of the perks for season ticket holders is a food and beverage credit.  Order food at the arena, scan your card, and you are good to go.  The credit was introduced last year and is a great addition.  Except when the screw up.   A friend of mine ordered a sandwich and gave their card to the cashier.  She scanned it, but the receipt did not print.  So she scanned it again.  And again. And again.  The result–my friend got charged 4 times for one sandwich.

Here is where it gets worse.  She went to a manager and explained what happened.  She even had her receipt showing how the balance had dropped $36.  The manager, rather than trusting this key customer, said, “I need to research this.  You might have bought 4 things and are trying to cheat us.”

Amazing.  As another friend pointed out, the amount of time they spend researching it will cost more than immediately refunding the amount and trusting the customer.   Additionally, to explicitly say to a key customer, “I think you may be lying” is a satisfaction nightmare.

2.  In the past, another friend had received a jersey as a gift.  It was the wrong size.  They went to exchange it (and even showed their season ticket holder card), and were told “We had a bunch of jerseys stolen from our warehouse, so we won’t exchange any jerseys without a receipt.”  Almost like they were asking her to give them back the shirt she brought in.

Those are just two examples of many.  Now, for hardcore fans (like me), we put up with it, because we love the game and love that it is here in North Carolina and quite affordable.  There is not another option.

Additionally, the franchise has received a bit of a pass from fans, since the team won the Stanley Cup in 2006—an amazing experience for the team, the fans, and community.  But that effect is wearing off in the face of mediocre teams, under performing stars, and questionable management decisions.  It is times like these when treating your core base well is critical.

The two examples above are customer services issues, but they have another area that is frustrating season ticket holders.  The worst thing a sports team can have is a lot of empty seats at games.  Empty seats mean no parking or concessions revenue.  When the team is not performing well, it is hard to draw the casual fan.  In a smaller market like Carolina, it is even worse.

So what does the team do?  They offer deep discounts on tickets.  In many cases, those discounts make tickets cheaper than what season ticket holders pay for the exact same seats (part of the benefit of a season ticket package is a lower price per game).   This is a huge dilemma and not easily solved.  But many people have dropped their tickets, because they have determined they can buy tickets using these “specials” for less than their season ticket cost.   As stories of lousy customer service mount, the allure of a cheaper option grows.   And a declining season ticket holder base is a huge concern.

What can they do?  (And what could your business do with similar issues)?

Well, first, they could check out a couple of books by my friend, Stan Phelps, that have crowd sourced examples of great customer service, word of mouth marketing,  and employee motivation.    The examples might help inspire them.

Second, they could train their employees in a similar way to Nordstrom:  ”Nordstrom Rules: Rule #1: Use best judgment in all situations. There will be no additional rules.”  Now this might be too drastic a change given the organizational culture, but they could, at a minimum, apply this to season ticket holders: “Our season ticket holders are our most important customers–treat them with respect and trust them–then do what’s right.”

The ticket problem is more challenging, but they need to get creative and find ways to fill the seats without alienating their core customers (the food and beverage credit is one perk–there are others, but most of them are either tired–same programs that people have been offered year after year–or limited value (playoff priority doesn’t matter if you don’t make the playoffs or implemented poorly)).  It could be a price guarantee.  It could be incentives if a season ticket holder introduces a new fan to the team and they buy their own package (hooray for customer advocacy).  It could even be something akin to playoff priority.  Offer season ticket holders their playoff tickets at the same price as regular season tickets.  Let the casual or bandwagon jumping fan pay the higher priced fees for this valued items (playoff tickets are never discounted).

But it all boils down to trust.  Can they get their fans to trust the business and do they trust their fans?

The problem of trust is a huge one for every business.   Buyers don’t trust sellers–looking to peers and third parties for validation–and it is because of situations like this—where companies display an attitude of “us first” v. “customer first.”  The Edelman Trust Barometer tracks the level of trust in key institutions, industries, and leaders.  The results are telling–trust is many key sectors is very low.

To rebuild trust requires openness, improved service approaches, and a collaborative approach to engaging with customers.   Increasing the level of trust that buyers have in your business will pay huge dividends and I’d be shocked if the ROI on trust improvement is not through the roof.

Do you trust your customers?  Do your actions make them not trust you?  What can you learn from your own practices and those around you to change how you approach things in your business to build, rather than erode business?

 

 

6 Comments »

Category: Go to Market     Tags: ,

6 responses so far ↓

  • 1 Bob B.   November 13, 2013 at 1:02 am

    You are definitely right on this. I’ve been a STH since before we won the Cup. Every year, I stick with the team as I love my hockey and like you said, I’m thrilled to have the sport I love in NC. But, each year, the benefits of keeping my seat shrinks a little more. The one year I skipped, I was able to come to nearly every game for far lower than STH prices and didn’t miss any benefits (except moving to a lower priority for select a seat). Big deal. I see rising expenses of concessions and parking on top of customer service issues as starting to alienate fans as well. Sorry but $15 to park is crazy and I have already heard rumors of parking going to $20 next season. Top that off with a single large beer being $9 and up…who can afford a night out? How about giving STH fans free parking? That’s a sizeable savings and encourages fans to sign on. Just a thought…

  • 2 Hank Barnes   November 13, 2013 at 3:05 am

    Thanks Bob, I agree that some of the changes are particularly hard to take. But it really is the inconsistent customer experience that gets people talking. That experience includes the on-ice product, customer service, concessions, parking, etc. There are some great people within the organization (e.g. Doug Warf, VP of Marketing, reached out to me after this post and we are talking in the next few days), but there are others without the same level of passion and customer care. And it shows in everything they do.

    While my rant was about issues with the way the Hurricanes do things, it really is a lesson for any business. Customer Experience always matters and when some things are not going great, you need to step up in other areas to make up the difference.

  • 3 Hans Willems   November 13, 2013 at 10:02 am

    This is a remarkable story but unfortunately also very familiar. Sport is and should be one gigantic experience but somehow it doesn’t work out like that. I have heard all the stories about Disney and how they handle the experience. It probably needs a mind shift, a clear strategy and real execution to make a difference. In Europe I have seen one soccer team who is doing a great job. European Championship team Ajax has a fan engagement strategy based on the experience and interaction with each single individual. They can fine grain and tune experiences on individual levels to improve and optimize fan engagement. The results? Ajax has an extremely strong fan base and is profitable and financially very healthy compared to bigger names like FC Barcelona, Real Madrid or Milan. And yes, I truly like to watch soccer but I am not an Ajax fan.

  • 4 The Cult of Customer Loyalty and How Tech Companies Can Harness It   November 13, 2013 at 4:07 pm

    [...] We’ll continue to write about customer experience, loyalty and marketing this year and next. In the meantime, take a look at Hank’s corollary to this post on destroying customer loyalty through stupidity. [...]

  • 5 Ian Zafra   November 19, 2013 at 1:43 pm

    Hey Hank! Great post on trust and how lack of it can destroy a business. I personally believe that trust is one of the basic cornerstones of any successful relationship so if businesses want to retain their clientele, it’s important that they never break that trust that was given to them.

  • 6 Adjusting Your Marketing Campaigns When Your Customers Don’t Like You   December 10, 2013 at 7:28 pm

    [...] use this blog for personal rants, especially about things in the sports world. But Hank Barnes opened up this can of worms a few weeks ago and I decided to go with it. I live in Denver, Colorado. I grew up watching [...]