Are all customers worth it?

[bicker]

Legitimacy is often in the eye of the beholder.

Indeed, what kind of system can rely on the integration of complaints which is so heavily dependent on which employee receives the complaint?

Still, its true, its not easy. That's why responsive companies record and track them, looking for trends and spikes.

Yes, aggregation helps, except when the complaints are due to a coordinated action (a boycott by a small minority of customers, for example) or due to unfounded expectations (whereby the complaint is perhaps valid, but is a complaint against the advertising which led to the unfounded expectations, perhaps even against the manner in which independent agents, such as TAs, represent what is being offered).

As far as I know, no such tally sheet exists, most likely for two reasons. 1, it would be impossible to create, even for Disney, simply because of the sheer volume of decisions.

And that alone proves the point: There are so many decisions made that aren't considered poor enough by anyone to even warrant discussion, that the vast majority of decisions are likely to be sound and defensible as the best decision possible.

there were either a lot of sub-optimal decisions made, or at the very least some very important sub-optimal decisions made in strategic areas.

Or simply a lack of perfection. Expecting perfection is unreasonable.

In the long run, all else being equal, higher wages being given by a company in an area will attract better talent to that company, and higher wages in a geographic area will attract better talent to that area.

No. There is no evidence of that, and when it was tried, it didn't work. In many circumstances it does work that way. In some it doesn't. In some, all it does is raise expenses, that's it.

The only simple truth in the matter is that throwing up their hands and saying "Oh, well, I guess quality just has to slip." is a cop out.

No, that's not a truth. It's an opinion. Sometimes, that is the best approach to a problem like this. And there doesn't have to be any "throwing up" of hand, or anything like that. It could simply be the most sound decision based on the facts.

Even though guests hate the idea that that could be true.

 

[CasualObserver]

Okay, I've just got to jump in here.

Mr. Bicker,

And that alone proves the point: There are so many decisions made that aren't considered poor enough by anyone to even warrant discussion, that the vast majority of decisions are likely to be sound and defensible as the best decision possible.

The fact that there has been no discussion on a particular decision does not logically prove that that decision is the best decision possible. It only proves that no one discussed it. It does not logically follow that all undiscussed decisions are determined to be the best decision possible.

What I find interesting is the continued argument in support of management decisions by discounting the opposition as "amateurs" who have insufficient data to support their conclusions. There is never any data given in support of your alternative argument. It is simply reduced to an ad-hominum defense.

Please, tell me exactly what data was used in these decisions that you consistently support. Please, tell me how you were privy to the discussions that led up to the discussions. If you have no access to the mounds of data that was used to make the decision, nor were you privy to the discussions that led up to the decision, then please simply discuss the merits of the argument.

Your consistent fall back on the "you're an amatuer" argument has worn thin. You are as much an amateur as anyone else you are debating. If you discount their arguments because of their status, then your arguments are equally discounted because of your status.

How about arguing the point, rather than the status of the opponent? How about arguing the point, rather than the lack of access to internal data of the opponent? You like to debate. Step it up a notch and really debate the issue without the ad-hominum tactics.

Casual Observer

 

[bicker]

It does not logically follow that all undiscussed decisions are determined to be the best decision possible.

The issue in this thread is whether one decision is better than another. Specifically, whether charging a surchage for customers insisting on sticking with older technology cellular telephones is better than not charging the surcharge, from the company's standpoint. Furthermore, if logical progression was required here, then counter-assertions would be equally indefensible, since it does not logically follow that all decisions made by professional managers (taking advantage of great stores of normalized, data about customer preferences and behaviors) are bad.

What I find interesting is the continued argument in support of management decisions by discounting the opposition as "amateurs" who have insufficient data to support their conclusions.

It is very common for customers to narrowly see things from their own perspective, and to aggressively assert that anything that is bad for customers is bad for companies. It's not just a matter of amateurs versus professionals, but also a matter of vested interest: Customers have a vested interest in making the customer-focused perspective sound better than it is, while the professionals running a company have a vested interest, at least indirectly, in making the company successful.

There is never any data given in support of your alternative argument.

That's not true. Tens of thousands of companies succeed based on the superior decision-making made by their managers. There are thousands of case studies documenting this.

Your consistent fall back on the "you're an amatuer" argument has worn thin.

No. It has been relevant for over eight years (since I've been allowed to discuss my experiences with Peat Marwick), and will undoubtedly be relevant for another eight years. The fact that you have no effective counter-argument to the assertion that professional managers with data more effectively manage companies than amateurs doesn't render the argument "thin" -- quite the opposite.

You are as much an amateur as anyone else you are debating.

Actually, I'm not, but my experience isn't necessary to support the points I'm making.

How about arguing the point, rather than the status of the opponent?

I would really like to, but the assertion being made by "the opponent" is that the professional managers are not as competent as they are to make the best decisions for the company. They have held up their own decision-making as superior, so the only way to counter that assertion is to point out why the decision-making of professional managers is better.

 

[CasualObserver]

The issue in this thread is whether one decision is better than another. Specifically, whether charging a surchage for customers insisting on sticking with older technology cellular telephones is better than not charging the surcharge, from the company's standpoint. Furthermore, if logical progression was required here, then counter-assertions would be equally indefensible, since it does not logically follow that all decisions made by professional managers (taking advantage of great stores of normalized, data about customer preferences and behaviors) are bad.

I don't think anyone has said that all decisions are bad. Some people are coming to the conclusion that THIS decision was bad. You make the assumtion that professional managers use "great stores of normalized data..." which is an unproven fact. However, I happen to agree with the surcharge and have, in the past, fired customers who's goals did not correspond with the direction I wanted my business to grow.

It is very common for customers to narrowly see things from their own perspective, and to aggressively assert that anything that is bad for customers is bad for companies. It's not just a matter of amateurs versus professionals, but also a matter of vested interest: Customers have a vested interest in making the customer-focused perspective sound better than it is, while the professionals running a company have a vested interest, at least indirectly, in making the company successful.

There is a great deal of business case studies that support making decisions based on growing the customer base. Current American business trends are to make decisions based on the quarterly results. Japanese business tends to make decisions based on the next quarter century.

That's not true. Tens of thousands of companies succeed based on the superior decision-making made by their managers. There are thousands of case studies documenting this.

There are equally thousands of case studies where managers have made great mistakes.

No. It has been relevant for over eight years (since I've been allowed to discuss my experiences with Peat Marwick), and will undoubtedly be relevant for another eight years. The fact that you have no effective counter-argument to the assertion that professional managers with data more effectively manage companies than amateurs doesn't render the argument "thin" -- quite the opposite.

What has grown thin is the repetition of the ad-hominum arguement. Again, you are not arguing the point "Was it a good decision or not" you are arguing the status of the opponent :"You aren't qualified to judge".

I would really like to, but the assertion being made by "the opponent" is that the professional managers are not as competent as they are to make the best decisions for the company. They have held up their own decision-making as superior, so the only way to counter that assertion is to point out why the decision-making of professional managers is better.

No, you are mistaken. They are making the contention that a particular decision was a mistake whereas you are making the contention that the decision was not a mistake. The arguments for or against a decision are different for the arguments for or against a decision-maker. This is the ad-hominum tactic to which I was referring. You need to argue the point, not the status of your opponent.

From your body of posts, I can come to the conclusion that you take any negative analysis of a decision as an attack on the decision-maker. You have as much said so in your reply to me. One doesn't follow the other. Bright, informed people with all of the possible data and all of the best motives make bad decisions. Could you please give me an example of a recent decision either in business or in government with which you disagree? If you disagree with the decision, are you saying that you are in a better position to make a better decision?

Casual Observer

 

[bicker]

I don't think anyone has said that all decisions are bad. Some people are coming to the conclusion that THIS decision was bad.

Yet, provided no reason to believe that there was anything about this decision, specifically, that would lead one to believe that it, specifically, was bad, except for the fact that it seems bad to them on visceral level. Their assertion that it is bad is no different than my assertion that it isn't, and so let them say they feel it is a bad decision, and let me say I feel it is a good decision, and let's move on. Why refuse to agree to disagree?

You make the assumtion that professional managers use "great stores of normalized data..." which is an unproven fact.

I disagree. It's well-established in thousands of case studies, and anyone who has worked in or with any major company knows what kind of vast stores of normalized data these companies have. Great numbers of WDW guests know they've been survey, many times, in many ways. Great numbers of WDW guests know that Disney remembers how old their children are. And so on...

There is a great deal of business case studies that support making decisions based on growing the customer base.

The revelation in recent years, and the whole context of this discussion, is that arbitrarily pusuing a larger market share is no longer a smart strategy. Companies better serve their own long-term interests by prioritizing their use of capital so that they focus on the efforts that best contribute to long-term shareholder value.

We learned a similar lesson in the quality management realm in the late 1980s. Phil Crosby had been peddling this idea that "quality is free" -- that basically, even though we couldn't prove it, all investments in improving quality would pay-off in the long-run. This was embraced by a number of companies, including the first winner of the Malcolm Baldrige National Quality Award, Wallace Industries, which proceeded to go out of business a couple of years later because their quality improvements didn't provide a return on investment. Ever since then, companies have rightfully been very careful about wasting resources on unproven approaches, and required that significant expenses be demonstrably valuable.

Current American business trends are to make decisions based on the quarterly results. Japanese business tends to make decisions based on the next quarter century.

Not any more. Japan is becoming more like the United States. I'm not saying that's good. I believe a balance between long-term and short-term priorities is best.

There are equally thousands of case studies where managers have made great mistakes.

The difference is scale. There are orders of magnitude more successes than failures. Just imagine if more than half of major corporations failed each year. That's more like the way small business works, not major corporations like Disney and Cingular.

What has grown thin is the repetition of the ad-hominum arguement.

There is no ad-hominum argument. You can stop beating that dead horse.

 

[DisneyKidds]

......so the only way to counter that assertion is to point out why the decision-making of professional managers is better.

Hmmmm....I always found it made for much more interesting and productive discussion to talk about the alternative viewpoint being presented and why you do/do not think that the alternative presented has any merit. That is, indeed, another option for counter....instead we get 5 pages of tail-chasing that do nothing but give me a headache.

 

[bicker]

That was covered in the very first message:

For whatever reason, customers holding onto older-technology telephones happen to be the ones who actually cost the company more to service than they generate in revenue. Cingular clearly would be better off if these customers left, and indeed, from one (evil) perspective, would be doubly-better off if these customers went to their competitors.

 

[YoHo]

That's a misunderstanding of Cingular's position though, those customers aren't costing more then the revenue they provide. The profit margin is less is the issue.

Therefore, they actually would suffer if their customers went to a competitor.

 

[raidermatt]

The irony of this discussion is thicker than peanut butter. The OP believes none of the posters (including himself) are qualified to evaluate the decision. No arguments or even discussion points have merit because they do not come from the "experts".

Yet the only reason we are discussing the decision is because the OP posted it, with his evaluation that included unsubstantiated (to this point) data.

The difference is scale. There are orders of magnitude more successes than failures.

Data?

All we know is that the companies that stayed in business managed to stay in business. How many "failures" are required to drive a corporation out of business?

More relevant, how many sub-optimal decisions are required to drive a corporation out of business, and how far from optimal do they need to be?

Of course these are ridiculous questions because there can never be a correct answer. A single mistake can destroy a company, while a plethora of them can merely result in a disappointing stock price.

The reality continues to be that mistakes, defined as less than optimal decisions, happen day in, day out at companies. Some are made with the best of intentions, some are made because it was the convenient thing to do. Some are just made, well, becuase somebody made a mistake. Data is everywhere, but decision makers still struggle with how to use it, how to ensure it's integrity is maintained, and how to please the boss (its amazing how often that third factor conflicts with making optimal decisions in some companies).

Blindly accepting the decisions based on the source is an option that allows one to offer an evaluation on everything. Fortunately, most see through that arguement for what it is and instead try to make up their own mind.

Proper capital prioritization, and "quality is not free" are solid enough concepts, but they offer nothing of pracitical value in evaluating whether a company is making the optimal deicisons in that regard. All they say is you need to make the right decisions. They are not evidence that anyone did.

 

[DancingBear]

It is very common for customers to narrowly see things from their own perspective, and to aggressively assert that anything that is bad for customers is bad for companies.

This is another straw man argument. The bulk of the discussion in this thread has been by posters discussing business issues from the business perspective, not just as customers.

That's not true. Tens of thousands of companies succeed based on the superior decision-making made by their managers. There are thousands of case studies documenting this.

That wasn't the point. We're not talking about your general assertion that "professional managers with data make better decisions on the whole than amateurs without data." Let's just take that as a truism. What we're talking about is that you regularly make substantive assertions without data, so you should just stop with the "you have no data" statements. For example, you said:

"it might be better to live with the current labor market crunch, and its consequential modest depression of service quality, since the long-term consequences are comparatively small.

YOU have no data to support that the resulting depression of service quality is "modest," nor that the long-term consequences are "comparatively small." So just stop talking about others' lack of data.

 

[DancingBear]

Great numbers of WDW guests know they've been survey, many times, in many ways. Great numbers of WDW guests know that Disney remembers how old their children are. And so on...

But you must acknowledge; however, that (1) errors can occur in data collection (asking the wrong question in the wrong way, e.g., asking questions that steer toward the answer you want, (2) errors can occur in interpreting data to determine solutions, and (3) errors can occur in applying solutions.

For example, I'm sure that, as Disney asserted, there were surveys that said guests liked the idea of having characters visit the resorts, and there was data about guest usage of Early Entry; however, using that data as a reason to substitute the Character Caravan for Early Entry, and the implementation of the Character Caravan itself, were very flawed.

I suppose at the time we all could have said, "Now, the professional managers at Disney have the data and, on the whole, make better decisions than you customers do, so all you customers just shut up." But this is a Disney DISCUSSION board. Instead of trying to stifle discussion in that manner, its a lot more interesting to DISCUSS the business issues involved. I think (hope? wish?) that you, Bicker, may have something to say beyond just "you're amateurs without data, they're professionals with data, so you amateurs please stop."

 

[CasualObserver]

First, thanks for addressing the arguments directly.

The revelation in recent years, and the whole context of this discussion, is that arbitrarily pusuing a larger market share is no longer a smart strategy. Companies better serve their own long-term interests by prioritizing their use of capital so that they focus on the efforts that best contribute to long-term shareholder value.

We learned a similar lesson in the quality management realm in the late 1980s. Phil Crosby had been peddling this idea that "quality is free" -- that basically, even though we couldn't prove it, all investments in improving quality would pay-off in the long-run. This was embraced by a number of companies, including the first winner of the Malcolm Baldrige National Quality Award, Wallace Industries, which proceeded to go out of business a couple of years later because their quality improvements didn't provide a return on investment. Ever since then, companies have rightfully been very careful about wasting resources on unproven approaches, and required that significant expenses be demonstrably valuable.

Are you making the assertion that it is generally a better decision to reduce spending on quality issues?

It is very common for customers to narrowly see things from their own perspective, and to aggressively assert that anything that is bad for customers is bad for companies.

I would agree that this is true for some types of companies but is not true for all companies and is certainly not true for all customers. Disney is an example where it is not true (at least across the board). Disney relies on creating, for lack of a better word, a bond between the company and their customers. Children enjoy the entertainment and then grow up and then relive the experience with their own children. There are few businesses that experience that kind of brand loyalty to the extent that Disney does. I don't expect that parents are passing along their affection and great memories of watching Waste Management pull up to their curb and pick up the trash.

Companies make a mistake in shrinking their customer base to a point where, if they lose a few key customers, the business is in danger. Even Waste Management cannot afford to alienate their customers. Let us assume this hypothetical situation:
Waste Management comes to the realization that driving down the entire length of every street costs signifcantly more that identifying key intersections. They send an letter to their customers stating that trash will now only be picked up at the specified corners. If you want curbside pickup at your house, you will have to pay triple. While on paper it looks like a valid decision, backed by normalized data, it is doomed to failure because a competitor will come in behind them and offer better service. Then the sum total income for the intersection pickup points will drop erasing the cost savings. Now Waste Management will have to try and regain the lost customers.

It costs much, much less to sell to an existing customer than it does to gain a new customer and even more to regain a lost customer.

While I agree that Cingular cannot continue to support outdated technology. Rather than penalizing the customer and risk losing that customers future cash flow, Cingular might have held an enticing carrot in front of them to preserve the cash flow. Even if the carrot balanced out against the cash flow, they have denied that cash flow to their competitors.

Thoughts?

Casual Observer

 

[DisneyKidds]

....since I've been allowed to discuss my experiences with Peat Marwick

A true Peat Marwick man, or a KPMG guy of Peat Marwick lineage? What was your consulting specialty? I spent my consulting years with E&Y, in the government contracts arena......right around the time we almost merged with your alma mater.

Anywho.......in every discussion on the Disboards I try and keep things in the context of Disney, so it's hard to compare your Cingular example to Disney business practices. Much of Disney's business is based on quality and customer service reputation, along with top notch entertainment offerings. In that kind of a market I think it is tougher to alienate a segment of the market based on eliminating a lower margin slice of the pie. You never know what that lower margin slice is going to grow up to be.

On the Cingular front, I agree with what Yoho said earlier.....that long term it might have been better to carry a small segment of their customer base at a reduced margin until such time as those customers upgraded service, which would have happened eventually. Now all those customers will be upgrading service, at a more attractive margin to the provider, with somebody else. What works best in the short term isn't always the best long term solution.

 

[YoHo]

A true Peat Marwick man, or a KPMG guy of Peat Marwick lineage? What was your consulting specialty? I spent my consulting years with E&Y, in the government contracts arena......right around the time we almost merged with your alma mater.

Anywho.......in every discussion on the Disboards I try and keep things in the context of Disney, so it's hard to compare your Cingular example to Disney business practices. Much of Disney's business is based on quality and customer service reputation, along with top notch entertainment offerings. In that kind of a market I think it is tougher to alienate a segment of the market based on eliminating a lower margin slice of the pie. You never know what that lower margin slice is going to grow up to be.

On the Cingular front, I agree with what Yoho said earlier.....that long term it might have been better to carry a small segment of their customer base at a reduced margin until such time as those customers upgraded service, which would have happened eventually. Now all those customers will be upgrading service, at a more attractive margin to the provider, with somebody else. What works best in the short term isn't always the best long term solution.

Kidd's you just hit the key flaw in the original posts argument that I've been skirting around.

If the $5 charge alienates the custoemr to the point that person leaves to sign up with say Verizon, Verizon won't take that same old phone and reassign it, they will in fact sign that customer up for a brand new CDMA account with a brand new phone. So Cingular ISN'T creating a problem for it's competitor, it's simply turning it's low margin customers into it's competitor's high margin customers.