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Are small companies better at delivering great customer experience than big companies?

It is our view that small beats large most of the time. As always with generalisations there will be some exceptions. The problem large companies face is they de-personalise their customers. Demanding customers can be a nuisance for any company but in a large one it is possible to forget that they pay our salaries. If customers go elsewhere, they take their much valued currency and they may harbour a grudge which they find hard to forget.

Hague senior met his wife-to-be before going to university. They were engaged while he studied and his fiancee worked as a window dresser. This very enjoyable occupation paid a pittance but there was always something left over to put aside for the day they would be married. As both came from Yorkshire, the spirit of saving was in their DNA. An account was opened with the Halifax Building Society and for three years a small sum of money was deposited weekly.

After graduation, the couple married and moved to Manchester where Hague senior took a position as a market researcher with Dunlop Rubber Company. It enabled the couple to increase their weekly savings at the Halifax.

Accommodation in the first couple of years of marriage was in a rented apartment. After a number of promotions for Hague senior it was time to buy their own property. Naturally they turned to the Halifax that had received their regular savings over the last six years. Their request for a mortgage was turned down. Fortunately for them the Leek and Westbourne Building Society was happy to provide the mortgage and the couple bought a property. The year was 1971.

Hague senior has not forgotten the bitterness he felt from being turned away by the Halifax. It was a crucial part of their lives and the memories were seared deep. There seemed no logic for the rebuttal. They had saved regularly and for a long time with the company, income had increased significantly and promised to continue to rise. It was as if their regular saving with the company counted for nothing. Their now strong financial circumstances, sufficient to convince the Leek and Westbourne, had been dismissed without discussion by the Halifax. The pain they suffered was never understood or realised by the Halifax. To them they were just a number whose scorecard wasn’t good enough for them to be trusted as borrowers. The Hagues vowed never to do business with the Halifax again.

The coronavirus has brought to the surface many such stories of poor customer experience from large companies. The other morning, a news item reported on the difficulty travellers were having in obtaining refunds for their airline tickets. A customer recounted problems with British Airways. BA said that refunds for tickets required customers to phone in. However, the phones were answered by a recorded message which eventually dropped the caller. It seemed to the caller that this was a device to dissuade people from seeking their legal entitlement of a refund. What would that caller feel about British Airways in these circumstances? The pain caused by the financial loss and the frustration in seeking a refund would almost certainly create a “Halifax situation”. There is no doubt that British Airways is facing financial problems. So is the customer and as it happens, the customer has legal rights to a refund.

We reported in an earlier blog that British Airways claims that customer experience is really important. So important in fact that 15% of their CEO's annual bonus is based on the company’s Net Promoter Score. We said at the time that a good test of real customer commitment is staying loyal to customers whatever the problems faced by the company. However, customer experience isn’t BA’s forte and a good test, as always, is what a company does in times of crisis. It appears that BA is not prepared to live up to its promise of putting the customer first.

Small companies don’t think of customers as numbers; they know their faces; they know their names. Whereas it is really difficult to find a slot for deliveries by one of the large grocery groups, small companies are bending over backwards to fill the gap. Cafes that can no longer open their doors to customers are turning to home deliveries. Local butchers and greengrocers are taking orders that are delivered the same or next day. Payment is often by card after the delivery has been made. Many of these small businesses will retain customers in the future who had previously bought their meat, vegetables and milk from larger supermarkets.

Yes, in our view small beats large most of the time.

1 Comment

May 05, 2020

Many decades ago the Masterpiece Theatre Host and NYTimes columnist Russell Baker wrote a column entitled, "If this is a service economy, where is the service?" Things have only gotten worse since then.

Much of what you describe is a seemingly inevitable result of scale--a huge enterprise can't possibly "know" its customers the way a small one can. De-personalization accompanies growth, as individuals become "accounts," whose treatment may be determined by in which segment one of our segmentation schemes as placed them.

A parallel can be found internally as companies grow. A company founder knows all his/her employees and their situations. As the enterprise grows, a more rigid hierarchy needs to be established, a professional HR person is hired, metrics…

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