Holding Customers To Ransom

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What if the business that services your needs could hold you to ransom?

Think about that for a minute. There are many business firms that enjoy a monopoly in their particular industry or geography. Yes, we clamp down on the monopolistic practices of giants like Google and Microsoft, every now and then. But, for every Google, there are hundreds of thousands of businesses that operate as a monopoly, and go virtually undetected or unfazed by anti-trust settlements upheld by the European Union. And, by virtue of the disproportionate power they enjoy, they get away with things any other business would not dream of.

Let me take a hyperlocal example of a newspaper distributor. In most major cities in the India, the newspaper distribution is virtually a monopoly. Every little nook and corner of the city is carved up in such a manner that at most one newspaper agent “services” the region, free of any competition. On the face of it, most of these agents seem to belong to just a few communities, and seem to respect each other’s boundaries as if they are conforming to some unwritten law. And most of the time, the system works. You get your newspapers and magazines delivered as per your preference, each morning, at your doorstep. And the service comes to you at no extra cost – the distribution fee is built into the cost of the publication.

But, what happens when the service standards falter? What happens if you get the wrong stuff delivered each day? Or if your favorite morning daily is delivered to you after you’ve left home for work? Yes, you can call and complain to your agent, but if his processes are broken or his staff inept, or worse, he couldn’t care less – most customers have no recourse to switch to a better alternative. In short, if shoddy services are meted out to them, they will just have to stick with it, or go out of their way each day to buy a copy from the local news stand.

Take another example of your Accountant. Once again, I speak of this in the Indian context, where prevalent Tax laws are so convoluted and ever-changing that there are very real exit barriers involved. Your “accountant” – the one who maintains your books of account and helps you file your tax returns – is not only well-versed with the regulations, but also an expert in your peculiarities and how things work specifically for you. And he/she is a vital component of the system, ensuring compliance with the law and advising you on making prudent investments, as you go through various life stages and business maturity cycles.

But, what happens if there are missed deadlines and constant reminders involved (from you to your accountant, and not vice versa)? What happens if you discover that you could have saved more tax under current provisions, but you were not informed of it in time? If the service delivery is short of expectations in this department, most of us would simply grin and bear it, because it’s not that easy to change your accountant mid-stream. I should know, since I’ve successfully attempted it on more than one occasion!

Which brings me back to my original question. But, now that we’ve understood the context in more detail, let us try and examine the issue in a new light: What if it was your business that enjoyed such a disproportionate power as a monopoly, or operated in an industry with high exit barriers?

Would you use such an opportunity to improve or lower your service standards? Would you invest any more in automation or new technology than you absolutely needed to? Would you make it easier for your customers to reach you, or avoid dealing with the extra hassle and costs involved? Would you want to listen to your customers and respond to their needs, or ignore them knowing that most are in a helpless situation anyway?

I know that most of us are part of organizations and businesses that do not enjoy such monopolistic protections. But the questions I have raised apply equally to us. In fact, even more so, considering that most businesses operate in fiercely competitive environments, where the other guy (competition) may be willing to bend over backwards to take a larger share of the market from us.

Are we doing enough to keep our customers close, respond to their needs, set and meet service benchmarks and invest in a consistent, brand experience for them? And if not, what are we waiting for?

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