January 11, 2010 7:33 pm : Comments 000
There is no retailer I admire or trust more than Nordstrom. My fervent loyalty stems from a favorable experience years ago when a menswear department manager voluntarily refunded the cost of a suit after I complained about premature wear. I had bought the suit a year earlier, didn’t have a receipt, and there was no record of my purchase in the computer. I was so impressed with the store’s sense of accountability, I felt compelled to buy two suits. I have pretty much shopped at Nordstrom exclusively ever since, and now carry the retailer’s loyalty program Visa card. Without question, the goodwill and repeat business generated by that refund far outweigh the latter’s actual dollar cost.
On the service and value front, Charles Schwab is quietly becoming the financial services industry’s closest equivalent to Nordstrom. But they’re not entirely there yet, and founder Charles Schwab would be wise to take a closer look at the customer service playbook of Blake Nordstrom, the CEO who runs the retailer that bears his surname. (While Schwab is no longer CEO, he remains chairman and apparently is active enough in the business to command more than $3 million in annual compensation).
Although I maintain some of my assets with Schwab, I readily admit that I am highly distrustful of the company. Allow me to explain the paradox.
My relationship with Schwab is currently limited to plain vanilla bank products where I’m certain I have virtually no risk (or at least the faith and backing of the U.S. government). I would never buy an investment product from the firm because, unlike what I’ve learned to expect from Nordstrom, I do not trust Charles Schwab to stand with integrity behind the products they push.
In the past few years, Schwab has unloaded some highly dubious products on its customers, including quasi money market funds called Schwab YieldPlus and long-term bonds known as auction rate securities. Schwab faces class actions suits relating to the sale of its money market funds and has been charged with Martin Act Fraud by New York Attorney General Andrew Cuomo for peddling the auction rate securities. (Important Disclosure: S&A represents an attorney who has a case against Schwab relating to Schwab YieldPlus. That said, the comments in this blog post represent my thoughts and observations and are mine alone).
My outrage and lack of confidence in Schwab is not simply that it sold the money market funds and auction rate securities, but rather its failure to do right by clients who allegedly were misled. While most of Schwab’s competitors have settled with regulators and reimbursed their clients for losses relating to auction rate securities, pass-the-buck Chuck is following the old-school Wall Street strategy of saying the clients were entirely to blame: “Roughly 90% of the clients who invested in (auction rate) securities came to Schwab asking us to locate and make available these investments for them,” Chares Schwab wrote in a Wall Street Journal op-ed last August, emphasizing his firm “never guaranteed individual success.”
While that may be true, customer service is not simply about written guarantees, Chuck. It’s also about ensuring your customers view you as trustworthy and reliable.
People shop at Nordstrom because they can do so with confidence. If something goes wrong with a purchased product, there’s little if any doubt that the store will do the right thing when you bring the defect to their attention.
In truth, when it comes down to the fundamental principles of effective brand management and customer service, it really doesn’t matter what you are selling. As Donald Porter of British Airways once aptly put it, “Customers don’t expect you to be perfect. They do expect you to fix things when they go wrong.”
So why didn’t Charles Schwab do the right thing with respect to making customers who essentially were sold defective products whole again? Perhaps the lawyers deemed doing so too great a legal risk.
While that stance may have a significant upside in the courtroom, it will not be without a significant downside cost elsewhere. By not stepping up as other firms have done (voluntarily or otherwise) to make allegedly misinformed product purchasers whole again, Charles Schwab will squander immeasurable current and potential client goodwill and badly undermine the impressive work of those responsible for creating Schwab’s Nordstrom-like experience.
In truly world-class organizations, the legal and marketing functions do not operate as separate silos, in good times or crisis, and a measured balance is routinely struck between their sometimes conflicting interests – and for good reason. After all, the only ones to ultimately benefit from letting Legal call all the shots are, well, the attorneys themselves.
Customers have talked, Chuck. Perhaps it is time you started listening.
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January 7, 2010 1:34 pm : Comments 000
Much has been written and speculated about the dire state of the mainstream media, both in terms of its financial condition and declining ethical standards. If you ask me, much of the current financial troubles can be attributed to industry leaders’ death grip on their widely held misperception that citizen bloggers can’t produce good content and that their own reporter’s work is vastly superior simply because they went to j-school.
An egregious example of this misplaced and often smug superiority was evident in this blanket statement made in a Wall Street Journal op-ed by Peter Kann, the former Dow Jones chairman who nearly drove that company to ruin:
“The Internet is not filling news vacuums either. There are hundreds upon hundreds of online sites and blogs that claim to provide news, but virtually none of them even pretend to pursue the traditional news role of newspapers, which is to invest in professional staffs dispersed around a community and across the country or the globe to cover, analyze, and only then comment on, events. Actually, all they do is comment.”
Yes, the Internet is indeed filled with wanna-be journalists and mischievous trolls who simply publish trite pablum or grossly reckless commentaries simply for the sake of getting noticed or causing a stir. But mainstream publications produce more than their share of irresponsible drivel as well, such as this “investigative” article published in the San Francisco Chronicle or this doozy published in the Orange County Register.
The American public clearly isn’t impressed with the content produced by mainstream media: According to a September Pew Research survey, just 29% of Americans say that news organizations generally get the facts straight, while 63% say that news stories are often inaccurate. But hey, even Pulitzer Prize-winning reporters like Kann apparently don’t have to let the facts get in the way of a good argument.
In truth, many of today’s bloggers are increasingly establishing themselves as authoritative sources of news and commentary in a variety of industries. Blogging is not a mere trend; its advent has proven to be a significant mile marker in the evolution of mass communication. Any organization that believes otherwise is deluding itself. Brett Snyder, who pens the “The Cranky Flier,” airline industry blog, best personifies the new breed of blogger who most threaten the survival of mainstream journalism.
I’ve closely followed Snyder’s work for the past two years. A former industry insider and self-professed “airline dork,” he is wise to the industry’s shenanigans and isn’t afraid to call them on it. Brett’s readers also are remarkably well-informed and civil in their comments on his observations. If you want to understand the airline business, “Cranky” is truly a must-read.
As for Kann’s dismissive claim that all bloggers do is comment, sometimes informed commentary is decidedly more valuable and insightful than the original “reporting” trumpeted by Kann. To wit, Snyder’s initial post regarding the crash of the Air France flight from Brazil stood in stark contrast to the speculative reporting of mainstream reporters. He derided the “million different theories” he had seen about what happened, cautioned readers that “none of the theories that keep being flung out there by the media seem to make sense on their own,” and forewarned that the true cause of the crash may never be known. By comparison, among the speculative stories published by the Wall Street Journal were this one, this one, and this one. More than six months later, we still do not know what really happened.
Unlike a lot of mainstream reporters, Snyder isn’t above admitting he might have been wrong, as he recently did in a post discussing Virgin America’s announcement that it posted an operating profit (as he put it himself, he’s “been a harsh skeptic of the viability of Virgin America since the beginning”). When is the last time you can recall a mainstream publication openly admitting without public pressure or the threat of a lawsuit that it may have gotten something wrong?
Snyder tells me that not one mainstream publication has ever approached him about a job. Given that he lives in suburban Los Angeles, which is heavily impacted by the airline industry, you might expect the Los Angeles Times or Orange County Register would be fighting to scoop him up, but therein lies the judgment of the leadership of mainstream publications. Hmm… is it any wonder the owner of the Orange County Register in September filed for Chapter 11 bankruptcy.
Blogging about airlines may be his passion but, like everyone else, Snyder needs to make ends meet. To that end, he recently launched Cranky Concierge, an airline planning and travel problem-solving service that I wholeheartedly endorse. Snyder recently figured out a way for me to fly business class from New York to San Francisco on my preferred flights for less than $250. Trust me: the guy knows his way around the system. And if anyone can solve your air travel dilemma, it’s him.
A tip of my hat to you, Cranky. Dork or not, it’s conscientious bloggers like you that should have the mainstream media now reaching for the overhead oxygen masks…
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January 6, 2010 1:42 pm : Comments 000
When I first joined The Detroit News after working for several years as a business reporter at major Canadian newspapers, I was completely taken aback by the comparably low level of editorial concern and legal oversight given to any of my highly critical stories about private individuals. As it was considerably easier to sue for libel in Canada, I had grown rather accustomed to my hard-hitting stories about business executives being subjected to Talmudic scrutiny by a bevy of seasoned editors and legal counselors. At The News, however, my investigative reports pretty much sailed through the copy desk as I had written them.
I suspect the unusually high number of ex-pat Canadians at major U.S. print and broadcast outlets probably has as much to do with the strong caliber of Canadian journalists’ rigorous training as it does with simple geography. Fear of being sued is a tremendous motivator to practice responsible and diligent journalism, and the extra miles Canadian reporters must often go to get their stories published undoubtedly helps ensure that media debacles such as the reckless maligning of innocent individuals like Richard Jewell and Dr. Steven Hatfill happen with a lot less frequency north of the border. Indeed, in Canada even former prime ministers can successfully sue for libel.
But that’s about to change – and not for the better. Sadly, the Supreme Court of Canada recently decided to dismantle some of the safeguards built into libel laws by allowing journalists to cite “responsible communication” as a defense in libel suits. The Court ruled that Canadian journalists can avoid liability if they were “diligent” when trying to verify the allegations. Under that standard, the reporters responsible for destroying the lives of Mr. Jewell and Dr. Hatfill couldn’t be held liable under Canadian law.
In theory, a vigorous and aggressive independent press is healthy for a functioning free society. I agree – in theory. Practice is another matter altogether. Truth be told, the mainstream American media has become a business controlled by profit-driven companies seeking to bolster their bottom lines and staffed by reporters focused more on promoting their brands than pursuing justice, revealing truth, and upholding the profession’s historic role as the Fourth Estate.
Oh, Canada….you’ve truly picked the wrong standard to benchmark.
New York Times reporter Alex Berenson is representative of the moral compass of journalists who remain in the profession: Having orchestrated a highly dubious scheme to gain access to court-sealed documents relating to the controversial antipsychotic drug Zyprexa, Mr. Berenson then balked about publishing a story when one of his cohorts insisted on making the documents widely available to serve the public good. Faced with a choice of serving the public interest or promoting their own, I sadly suspect most U.S. reporters would follow Berenson’s lead. (An outline of Berenson’s largely unknown antics can be found here and here.)
The Supreme Court of Canada should have taken a lesson from Parliament about knowing when to rebuff the prevailing wisdom of its neighbor. Years ago, Canada’s Parliament blocked four of the country’s five major Canadian banks from merging, showing remarkable responsibility and prescience by ignoring the dominant view in the U.S. at the time that “bigger is better” when it comes to financial institutions. Had those bank marriages been allowed, the merged institutions would likely have been badly crippled during the global economic collapse by their combined U.S. exposures. Instead, Canada’s banks remain among the healthiest and safest in the world.
Canada would be similarly wise to prevent the creation of a U.S. style press where the media can publish irresponsible and false stories with wanton abandon and without retribution. Regardless of your political leanings, it’s hard to argue that despite having the most liberal press freedoms in the world, the American public is any more enlightened than their brethren elsewhere in the Western world.
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