Question: how do MBA courses teach their students to handle Goodwill? And specifically, customer goodwill?
I was prompted to wonder about this last Friday when, due to an ill-advised sequence of use, my Visa card was frozen. (A three-digit purchase from a German online store followed immediately by an attempt to re-up my car insurance apparently caused the bank's mainframe to flag my card as stolen or something.) Unfreezing the card was a simple but annoyingly long-drawn-out sequence, involving fifteen minutes on the phone, an interminable voice menu tree, and then a call centre where they speak English with a non-British accent.
Call-centre outsourcing is of course one of those familiar nuisances of modern life, as is the voice mail menu system from hell. We're familiar with the justifications for it: Indian call centre workers are cheap, voice mail menus save money (robots are cheaper than humans) and so on and so forth. But we're also familiar with tales of family and friends reduced to incoherent piles of quivering rage by failed interactions with systems that don't work and people who are unable to communicate (because there's more to effective communication than simply sharing a language). What do the corporations who go in for these systems think they're achieving, if the cost savings are counterbalanced by loss of customer goodwill ... and an eventual loss of custom as the terminally pissed-off turn elsewhere? (There's at least one major bank in the UK that makes a selling point of not having call centres, but putting calls made during office hours through to the account holder's local branch office. The way it used to be, in other words.)
Here's a secondary loss of goodwill scenario: I am informed that the menu at Cheesecake Factory — a chain of American diners — now carries advertising. Not advertising for the restaurant chain in question, or their schwag, but advertising for designer jeans and other random products. I can almost see the marketing conference in my imagination, the guy in the boardroom saying, "hey, we've got a captive audience for the fifteen minutes between them placing the order and getting their meal — how can we monetize this?"
Well, the answer is that you can monetize it right up until the moment you piss off the customers, at which point they stop being a captive market and become someone else's market instead. Some people find advertising annoying, and piggybacking ads on a restaurant menu is a new level of intrusion into what was formerly a social space: it won't piss most people off enough to walk out the first time they see it, but it may deter some fraction of them from coming back.
But here's the rub. Goodwill is only significant in iterated small-scale transactions. Retail stores live or die by it: consider the damage John Mackey did to Whole Foods Market's brand by using it as a springboard for a controversial political intervention on healthcare; or if that's too ambiguous, how a single misplaced sentence by Gerald Ratner wiped £500M off his company's market cap. Consumers notice when a retailer starts taking the piss, and they don't like it. From a different angle: Circuit City's suicide by downsizing. They fired their highest-paid retail staff and replaced them with entry level employees, to save costs, not realizing that the highest paid staff were highly paid precisely because they were the ones who generated the lion's share of sales.
On the other hand, customer goodwill counts for zip when (a) there are no repeat transactions, or (b) the price is so steep that the customer needs accountants and lawyers to ride herd on the stack of zeroes. Estate agents don't need to worry about goodwill as much as, say, a grocer, because most folks don't do repeat business with them on a weekly basis. And Boeing or Lockheed or BAe Systems don't worry about goodwill when tendering for multi-billion military procurement contracts because governments don't run on goodwill, they run on oversight and accounting. (This glibly tap-dances around some more questionable issues — wining and dining key committee members, for example — but at that point, cultivating goodwill begins to fade into bribery and corrupt practices.)
Anyway, back to the original question: how do MBA courses treat goodwill? Because it seems to me that many of the annoyances of everyday life (outsourced call centres, intrusive ads in inappropriate places, and so on) spring from a fundamental failure to understand the importance of goodwill in businesses that live or die by repeat custom. Patterns of customer interaction that are appropriate to large enterprises are a very poor fit for daily life, but that's what seems to be filtering down from above. And I'm wondering how much of the stress of contemporary life is the result of this — of the routine imposition of management practices that damage goodwill.
