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e, humans, hate being cheated. We hate being wronged. We hate being taken advantage of and exploited. At the same time, we can be forgiving under the right conditions. We look for the extended olive branches from others.
We at Apex believe that this is the human foundation of what it means for someone (or some brand) to be principled: accepting the wrong and making it right.
When someone wrongs us, we expect them to admit their mistake and make amends. It's the same with businesses and brands. If a company screws up, we have the same expectations: own up, regain my trust. The reason for this is that psychologically speaking, there's a great deal of overlap between how we relate to another person and how we relate to the 'entity' of a company or brand.
This is true, in fact, at the level of the brain. A theory referred to as "brands as intentional agents framework" confirms that people humanize brands all the time. As one team of consumer scientists describe in their research paper, "brands seem to be like me, are part of me, and are in a relationship with me." It's more than a mere metaphor. Even legally, corporations are considered people, too. They have certain rights and responsibilities.
On the responsibility side, businesses and brands have the moral, psychological, and legal obligation to the affected individuals to make things right when they've done something wrong (to us).
There's a great deal of overlap between how we relate to another person and how we relate to the 'entity' of a company or brand.
This is a reality that all Customer Experience (CX) professionals need to bring to their daily work. At all touchpoints in the customer journey, the individual will have these brand-humanizing beliefs, feelings, and thoughts. Accounting for this in any CX strategy is critical for brand and business success. Failing to account for this is a surefire way to lose customers, especially when they perceive your brand as having made a mistake.
Let's be clear on one thing: It hasn't always been the case that people expect so much out of brands. There are plenty of examples and stories of businesses misbehaving and getting away with it. Much of this can be traced back to the Industrial Revolution, taking hold after World War II, when the "downsize-and-distribute" regime of cost-cutting justified questionable managerial practices.
And with the rise of elitist management consulting firms like McKinsey and BCG, the name of the game for corporations was simple: deliver shareholder value above all else.
This governance philosophy has led to some pretty dodgy business practices over the years, contributing to employment instability, the culling of a middle class, income and structural inequality and a slew of other questionable ethics, all culminating in the 2008 housing market crash. In fact, the crash, at its root, has been considered a failure of the moral principles of corporate America.
But things are changing. The expectation that businesses and brands are principled in their ways is more relevant and top-of-mind than ever in today's marketplace and economy, where the conscious consumer has the power to enforce good actors. It's part of the fundamental story of the Customer Experience.
Our empowered customers demand that brands and businesses abide by a set of principles and that there are certain ethical standards outside of just "making money." A collection of shifting norms means that the pendulum has begun to swing the other way.
Case in point: "The Stengel 50". Based on ten years of research involving 50,000 brands, Millward Brown and Jim Stengel created a list of the world's 50 fastest-growing brands. The common denominator? All of these brands serve a higher purpose with evidence of principled business practices. Incredibly, if you were to invest in these companies - the Stengel 50 - you would have been 400% more profitable than a similar investment in the S&P 500.
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Then, just a couple of years ago, in 2019, 181 high-powered Fortune 500 business CEOs convened to announce the new Statement on the Purpose of a Corporation. Carrying with it the marks of a true paradigm shift: for the first time, brands today have to think intentionally and genuinely about being principled and doing good - for all.
The sea-change in the marketplace over the last few years is partly attributed to the new lens that CX provides. Before (real) CX, brands saw the customer journey from the brand's point of view. What was good for the brand was the motto. That is an error in perspective. Bona fide CX is about true customer-centricity: understanding and optimizing the relationship between customer and brand from the customer's point of view. That means understanding how they feel, what they think and believe, and why they make the decisions they do. Most importantly, it's about understanding the customer's desires and needs so that they can feel cared for and responded to. That's the first starting point of solid CX.
How can you let your principles guide you as a brand and business? Here are the three things you must continually consider in your CX strategy and work.
Truly understanding your brand's mistakes requires you to do something uncomfortable: confront your ignorance and admit your mistakes, then say sorry the right way.
Regardless of how much you may try to avoid it, it's inevitable - things will go wrong. That's okay. Your customers and employees don't require perfection from you but value an authentic desire to make things right when something goes wrong. The formula for doing so is simple: Reflect on where things went wrong, own the mistakes and work to repair them.
As brand and CX leaders, we put so much passion into our ideas that it can be hard to let them go if they aren't working out how we'd envisioned them. Don't let your customers suffer as a result.
What about apologies? Is there a right way to apologize? Definitely, but let's start with the wrong way to say sorry. The characters on "The Real Housewives" have perfected the feigned apology, saying something like "I'm sorry if your feelings were hurt." If customers perceive your apology as inauthentic or contrived (or a flat-out form of gaslighting), the apology will surely backfire. Plenty of bad examples exist where a company's stock prices fell after the apology was issued.
"Straight up, we made some mistakes," Whole Foods co-CEOs John Mackey and Walter Robb said in response to an overcharging scandal.
"We weren't prepared for the crisis, and we dropped the ball," said Airbnb CEO Brian Chesky in 2011 after a guest trashed a host's home.
"Straight up, we made some mistakes." - John Mackey and Walter Robb, former co-CEOs | Whole Foods
Most recently, however, it's been a string of corporate apologies for the massive layoffs in the tech industry and beyond. While these sorries are directed towards employees, don't doubt for a second that the nature of the apology won't impact a customer or user. We're all looking to these leaders to see how they handle the mess-up of their past decisions.
"I want to take accountability for these decisions … I know this is tough for everyone, and I'm especially sorry to those impacted", Marc Zuckerberg wrote in an open letter after firing 11,000 Meta employees. It was an OK letter, but it lacked an emotional tone.
Amazon botched their apology. Many people were notified by email about the layoffs without a face-to-face meeting with their line manager. Twitter did an even poorer job. Zoom did it right. In addition to the company memo where CEO Eric Yuan wrote, "I am accountable for these mistakes and the actions we take today," Yuan also said he would take a 98% pay cut for the year.
In a set of studies by psychologists Brinke of the UC Berkeley Haas School of Business and Adams of the London Business School, it was found that if a leader appeared more personally sad in the apology video, the company's stock price would increase afterwards. If the leader showed a lack of sadness or remorse, stock prices would plummet.
Make sure the sadness is real, however. We all remember the video of Vishal Garg, executive of mortgage firm Better.com, callously telling people over an impromptu Zoom call that they would be fired "effective immediately" and that the last time Garg had to do this, he cried "because it was so hard." That didn't go well for him and his company.
3. Act swiftly, and don't make it a pattern.
This part again embodies customer-centricity. The conscious consumer sees brands in a totally different light now. And the leaders in the market can differentiate themselves because they listen to the needs of their customers. Today, the customer is a discerning buyer with more power than ever before, and she will happily drop your brand if she catches any whiff of bad acting or dishonesty.
Take Uber, for example. From its horrible treatment of employees to its Orwellian data privacy malpractices, the rideshare giant has, on numerous occasions, had to deal with #deleteUber trends as they watched millions of users leave in favor of the more "decent and ethical Lyft".
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And as social creatures, we tend to jump aboard the moral bandwagons. So in the era of social media and influencer marketing where virtue signaling trumps any sign of customer loyalty, all it takes is a single screw-up for the Gen Zs of the world to collectively decide that your brand is morally bankrupt. And that can't be good for your quarterly earnings.
It becomes gasoline on the fire when one of the outspoken people who feel wronged is mega-famous, someone, for instance, like Taylor Swift.
Back in 2015, Swift announced a public boycott of Apple Music. She was miffed with the tech giant because of their one-month trial period: It would be free for the users, but artists wouldn't see their payment for any of their music that was played during the trial period. Apple brand loyalty is strong but doesn't hold a candle to the tens of millions of die-hard Swifties. Apple knew they were in trouble with the boycott.
Almost immediately, an unlikely person made an unlikely apology - and it worked. SVP of Internet Software and Services, Eddie Cue, went public to admit the brand's wrongdoing. He did it informally, but sincerely - on Twitter.
In two sentences, Apple righted their wrong. Not long after, Swift starred in an Apple commercial. The relationship was repaired between Swift, her tens of millions of fans, and Apple.
Brands must recognize the interconnected relationship between customers and brands and the expectation for principled behavior from businesses. Failing to do so can have detrimental effects on the brand's reputation and bottom line. Admitting mistakes and making things right can be the difference between losing a customer for life and creating a loyal brand advocate. As you move forward in your CX journey, keep in mind the power of principled business practices and make it a priority in your brand strategy.
