The Good, the Bad, and the Ugly in Communication – Corporate Reversals

What can we learn from Bank of America killing its debit card fee before it got off the ground, and the reversal of Netflix’s plan to split its mail-order DVDs and streaming video services? As a veteran of corporate communications, I can tell you that the policy changes were planned amid much corporate hand wringing — product planners saw them as a way to increase revenue, even though their public relations folks told them they should expect public outcry. Initially, the revenue cheerleaders won. Plans went forward, public announcements were made, customers threatened to leave, and a few weeks later, the result: two stunning reversals.
  Within weeks, each company realized it had made a huge error. Each had to change their plans, make a new announcement, and admit they had made a mistake by not understanding their customers.

What can we learn by these examples?

1. To counter the old adage, Not all PR is good PR. Customers’ grumbles turned to petitions, which generated media coverage that led to more negative exposure. Each company seemed greedy and desperate. Worse, it appeared that they did not understand or care about their customers. Ultimately, public pressure killed both of these programs, designed to boost company profits after the economics of banking and entertainment changed.

2. Customers, who can quickly communicate using social media, have a lot of power. What Middle Eastern dictators learned in the wake of the Arab Spring, corporate policy makers also will have to apply.

3. Effective communication is key when making a change. Both companies did a good job of telling customers about their new policies during the roll-out stage, and undoubtedly spent serious time and effort monitoring the public outcry, BUT….

4. Sometimes even effective communication will not create a desired outcome. Good communication cannot make up for bad policy. While effective communication will set straight an untold story and make sure each stakeholder understands a new policy, it cannot overcome an ill-conceived idea or corporate error.

Communication Outcome: Bad

Do you think Bank of America or Netflix should have done a better job communicating about their new policies, or that they should have better anticipated public outcry? I would love to hear your views. Learn more about me at www.margolin.com.