What Big Business can learn from Small Business

November 5, 2009, 12:00 am by Donna Brond Yahoo!7

Telstra has backed down on its surcharge for over the counter bill payments, but is the gesture enough to appease cynical consumers? Donna Brond explains.

Sometimes, being a consumer is tough. We're at the mercy of big companies, which pretty much hold a monopoly on where we buy our fuel and groceries, and how much we pay for our utilities. Even when you take the time to compare prices, you often find that there is little difference between the prices offered by different companies, usually because of the lack of competition. If prices go up, we're usually stuck with it.

However, today, Telstra announced that they were backing down on the $2.20 fee that they introduced in September, which punished customers for making payments either over the counter, or by mail. This 'administration' fee, which was apparently to cover the costs of Telstra processing payments for their already pricey services, squeezed yet more money out of some of Australia's most vulnerable consumers, and, most noticeably, made them angry. And when you make people angry, they tend to shop elsewhere.

Baby steps to better service

Telstra has had a public image problem for years. They have developed a reputation for poor customer service, which may or may not be deserved, but will undoubtedly take years to repair. Their market advantage in being Australia's most high profile Telco has been slowly eroded by bad press. Introducing the 'administration' fee was not a wise move. Nothing makes consumers more annoyed than slugging them more for service they are already not happy with. However, while I am encouraged by their move to axe the fee, the cynic in me isn't expecting an overnight change in customer service. Nevertheless, I am hoping for some improvement. It would make a nice change in dinner party conversation, and current affairs programmes would be able to devote more time to stories about spray tans, crazy neighbors, and dole bludgers.

Just about everyone I know has had a consumer horror story. I had one once. I had just lost five kilos, and, still wearing my frumpy 'fat' clothes, had decided to go shopping with my mother. When I went up to the counter for a price check at a department store, the customer service assistant, who was old enough to be my mother's Grade 7 PE teacher, said "Don't worry, love. You can't afford it." I was so stunned by this man's rudeness that I walked out of the store, never to return, and have since regaled people with that story at every opportunity. It doesn't matter how many catalogues this business delivers around town. I make sure people know that I am not happy with their service.

Customer service is the backbone of a small business. A small business relies on it to get a reputation in the local area. My father ran a small business for decades, delivering fruit and vegetables, which relied on word of mouth advertising, low prices, and service to people's doors. It worked. He never advertised in the paper to let customers know that his produce was available. People just rang to find out. They placed an order, and when my father took the truck to town, they got their delivery. It took years to develop that customer base, but once it was established, it created its own momentum. As some customers moved away, other customers filled their place. People came back because they were happy with the product, and it was not overpriced. There were no frivolous surcharges or fees. People just got what they paid for.

Good customers make good advertising

When people are happy with a product or service, they are willing to pay more for it. What's more, good customers make good advertising. I am quite happy to recommend a service or a product I genuinely like to people I know. Word of mouth advertising is what got me my accountant, my solicitor, and my plumber. I live in a small town, and people in small towns tend to know everyone else. Word of mouth advertising is very valuable when it's positive. However, once a business or a product gets a bad reputation, the mud is quite hard to clean off. Successful small businesses know how valuable customer service is to their public persona. However, some of Australia's larger companies seem to have forgotten this, to their detriment.

Remember James Hardie? James Hardie was a huge, powerful company. They made products people needed at a price people could afford. People liked them. Then, the public found out that their employees had been exposed to asbestos in their products, and it was now leading to mesothelioma, a deadly cancer. Public opinion of the company tanked. Last week it was revealed that James Hardie's compensation fund was in shaky financial territory. I mentioned jokingly to my sister that James Hardie shares were cheap and suggested that I should buy some. She told me not to confuse her, as she was supposed to be the evil twin. Despite its efforts to compensate victims, James Hardie has become a dirty word. It might take fifty years to improve their reputation. The public has a long memory.

No pain, no gain

In more heartening news, Telstra has also announced that they will be making it easier to make a complaint by having one email address and one phone number for customers to address their concerns to. This is a gutsy move on the part of Telstra, because in making it easier to complain, they will probably receive more complaints. However, such criticism will hopefully help them improve their performance, which will be a nice change for shareholders and the public at large, and will be a good move for the long term economic health of Telstra. No pain, no gain.

So, good luck to Telstra. I'm sure most of Australia will be watching closely in the next twelve months to see if they can capitalize on their decision.

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