A moral obligation

Does a business have a moral obligation to its customers? When it comes to publicly traded companies the prevailing answer is no; the Company has an obligation only to its shareholders to maximize its value on their behalf. I beg to differ. Legalese aside, the formula is way too simple: no customers= no dividends or worse, no value and a worthless stock.

What about privately held firms? Who cares, ususally the same formula and the same results.

Enter JetBlue. In a December 2014 article in The New Yorker “Why airlines want to make you suffer” Tim Wu shares some very bad news from the beloved airline “In November, the airline, under new management, announced that it would follow United, Delta, and the other major carriers by cramming more seats into economy, shrinking legroom, and charging a range of new fees for things like bags and WiFi”. Big ouch.

What apparently precipitated the move was consistent Wall Street type assault “Wall Street analysts, however, accused JetBlue of being “overly brand-conscious and customer-focussed.”

So let’s get this straight: JetBlue has solved a serious and unmet need for those traveling by air - it turned an intolerable experience into a pleasant one, repeated even by those who were afraid to fly. In a very short period, JetBlue created an amazing brand loyalty; their customers literally dismissed the existence of any other airline. The JetBlue tribe was similar to Apple followers who will never consider switching to a Windows operating system.

The challenge, or the moral question is straightforward: if you lured me to buy from you based on a promise, which you delivered upon, is it ‘immoral’ for you to change that experience and cause me the type of discomfort that lead me to switch in the first place?

It is not as though JetBlue was not profitable. Even though it is consistently high performing greed, or Wall Street, is winning the battle of making money while being ordinary. What is even more disturbing is JetBlue’s big disconnect about their impending changes.

Check out this hilarious (well now it is) video with the new slogan of Flying it Forward; “it’s about putting you above all”. Sorry, no.

On the other side of this story are examples of true and transparent corporations who do feel a moral obligation to their customers. Take L.L Bean where the raging debate a while back was whether to eliminate their “guaranteed for life” policy. It was a short lived debate and it ended with something like “our customers expect this from us and it is our obligation to not change one of the main reasons they do business with us”.

Lifetime, no-questions-asked, returns are a lot costlier than shrinking legroom. They may pale in comparison to huge fee-generated bag or snack based revenues, but in my world, no amount of money is worth alienating or, more likely, losing a loyal customer.

Here’s the thing: loyal customers aren’t stupid. They know that you’re in business to make a profit. When you do well, your service and quality are consistent and may even improve. I want it to stay that way. It’s a quid pro quo; I will buy as long as you provide value and maintain a pleasant buying experience.

Yes, we have a moral obligation to our customers and if that obligation turns out to be less profitable, then it’s our problem to solve. Profit increases when expenses goes down and revenues go up. There is always room for improved efficiencies and expense reduction. When it comes to increased revenues, get creative. Give customers options to upgrade or buy additional services, without reducing the services that got them in the first place.

p.s. Thank you @annettefranz for the inspiration to write this blog.