Franke: The Customer Is Always Right, but Which One?

July 11, 2018

by Mark Franke

I took a class on business policy during my undergraduate days, back when Richard Nixon was still in his first term. My professor emphasized this key to business success: Serve the public.

The point was that your business must always think about your customers’ needs and wants, and to use that as your starting point in making product or service decisions. He was right, of course, but things aren’t quite so simple any more.

Hardly a week goes by without some consumer boycott being announced, typically by a politically motivated group. Walmart, the largest retailer in the universe, has been hit with demands from the left to stop selling guns and from the right to stop selling “Impeach Trump” t-shirts through its on-line marketplace.

Can all these customers be right at the same time? If so, do you end up selling nothing? Three articles in a recent Wall Street Journal illustrate what American businesses are facing in our increasingly polarized society.

A front-page article focused on Walmart’s attempt to be more open and public in its political stance while making it vividly clear that this leaves a giant Gordian Knot to be cut by management. The company knows that its marketing strength is with low- to mid-income customers outside urban areas rooted deep in Red State country.

Walmart’s board room debate is no doubt focused on how much the retailer can give in to politically motivated activists without losing significant support among its customer base. Both courage and wisdom are needed.

At the other extreme — and I mean really extreme — is a small feminist bookstore called In Other Words in Portland, definitely Blue State territory. A customer was welcome provided she (I assume not many he’s were patrons) abided by seven guidelines including one acknowledging the evil of cishetero patriarchy, whatever that means.

Even in ultra-liberal Portland, one can see the potential train wreck in this business model. Sure enough, In Other Words is now closed due to lack of business. The owners do not believe the fault lies with themselves, as Cassius counsels fellow-conspirator Brutus in “The Tragedy of Julius Caesar,” but according to their public pronouncements prefer to blame the Shakespearean “stars” of patriarchy, white supremacy and capitalism.

The third article was a book review of “Barrel-Aged Stout and Selling Out” by Josh Noel, an account of the rise of Goose Island Brewery in Chicago. Goose Island began small and developed a following in the Chicago area but soon outgrew its production capacity. To raise the capital they needed, its owners sold first a minority share and then the rest of its stock to the Evil Empire itself, Anheuser-Busch.

Craft beer purists took umbrage, something that is rapidly becoming our national pastime. The beer didn’t change, just the marketing power brought by its new corporate parent. No matter.

Now, I like craft beers as much as the next person but, being one of the great unwashed, I don’t really care who owns stock in the brewery. No doubt Goose Island lost some of its long-time customers and even suffered a backlash of “shock, anger and betrayal” emotions from its employees when it announced the sale.

At least this story ends with good news. Goose Island’s sales continue to grow rewarding management for making a difficult but correct decision.

These three articles were all on different pages and only thematically related after-the-fact. Taken together, they may lead one down the rabbit hole of never-ending reactionary policy changes. Each decision in reaction to short-lived publicity may just bring on more of the same with an end result of losing focus on what made you successful in the first place.

If I may add a corollary to my old professor’s adage it would be this: Serve the public, but know which subset of the public you can realistically and profitably serve in the long run.

Mark Franke, an adjunct scholar of the Indiana Policy Review, is formerly an associate vice chancellor at Indiana University-Purdue University Fort Wayne.


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