What is a customer iceberg? Simply put, every dissatisfied customer turns into a customer iceberg. The more unhappy he is, the more dangerous a customer iceberg he turns into. Customer icebergs are a manifestation of the insensitivity of the business world, which they could very well do without unlike the icebergs whose formation we have no control on. So let us get acquainted with the customer icebergs? I urge you to pay attention because the success of your business or your career may depend on your in-depth understanding of how customer icebergs are formed, what damage they can cause to your business as well as how you can avoid their formation.
How do customer icebergs form?
Customer icebergs are as old as the business world. Every time a company makes a customer unhappy, a customer iceberg is formed. Large customer icebergs are formed when the customer is very unhappy and angry while smaller icebergs are formed when the customer is mildly unhappy.
Sometimes customer icebergs are formed instantly. For instance, a customer is so unhappy about how he has been ill-treated by an organization that he immediately leaves the company to turn into a customer iceberg. In other instances, a customer may get disappointed after a series of bitter experiences which the customer has had with the company over a period of time. Ultimately, the customer throws in his towel and leaves with hatred towards the company.
We do not live in a perfect world in which there are perfect products and services. Also, however good the product or service may be, there will always be customers who are unhappy about something or the other. As such, customer complaints will always be there. In a perfect world, even if one were to complain, the same would be attended to immediately and resolved amicably. No customer icebergs would be created. But we all know that we do not live in a perfect world. In our world, even though a genuine complaint is made, chances are that in majority of the cases it will not be treated properly. In fact, chances are that it might be ignored completely. Though, in a minority of cases the complaint may be resolved to the satisfaction of the customer, more often than not, the complaint is either ignored entirely or handled in a way that is simply not satisfactory.
It is when complaints are not handled effectively and in a timely manner that customer icebergs are formed. Every dissatisfied customer turns into a customer iceberg. Depending upon a number of factors, some of these customer icebergs turn into large and more dangerous customer icebergs. For instance, some of the dissatisfied customers may take their complaints into the public domain by spending ample time and effort as well as loosening their purse strings. They do this by releasing advertisements or opening websites to hurt the companies where it would hurt them the most, their bottomline. A few even drag the companies to court. Broadway producer David Merrick ran a series of advertisements attacking Chrysler when he couldn’t get his car repaired properly. Californian Jeremy Dorosin spent thousands of dollars out of his pocket buying advertisements in the Wall Street Journal, narrating his tale of woes with Starbucks Coffee to practically everyone in the U.S. He even invited other dissatisfied customers to get in touch with him.
The customer iceberg formation is increasing day by day. People from all walks of life are saying that they will not put up with inferior products and lousy service. The situation has become so serious that dissatisfied customers are turning aggressive with the intention to wreck havoc on the defaulting companies. With cost effective methods available to channelize their discontent, customer icebergs are now breathing down the neck of companies that ill-treat them. Some are even calling it the era of “consumer terrorism.”
Padmanabhan, Dr. Trivedi, Michael McConnell, Citizens of Delhi, Zhao Lun and Jeremy Dorosin (their stories are discussed in this site) have shown the unhappy, ill-treated and helpless customers the existence of an alternative to resignation and despair. The alternative is fighting for your rights. Dissatisfied, disgruntled and unhappy customers now have the weapons and ammunition to fight their battles with the corporate world which has so far thrived with impunity at the expense of its customers. The weapons include telephone calls, letters, hate websites and airing of complaints on mushrooming complaint sites designed for no other reason but to take revenge. So dissatisfied customers are taking aim and firing with one or more of the weapons that they have at their disposal. More and more dissatisfied customers are turning into not just customer icebergs but into the more dangerous variety, the monster customer icebergs.
The form, size and the rate at which customer icebergs are generated is governed by the following:
(a) Attitude of the company as well as that of its employees towards its customer.
(b) Whether the management and employees of the company are BELIEVERS or not?
(c) The quality of its products and services. (d) The efficiency of the company’s service recovery system.
Types of customer icebergs
The different types of customer icebergs are as follows:
-Silent customer icebergs
Silent customer icebergs are those unhappy customers who do not complain about their unhappiness to the company. They feel that complaining will serve no purpose. This is the most common type of customer iceberg. Research shows that for every unhappy customer who complains, there are 23 others who do not complain. However, do not for even a moment think that the silent customer iceberg is harmless. In fact, they are very dangerous as you will learn in chapters ahead. In their case, even the visible part of the customer iceberg, that is, warranty cost is also not visible because they just don’t complain. They are the most uncanny. The worst part is that they strike without you even knowing about it. They just give their business away to your competitors without you even getting to know about it. In fact, silent customer icebergs are invisible to the company that creates them. Even the actions that silent customer icebergs take to harm the company by bad-mouthing them to others is also invisible to the erring company.
-Casual vocal customer icebergs
This type of customer icebergs are the ones who complain either orally or in writing to the erring company but they are not aggressive in nature. They complain just once but they do not pursue their complaint aggressively. Very innocuous at this stage but further ill treatment may land them in the territory of monster customer icebergs.
These customer icebergs are visible to the company initially. The casual vocal customer iceberg becomes invisible after they stop pursuing their grievance. The actions that they take to harm the company by bad-mouthing them to others is invisible to the defaulting company.
-Aggressive vocal customer icebergs
This type of customer iceberg not only complains but pursues it vigorously to its logical conclusion, that is, justice. When they do not get justice, they keep escalating the issue to higher levels, even to the CEO of the company. This type of customer iceberg is visible to the company. The actions that they take to harm the company by bad-mouthing them to others is also invisible to the defaulting company.
-Monster customer icebergs
Monster customer icebergs are few but they are very dangerous. They are initially unhappy with the company and are just looking for value for their money. But it so turns out that the experience they have with the company in getting the problem resolved or to get justice leaves them with such a bad taste that they start baying for the blood of the company. In other words, they won’t settle for anything less than revenge. Monster customer icebergs take action that will ultimately cause serious damage to the company’s reputation plummeting down its sales and profits big-time. This type of customer iceberg is more dangerous as they dismantle the goodwill you have enjoyed till now beyond the stage of resurrection. The monster customer icebergs are visible to the company. Their actions to harm the defaulting company are also visible to the company. These customer icebergs take their fight to the public domain.
A customer with deep pockets who feels that he has not been treated fairly is a prime candidate to turn into a monster customer iceberg. Some action or inaction by the erring company can set the trigger for aggressive and hostile retaliation by the customer iceberg.
Life-cycle of a customer iceberg
There is very little that separates one type of customer iceberg from another. A customer iceberg could be of the silent variety but one horrifying experience can turn him into an aggressive vocal customer iceberg or even a monster customer iceberg. A monster customer iceberg can start by being just a casual vocal customer iceberg. One bad interaction with the company sets the trigger and he turns into an aggressive vocal customer iceberg before finally turning into a monster customer iceberg. If such a change takes place in a customer then the company at fault has no option but to just pray.
Number of customer icebergs
The number of customer icebergs formed are greater than regular icebergs. In fact, it is almost impossible to estimate or count the number of customer icebergs created by the business world. Let me just try to give you an idea of the magnitude of the task involved in figuring out the number of customer icebergs formed in a year. On an average, a company loses about 25 percent of its customers because they are dissatisfied with the company’s product and/or its after-sales-service. So all you have to do is to find the number of companies in the world and the number of customers each company has and then total it up. 25 percent of the total number of customers so calculated would be the estimated number of customer icebergs formed in a year. An almost impossible task! Over the last 9 years that I have been in business, I must have created 80 to 90 customer icebergs. In addition, I could have even created some customer icebergs oblivious of doing so. It is obvious that the number of customer icebergs formed in a year is a huge number and as discussed above, very difficult to estimate.
Age of customer icebergs
Customer icebergs can be just an hour old or a number of years old. All we know is that a customer iceberg is born the day he becomes unhappy with your products and services or deserts you for your competitor. For instance, Jeremy Dorosin became a customer iceberg when he complained to the Starbucks store manager and turned into a monster customer iceberg when he released advertisements in the Wall Street Journal. He has not melted till date.
Colour of customer icebergs
Customer icebergs do not discriminate. They come in all kinds of colors, caste and creed. It doesn’t matter if you are white, black, brown or yellow, you can be turned into a customer iceberg. Even if you are a Brahmin, Christian, Sikh or Hindu, you can still be a customer iceberg. To become a customer iceberg, all you have to be is a customer, an unhappy one. This phenomenon transcends all man-made as well as geographical boundaries. It can cast anyone under its spell, cutting across all sections of society. You just can’t escape being a customer iceberg if the situation around you dictates you to be one.
Temperature of customer icebergs
The temperature of customer icebergs varies from cool to very hot. Some dissatisfied customers are cool and they calmly take their revenge while others like me get very hot when they are not treated properly by a business organization. The cool ones are more dangerous as their intensity is not visible unlike the hot ones who make no bones about their fury. Both are avoidable and worth a miss as far as business entities are concerned.
Speed of movement of customer icebergs
Some customer icebergs are very fast while others are slow. Some customers are so angry with the company that once they are dissatisfied they immediately react and cause harm to the company. Just like what Jeremy Dorosin did to Starbucks or Dr. Trivedi to Oracle. On the other hand, there are others who are simply slow in their reaction. They do not go out of the way to harm the company but if somebody asks them about the company’s products or services they give a negative response.
Visible part of customer icebergs
You have read the scientific explanation of the reason why you see only a small portion of the iceberg above the water. The reason why you see only a small portion of the customer iceberg is because majority of the cost of customer dissatisfaction cannot be easily tracked and recorded. It is hidden and invisible to us. Even with the advances in technology, it is still difficult to track most of the cost of customer dissatisfaction. Some elements of the cost of customer dissatisfaction, as we will learn later, just cannot be tracked irrespective of the amount of resources you may allocate to do so. The visible portion of the cost of customer dissatisfaction is the warranty cost which is a very small part of the total cost of customer dissatisfaction. Warranty cost can be easily tracked as it is the out-of-pocket cost incurred by companies by way of parts replacement and manpower cost during the warranty period.
Customer icebergs also melt
Icebergs melt. Some melt within two months while others can take four years. On the other hand, in the case of customer icebergs some can melt in hours and days while others could take much longer. Some customer icebergs like Jeremy Dorosin (search on this site to know more about Jeremy Dorosin) could survive for more than 10 years and continue harming the company from which it calved itself. The Internet is assisting customer icebergs to survive longer. For instance, a negative website could be left on the Internet for years with very nominal annual recurring expenses.
Customer icebergs are unseen dangers
Just like icebergs, you only see a small portion of the customer iceberg while the major part of it is hidden. The visible part of the customer iceberg may not seem dangerous but the invisible part of the customer iceberg can be very destructive to your business.
You can only see the destruction caused by an iceberg when a ship hits it. Most of us do not get to see the destruction caused by an iceberg but we do sometimes hear about it. Most of the damage caused by the customer iceberg is also invisible. It is very rare when a business can clearly see the destruction caused by the customer iceberg. When a business collides with a customer iceberg, it can destroy a business slowly and steadily without the entrepreneur or the organization ever getting wind of it. It can take quite a while for the business to recover from the slow and steady destruction that the customer icebergs cause.
One would think that large businesses with established credentials would not get hurt by customer icebergs. This is far from the truth. Customer icebergs do not show any bias while vandalizing companies. They do not discriminate between big and small, domestic and multinational. They do not show any mercy. As you will learn in this book, even multinational corporations like Starbucks and Oracle are fair game. This is because of the overwhelming power of customer icebergs. Just like no ship, big or small, can avoid the disaster if it hits an iceberg, no business, big or small, is immune to the havoc that a customer iceberg can cause.
All customer icebergs are dangerous to your business. However, some are more dangerous than others depending on the level of dissatisfaction with which the customer icebergs were formed. The more unhappy the customer, the more dangerous the customer iceberg can get. How dangerous customer icebergs can get can be seen off and on. For instance, customer iceberg named Dorosin hit Starbucks Coffee in US in 1995 and caused irreparable damage to the reputation of Starbucks. In 2003, Zhao Lun in China turned into a dangerous monster customer iceberg which hit Mercedes Benz. Its effects could be felt probably all over the world, including India. In India, Dr. Trivedi turned into a dangerous monster customer iceberg and placed the CEO of Oracle in an embarrassing position during a video conference. This incident was reported all over the media in India. On each of these occasions, the incident stunned the business world. It made headlines. After each such occasion, the business world starts thinking about customer satisfaction and how to achieve it.
You can detect large icebergs with radars and avoid them while the smaller ones are more difficult to detect. However, companies do not have any equipment to detect customer icebergs and as such you cannot avoid them. You have to take steps to make sure that the customer icebergs just do not form as these difficult-to-detect customer icebergs can cause a significant amount of damage to your business.
Icebergs are only found in 20 percent of the ocean in the Arctic and the Antartica regions. Most of us do not even get to see an iceberg. You have to be on a ship to come across an iceberg. On the other hand, every business comes across a customer iceberg without realizing what it is. You can come across customer icebergs all over the world. The journey of a business is almost always accompanied by navigational hazards, with customer icebergs posing as a major threat to the profitability and survival of the business organization.
The Customer Iceberg Patrol
Very few people are aware of the existence of customer icebergs. I think I belong to the minority of those who are adequately enlightened about customer icebergs because I have tasted its fury. Since I know how dangerous customer icebergs are, I have taken upon myself to act as the Customer Iceberg Patrol and issue Customer Iceberg Bulletins so that companies can avoid the formation of customer icebergs. Just like the Ice Patrol, I will attempt to monitor the movement and formation of customer icebergs first in India and then slowly and steadily spread to other parts of the world. Even though, I plan to put Customer Iceberg Bulletins on the Internet, I am not sure how many people will access it. As such, I think a large part of the business world would still be under the threat of customer icebergs.
Even though my first book Customer Math was also published in Chinese, I guess folks at Mercedes Benz, China did not read it. Had they been aware of this Customer Iceberg Bulletin, they could have probably avoided the losses they suffered when they hit the monster customer iceberg – Zhao Lun. Even Oracle India could have avoided hitting the monster customer iceberg Dr. Trivedi if they had read one of my Customer Iceberg Bulletins.
Just like the International Ice Patrol Operations Center in Groton, CT, I intend to collect data about the customer icebergs and increase the awareness of the existence of customer icebergs on a regular basis so that others can take steps to avoid their formation. I hope this will benefit the customers, the business world as well as everyone who works for a living.
Even though the International Ice Patrol has had a pretty impressive safety record, my record has not been very good so far. Avoiding the formation of customer icebergs is not an easy job. In spite of best efforts, I still end up creating customer icebergs. Also, a large number of customer icebergs are being formed and companies are suffering heavy losses by banging their ship of business into them. The worst part is that they don’t even know about the existence of customer icebergs and the extensive damage they are causing to their business. With limited resources, I intend to do my best to spread the word. In any case, the problem of customer icebergs is more widespread and more difficult to monitor as compared to icebergs.
Just like Ice Patrol asks ships to report iceberg sightings on their routes, I am asking you to send us information about customer icebergs that your ship of business comes across. I will keep the data and report the same to you and the business world in a consolidated manner on a regular basis so that all of us can benefit from it. I am sure you will agree that we all need to avoid customer icebergs.
I am also asking customer icebergs (dissatisfied customers) to tell us their stories about how they became customer icebergs and what damage they have caused to the erring businesses. I would like to share this information with the business world so that they can become BELIEVERS and start treating you, their customers, as they should – like “Kings.”
Just like the whole world gets to know when an iceberg is the cause of a tragedy like Titanic, similarly monster customer icebergs become visible when they get reported in the media because of the huge damage they cause to the erring businesses. Jeremy Dorosin, Zhao Lun and Dr. Trivedi are some of the monster customer icebergs that a large number of people have heard about. I believe one of the ways we can become BELIEVERS and remain BELIEVERS is by constantly hearing about the damage the monster customer icebergs are causing to defaulting companies. This will serve as a warning to companies as to what can happen when they ill-treat a customer. As such, at our website www.customermath.com as well as through our Customer Iceberg Bulletins, we will keep informing you about the monster customer icebergs sighted by us. Of course, if you have heard or hear in the future about a monster customer iceberg, we urge you to share the information with us.
Decisions made on the basis of the visible portion of the iceberg can be disastrous as ships have found out the hard way. Similarly decisions made purely on the visible portion of the customer iceberg, the warranty cost, would also be as disastrous.
So whether you are working for a company, or running your own business, just steer clear of customer icebergs. If you don’t, your business and career is heading towards a disaster.
The next time you ill-treat a customer, I urge you to think of the fate of Titanic.
(Copyright @ Avinash Narula – All Rights Reserved. This publication may not be reproduced, stored in a retrieval system, or transmitted in whole or in part, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of Avinash Narula, M-53, IInd Floor, Lajpat Nagar-II, New Delhi-110 024 (India), Telefax:011-41625771/41625772, E-mail:info@customermath.com)
Permission to reprint can be granted on payment of nominal royalty. Please contact us at info@customermath.com.