Blog

You know your brand stinks when the government adds regulations

July 6, 2011 by Dale Furtwengler — President, Furtwengler & Associates, P.C.

The U.S. Department of Transportation has issued new rules for the airline industry including price disclosures and cash penalties for a variety of airline misadventures. The truly sad part of this, or any story on regulation, is that regulation is a self-inflicted wound.

Companies invite regulation when they continuously ignore the concerns of the buying public, then bemoan the high costs of complying with these new regulations. Finally, they wonder why that same public bristles at future price increases to 'cover higher costs.'

How Costly?

The cost to the airline industry won't be known for some time, but they're not alone in their 'quest' for further regulation. The Sarbanes-Oxley act was the result of the CPA profession's failure to adequately monitor itself. This act cost operating companies between $2 million and $5 million depending on their size. Some CPA firms have seen the cost of their peer reviews quadruple as a result. What we see with Sarbanes-Oxley is what' s typical of regulation - there are no winners.

The Alternative

What most companies don't realize is that customer complaints are an opportunity to either establish or strengthen their brand image. Indeed, years ago I created a program that taps annoying customer behaviors to identify areas of customer dissatisfaction. Dealing with those effectively helped clients:

• Differentiate themselves
• Enhance their brand
• Create great customer loyalty

The interesting thing is that the solutions to these customer problems are almost always simple, inexpensive and easy to implement. Indeed, most were implemented in a matter of days and carried a cost of a couple of thousand dollars or less. Contrast that to the $2 to $5 million dollar price tag of Sarbanes-Oxley and you can see why it's in your best interests to deal with customer dissatisfaction quickly and effectively.

Beyond Cost Savings

The real value of regulation-avoiding strategies isn't in the cost savings; it's in the power of a brand that attracts customers who are willing to pay handsomely to avoid the headaches they experience with your competitors. Effect this brand strategy well and you enjoy greater customer loyalty at much higher prices/margins.

Lead the Industry

Don't wait for the problems in your industry to become so severe that regulation is looming at your doorstep. Develop strategies to remove dissatisfaction from your customer experiences. Lead by example and reap the rewards of higher prices and greater customer loyalty that go to the innovators in any industry. Then take an active role in your industry association and use your results to help the industry avoid the high cost of government regulation. You'll be helping yourself, your customers and your industry enjoy greater success.

P.S. Don't forget that the aforementioned strategy affords great PR opportunities, one of the least expensive ways of building your brand.

About Dale Furtwengler

---

None

Connect with Dale: