What can I believe? This is a familiar lamentation by consumers when confronted by the product and service claims made by firms of every size and stripe in the marketplace. Nearly sixty years ago, historian Carl Becker in his book, Freedom and Responsibility in the American Way of Life, madethe following claim: “No one can deny that much of our modern advertising is essentially dishonest…” Becker also saw the tension between freedom of speech and freedom of lyingand believed that corporations should have the latter freedomcurbed. Apparently, not much has changed in this regard since Becker’s time.
Comcast Corporation’s slogan, for example, that “Technology and innovation have always been at the heart of what we do” is a less than artful rhetorical spin since the conclusion is obviously embedded in the marketing claim. How many consumers are taken by the slogan is hard to tell but the company seems to double down when making a commitment to its customers that it will: 1.”respect your time, 2. simplify your experience, and 3. make things right if we fall short.” If the slogan is inartful, the “commitment” is gibberish and obviously counterfactual. Again, what impact this has on the consuming public is hard to tell.
What is not hard to tell is that in J.D. Power’s rating of major wireline services, the company received the worst scores in cost to consumer, performance, billing, and reliability. It is little wonder that the Federal Communications Commission has seen fit to fine Comcast $2.3 million over allegations the company charged customers for services they never received. Yet, Comcast remains the number one provider in total broadband connections with over 24 million subscribers in the United States. And, as larger and larger swaths of the country become cable monopolies – in my area, the non-Comcast provider’s maximum available download speed is nowhere near the FCC mandated broadband standard of 25Mbps – there may be reasons to forgive the company for its amateurish marketing messaging.
RHETORIC HELPS TO VEIL FALSE CLAIMS
Aristotle teaches that rhetoric as a form of persuasion relies on three basic appeals: 1) ethos, persuasion based on the character or celebrity of the speaker delivering the message, 2) logos, or persuasion based on logic and facts, and 3) pathos, a reliance on emotional or humorous stirrings.
We are predisposed to believe a message when it is delivered by a known, credible, or celebrity figure. This is especially true if the facts surrounding an issue in question are unclear. Still, it is axiomatic that the rhetor – the speaker presenting the claim – has a clear path of authority on the subject.
William Devane, the star of stage, television, and Hollywood films is an engaging pitchman for Rosland Capital, a company which trades in gold and other precious metals. Mr. Devane carries himself well and projects a likeable persona in his commercials for Rosland. Mr. Devane suggests in a commercial dripping with pathos – the Battleship USS Iowa’s menacing 16-inch guns are in the background – that “there are forces everywhere pulling our country apart, threatening our economy and our way of life.” Mr. Devane’s solution? Buy gold.
To the best of my knowledge, Mr. Devane is not a precious metals investment guru. If he is, he doesn’t say so in the Rosland commercials. Further, his pop-culture celebrity can hardly obscure the facts. Gold, it turns out, has been a ho-hum investment. In the period 1986 to 2016 the annual rate of return of gold, with inflation factored in, is an unimpressive 1.3% per year. More perplexing, is the choice of an octogenarian to pitch gold. Presumably, Rosland is aiming at an older demographic with Mr. Devane as its spokesman. Given gold’s snail’s paced growth over the last thirty years, however, the metal seems hardly a worthy investment for a senior citizen. This and other Rosland commercials fail to carry their claims based on an appeal to facts and logic.
In my experience, the vast number of public utterances, declarations, and slogans coming from companies both large and small on the subject of customer service – if not all claims having to do with a product’s presumed prowess – is rarely rooted in fact. Little has changed since 1957 when Vance Packard wrote the immensely popular book, The Hidden Persuaders. In that book, Packard stated that we rarely buy products and services based on logos – that is, the intrinsic qualities of a product or service. Rather, that we fall prey to appeals that play to our emotions.
JetBlue Airways’ Customer Bill of Rights states that the company “… is dedicated to inspiring humanity.” The company further states in its financial report that, “One of our competitive strengths is a service-oriented culture grounded in our five key values: safety, caring, integrity, passion, and fun.” The company’s grandiloquence aside, this is the same airline that kicked a couple, accompanied by a small medical alert dog, off a flight because the passenger’s doctor’s notice – dutifully signed, on letterhead, and with the physician’s contact information – was not typewritten! Now, that kind of service behavior is sure to inspire humanity.
“EXCELLENT CUSTOMER SERVICE IS OUR HALLMARK”
Wachovia Bank, once one of the largest banks in the nation, publicly, and with great fanfare, announced that it had made an investment of $100 Million to upgrade frontline staff to better serve its customer base. Crowing about the recently released American Customer Satisfaction Index (ACSI), which showed Wachovia was ranked the number one bank for customer satisfaction, its chairman and CEO, G. Kennedy Thompson, had this to say: “Providing excellent customer service is a hallmark of our company, and this award is a testament to our success.”
Meanwhile, the bank was processing unauthorized, unsigned check transactions from thousands of accounts; representing auction-rate securities – complex, illiquid debt instruments – as alternatives to liquid money-market funds; ignoring anti-money laundering federal guidelines; and selling negative amortization mortgages whose principal balance would increase if the customer chose the lowest payment option available. In the first instance, court documents show that bank executives knew of the fraudulent scheme that allowed telemarketers to steal hundreds of millions of dollars from unwary depositors but failed to stop it. The reason: telemarketers were a huge source of revenue for the bank. As to the bank’s sales practices of auction-rate securities and negative amortization mortgages, and its disregard for money laundering safeguards it is clear the intent was to deceive the consuming public while feathering its own nest. So much for “customer service as a hallmark.”
Wachovia’s experience is proof positive that clichés and slogans alone won’t cut it. In April 2008, Wachovia agreed to pay $144 Million to settle claims that it allowed telemarketers to bilk depositors. In June 2008, Mr. Thompson was ousted. In July 2008, the bank eliminated 11,000 jobs. In August 2008, regulators forced the bank to buy back $9 billion of auction-rate debt, pay a $50 Million fine, and make no-interest loans to consumers hurt by the fraud. In October 2008, the bank a victim of the subprime mortgage implosion it had a huge hand in inducing, got its comeuppance for its systemic cheating as it was picked over by both Citigroup and Wells Fargo. In the end, Wells Fargo – a prodigiously unethical financial institution – prevailed by offering $11.7 billion for a bank that was worth ten times that amount only one year earlier.
Oh, and what about Wachovia’s number one ranking for customer satisfaction in the ACSI survey? It turns out that on this occasion the ACSI survey only covered five banks – this, out of a bank population of roughly 7,000 banks in the United States at the time of the survey. Most egregiously, however, the bank’s mortgage, investment, and brokerage customers – the source of many of the bank’s major transgressions, aside from money laundering and unsigned check fraud – were not included in the ACSI survey. So much for a number one ranking!
Wachovia’s profound disregard for the customer is perhaps epic but lest consumers think this is a one-off episode consider that every claim from the niggling – Blockbuster’s “no late fees” acclamation which proved to be false – to the tragic – Bernard Madoff’s “I made a lot of money for my clients” when, in fact, he was running a scheme Charles Ponzi would have been proud of – Ponzi apparently swindled clients out of $7 million when he was finally apprehended in 1920 and which even in today’s dollars would amount to a pittance compared to what Mr. Madoff swindled from his clients. Tragically, multiple investors struck with the horror of their losses took their own lives, including Mr. Madoff’s son Mark. In the end, the onus rests on the consumer to reach for the logic and facts of a supplier’s service claims.
Management Advisor
