The Customer Service Survey

Bad CX Sinks $45B Deal

by Peter Leppik on Fri, 2015-04-24 14:01

"How do you measure the ROI on Customer Experience?"

That's a common discussion topic any time customer experience professionals gather. Everyone knows that there's a payoff to having a better customer experience, but much of the benefit comes in soft forms like increased customer loyalty, brand reputation, word-of-mouth marketing, and similar categories.

Those are inherently hard things to measure, and many in the CX world come from an operational background where costs and benefits are just columns in a spreadsheet. So figuring out the ROI of customer experience can be uncomfortably squishy at times.

But every now and then there's an example where the cost of bad customer experience is so overwhelming it just can't be ignored. I wrote about one case a couple years ago, where Time Warner Cable committed $50M in marketing to try to erase the damage done by years of terrible customer service (spoiler alert: it didn't work).

Today we have an even more eye-popping example with the cancellation of the proposed $45 Billion merger between Comcast and Time Warner.

Clearly, the infamously bad customer service at Comcast and Time Warner were not the only factors leading to the deal being killed. But the poor reputations both companies have earned over the past several years played a big role.

Right at the time when Comcast needed approval from federal regulators, it found itself in an extremely hostile media environment. "Customer abused by big monopoly company" stories are like catnip to the media, and Comcast provided mountains of raw material. The company's own statements about their customer service only fed the fire, making executives sound ignorant or delusional or both.

What's more, all those unhappy Comcast customers allowed the mobilization of political opposition. It's easy to get an upset customer to write a letter to the FCC, FTC, or their senator. It created the impression that the only people standing with Comcast were either paid by the company or afraid of it.

There was no way regulators were going to rubber-stamp this deal. There was too much grass-roots opposition. In the face of what would probably be a lengthy investigation and onerous conditions on approval, Comcast decided to call the whole thing off.

Would a company less loathed than Comcast have been able to pull off this deal? Quite possibly. There have been lots of corporate mergers larger than Comcast/Time Warner, including some which raised similar antitrust concerns. Any deal this size can get dragged into politics, and success in politics means getting more people on your side than your opponent's side. Comcast simply didn't have enough friends.

I'm sure there's going to be plenty of analysis and Monday-morning quarterbacking. But in the end, this $45 billion deal died because the company couldn't rally enough support, and it couldn't rally enough support in large part because of its reputation for mistreating customers.

Bad customer experience killed the Comcast merger.

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