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Brands are Failing to Secure Consumer Trust

The past year has been a time of missteps, misunderstandings, and plain thoughtless decisions by some of America’s most time-tested brands. Maybe it is the stress of poor economic times that is driving up the cost of doing business, particularly in those areas where solutions are out of reach of most internal problem solvers. Iconic brands like Disney, Anheuser Busch, Target, Delta, and most recently Wendy’s have demonstrated remarkable ineptitude in marketing strategies, with tactics that have upset the brands’ most valuable customers, reversing years of hard-won progress in building customer trust.

Wendy’s has been America’s “Home of Fresh, Never Frozen Beef” for more than 50 years. While its tenure in servicing customers with a square hamburger and Frosty Milkshakes has survived many common industry challenges over its history, a most recent blunder is setting it apart from even its most inexperienced and novice of competitors.

Earlier this month, the CEO of Wendy’s publicly shared that the company would be installing digital menu boards that would make it easier to change the prices of menu items. The action is known as dynamic pricing, and it does allow for timely opportunity to adjust prices and provide special discount offers to customers. The announcement that the digital menu boards would improve order accuracy, enhance customer service, and increase sales was accurate, but media outlets and consumers interpreted the messaging differently. Many customers, some of Wendy’s best and most valuable, became outraged, envisioning the fast-food vendor raising prices based on the hour of the day, or day of the week. Like so many events in the digital media era, the news went viral and commanded an immediate correction from Wendy’s CEO Kirk Tanner, to attempt to quail the public outcry.

“We said these (digital) menu boards would give us more flexibility to change the display of featured items. This was misconstrued in some media reports as an intent to raise prices when demand is highest at our restaurants. We have no plans to do that and would not raise prices when our customers are visiting us most. Any features we may test in the future would be designed to benefit our customers and restaurant crew members. Digital menu boards could allow us to change the menu offerings at different times of day and offer discounts and value offers to our customers more easily, particularly in the slower times of day.” Regardless of whether the announcement was an unintended, “open mic,” moment or a poorly-scripted public relations misstep, the result has Wendy’s best and most loyal customers declaring they will be heading out the door and around the corner to a competitor.

Loyalty programs have become the lifeblood of the airline industry. Nearly 60 percent of adult consumers say that retention programs that offer rewards for repeat visits and purchases are important to retaining support, and 95% of consumers want companies to find new ways to reward them for loyalty. Retaining customers produces increased long-term value, builds stronger relationships with a brand, and allows a business to gain insight into customer attitudes and purchasing behaviors. So, why did Delta management mess with a good customer loyalty program?

Last September, Delta Airlines announced a sweeping reduction of benefits to the company loyalty programs that immediately angered Delta’s best and most valuable customers. Delta said the changes were necessary due to increased demand for premium products and services. The programs were so successful that the company was finding it difficult to provide an upscale service to all those who wanted them. The proposed solution sounded as though the Company was jettisoning some of its best customers into the arms of the competition. Alaska Airlines and JetBlue Airways jumped in pitching offers to capture disenchanted Delta customers by matching loyalty status in those carriers’ programs. Oops!

The changes were roundly criticized on social media, and two weeks later, Chief Executive Officer Ed Bastian acknowledged, “No question we probably went too far in doing that. I think we moved too fast, and we are looking at it now.” The embattled company did reinstate some of the loyalty benefits and enhanced some others to soothe upset frequent flyers. But the damage to consumer trust was done and it will require significant action on the part of Delta leadership to appease its best and most loyal customers.

It is true that over time, companies need to evaluate and adjust marketing campaigns based on effectiveness and costs. But doing so should involve careful analysis by both finance and marketing professionals to determine, in advance, the impact potential changes will have on customer relationships. At best there appears to be a broad learning curve, across industry, when it comes to coordinating messaging between the number crunchers in the C suite and the marketing mavens on the lower floors. At worst, it could be that company leadership have a serious disconnect with the brand’s customers and fails to recognize all the factors that lead to putting the numbers on the page.

The historic disconnect between the two disciplines is well-entrenched, but it is hard to fathom that those responsible for these debacles sat around a conference table or Zoom call and purposely hatched plans that were so obviously fraught with peril.

The importance of building and maintaining customer trust cannot be overstated in today’s competitive environment. It is essential to establishing customer loyalty and fostering long-term customer relationships with a brand’s core audience. Trust is non-negotiable and must be a part of every company’s operating strategy.