First Monday

Consumer Power via the Internet

Recently, there has been plenty of upbeat reporting on new opportunities provided by the Internet to business in marketing and sales and in financial services, to name a few. Most of these developments may be said to increase "firm-power". This paper describes a proposal to strongly enhance "consumer-power" to the ultimate benefit of both businesses and consumers..

In 1970, the American economist Albert Hirschman introduced the terms "voice" and "exit" to characterize the two main channels for individual influence versus an organization. You may try to change something by speaking up, complaining or voting for another leadership (for instance if the organization is a union). This is "voice". Or you may quit the organization; "exit". In this case, you sacrifice future influence for the (hoped for) strong impact of quitting. One may of course also combine the two, by using "voice" to threaten with "exit".

If we apply these concepts to the relationship between a customer and a business, we observe that "voice" may be exercised by direct contact with the firm in question, to complain or give suggestions. As opposed to "exit", which simply is to quit buying from a given company. In a market economy, the consumer's option is nearly only "exit". You "vote" with your wallet, and hopefully some astute manager in the organization will draw the right conclusions when many customers do the same and there is a downward trend in sales. There are several problems with "exit" in this context; first, signals are only felt when many customers quit. The second is that reasons for customers' actions do not reach the company, only the result. Thus important qualitative information is lost.

Some may object by remarking that many businesses have a policy of listening carefully to customer complaints and suggestions, thus giving customers the "voice" option, not only "exit". I hold that this to a large degree is cosmetic. There are organizational-psychological mechanisms at work that very often make a parody out of announced good intentions: If a given firm is large or has a near monopoly (and those are the most important for the public to influence), employees responsible for customer contact will have no personal stake in really taking a given customer seriously. The exchange between the customer and the firm's employee remains a private matter between these two parties (it is hardly ever broadcast to the general public!). The firm has so many other customers that it is very tempting to dismiss an insistent, vocal customer as a "crank". Furthermore, the bureaucratic distance from the supposedly "friendly representative" on the phone, to persons having the power to decide changes in the organizational practices, is so great that even a sympathetic listener will not make much of a difference. An additional point is "not-invented-here" psychology; even a very good suggestion from a customer may not get a chance because it has not emerged from within the organizational bureaucracy. Generally the path of least resistance is chosen - to continue with today's solutions and practices, and to shrug off individual complaints or suggestions as non-representative, since the overwhelming amount of customers elect not to voice an opinion.

This is where the Internet opens new possibilities. Consider the following proposed reform. Any business above a certain size will be required to have an e-mail address for complaints and suggestions, and a Web page for public discussion of the firm's products and practices. Businesses are obliged to include these addresses on all its products, ads and brochures.

The point of the e-mail address should be obvious. It is much easier to send a complaint or suggestion by e-mail there and then (when you are sufficiently irritated, or enthusiastic about your suggestion for an improvement), than the alternative of looking up the postal address and mailing a letter, or the "modern" alternative of endlessly waiting on the phone, listening to commercials, tinny music or taped sugary assurances of "your call is important to us" - finally being answered by a live person who is really not very interested, and who furthermore doesn't have much influence to get anything done.

By giving the public an e-mail option we give the customer more "voice" in her relationship with businesses. We also - as a benign side effect - give businesses a new instrument for improving their products and practices. In this context it should be noted that suggestions over e-mail may with time turn out to be of greater value than today's consumer surveys, even if they consist of fewer "samples", because of a higher average qualitative information content in each response. Additionally, they cost nothing, as opposed to expensive surveys.

The observant reader will now, however, protest that the proposed e-mail option will not in itself make much of a difference, it may be just as cosmetic as today's "your call is important to us". E-mail messages may just go in the electronic wastebasket, after being replied to with some sort of computer-generated corporate blah-blah.

This is a valid objection, which explains the logic behind the second and crucial part of my proposal - the mandatory corporate Web page with public discussion of a given firm's products and practices. The customer has the following options. She may either send a complaint or suggestion as a private electronic letter to the company. Or she may send the letter to an e-mail address which automatically puts her message on a discussion component of the corporate Web page. This discussion page will (by law) not be moderated by representatives of the corporation. The firm just has to accept what it may consider to be bad publicity to reside on this page for everyone to read. The only option for a business is to reply to the message in the same discussion forum, participating on an equal footing with the public. By this the public may judge whether the criticism is valid or not, and whether the firm's reply is satisfactory. The public will also be able to put questions directly to the company, and judge for themselves when for instance a reply does not show up. All of this traffic will occur on the Web site with little time delay, computer-mediated with no human interference. Archives of earlier correspondence will be associated with this forum, with nothing deleted. An associated Web search engine will provide an option to search for certain discussions and issues, to check whether earlier promises and announcements have been kept, and with the option of copying these into new messages to remind the company, and the public, of broken pledges.

I have no illusions about these proposals being met with enthusiasm from most big businesses. Even if they give a means for improved products and practices, thus enhancing competitiveness, they will probably be resisted. Essentially, this Web proposal erodes corporate control over their own public image, an image which is built up at great cost through marketing and public relations exercises. The impact of such Web discussions must not be underestimated. Even if these pages will (initially) be accessed by a small sector of the public compared to those exposed to a given firm's marketing activities, the Web discussions will earn high credibility, as opposed to advertising which typically has very low credibility.

The Web site also allows consumers to meet to discuss with each other a given firm's products and practices, and through this interaction discover that others hold similar opinions. This connectivity opens up the possibility of more effective consumer action to pressure firms, even organize boycotts (for instance in connection with environmental issues). It also provides a path for public pressure to remove some of the more idiotic television (and other) advertisements.

Admittedly, there is at least one legitimate problem with this proposal. It is not very difficult to solve, but I mention it here to avoid further discussion being sidetracked by some - possibly with ulterior motives - trying to inflate problems out of proportion in a hope of derailing the whole proposal. The problem is that any completely unmoderated Internet discussion list may be misused by those with personal agendas, directing discussions on the forum into completely unrelated topics. This may, however, be solved by locating the discussion lists physically at a Web server of a Public Consumer Issues Authority. This Authority would moderate incoming messages following a liberal set of rules, and it would be accountable to a review board. Computer time and resources and the personnel for the Authority would be financed by a small fee assessed to each participating firm. The main Web site of a given corporation would link to its discussion page on the server of the Authority. A given company does not need to allocate resources to take care of the discussion site other than providing personnel to respond to queries in a timely fashion.

I expect (or at least hope) that these proposals will be more or less applauded by the green, left and center parts of the political spectrum. But what about the conservatives? On one hand they are more accomodating to business interests than most. On the other they strongly advocate the principle of the consumer as the king, and businesses as humble servants. Now the Internet offers a potential tool which for a negligible cost will significantly boost consumer power versus corporations. So what do they say?

About the Author

Trond Andresen is Lecturer in the Department of Engineering Cybernetics at the Norwegian University of Science and Technology, Trondheim, Norway.

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