President Global CEM
Share this content
rich poor
istock

Are companies harming society by satisfying customers?

by

The demand for fast and easy online experiences is creating greater inequality, says Sampson Lee. So should we stop listening to our customers and focus on the broader voice of society?

9th Jun 2021
President Global CEM
Share this content

A few months ago, Bob Azman, the former chairman of the board of CXPA, published an article: Is Social Responsibility a Part of Your CX Strategy? In response, Contrary Domino’s managing principal Andrew Rudin commented: “We’re dealing with the fallout from Milton Friedman’s essay titled, The Social Responsibility of a Business Is to Increase its Profits. It’s what I was taught as an undergraduate, and I don’t remember much debate over it. It was the ’70s, and the term CSR hadn’t entered the conversation.”

That prompted me to write this article.

Do you have real estate?

Since the millennium, the average UK property value has trebled. The cost of a home in 1999 stood at around £91,000, compared to £279,000 in 2019.

The phenomenon of not being able to afford housing is ubiquitous. According to UBS’s 2019 Global Real Estate Bubble Index, here’s how long it takes the average skilled worker to buy a 650-square-foot apartment in some of the biggest cities in the world:

  • 11 years: New York, Tokyo and Tel Aviv
  • 12 years: Singapore
  • 14 years: London
  • 15 years: Paris
  • 21 years: Hong Kong

Due to the stagnation of real wages for decades and the crazy rise in asset prices such as real estate, especially driven by the quantitative easing policy that began in 2008, for those who have no assets (for example, the lower middle-class and the working class), the gap between the haves and the have-nots has widened sharply.

What is the tax rate you pay?

In April, Forbes announced that Jeff Bezos has remained the world's richest person for the fourth consecutive year. If Bezos were a country, he would be the 56th richest country; his wealth exceeds the combined GDP of the poorest 48 countries.

Last year, CBS News reported that Amazon’s tax rate in 2019 was only 1.2%, while the average American tax rate was 14%. Even more shocking is that this figure (1.2%) is Amazon's highest figure from 2017 to 2019, and the company's total profit in the United States in these three years reached US$30.1 billion. (Note: The average tax rate for Fortune 500 companies is 11.3%.)

Unsurprisingly, earning huge profits at extremely low tax rates can enhance Amazon’s financial strength in building an online empire and help provide irresistible offers.

Who can resist Prime?

Amazon Prime is a paid subscription program. It offers immense value to members, including free delivery, exclusive rewards and discounts. JPMorgan estimated that the $119 Prime annual fee is actually worth $785.

This irresistible plan entices subscribers to spend more money and ultimately indulge in shopping on Amazon. Based on Convey’s survey, the top 3 reasons people shop at Amazon is ‘fast, free shipping’ (73%), followed by ‘I am an Amazon Prime member’ (67%) and ‘easy and convenient purchase process’ (58%). On the report of Clarus Commerce, Prime’s members spend almost five times that of non-members.      

What’s more, Prime’s global membership is growing exponentially. In its annual letter to shareholders in April 2021, Bezos stated that the number of members has doubled from 100 million to 200 million in just three years. Amazon's train is unstoppable.

Is instant pleasure everything?

But while numerous customers are loyal to Amazon in transactions, many of them are not emotionally loyal. Some of them don't even like or may even hate Amazon and try to stop buying from them. Customers are deeply worried about monopolization, worker exploitation and privacy intrusion. However, “instant pleasure” has still prevailed and won.

According to Statista, Amazon’s market share of the U.S. e-commerce retail market:

  • 2016: 34%
  • 2017: 37%
  • 2018: 41%
  • 2019: 45%
  • 2020: 47%
  • 2021: 50% (projected)

Numbers don’t lie. There is no doubt that many customers may not like the status quo. But because customers (regardless of age) are addicted to Amazon's effortless experience and irresistible offers, and can’t find any close substitutes, they become slaves to convenience.

What is the internet?

In the 2018 US Congress hearing on the Facebook–Cambridge Analytica data scandal, an 84-year-old senator asked Mark Zuckerberg: “If [a version of Facebook will always be free], how do you sustain a business model in which users don't pay for your service?" Zuckerberg replied: “Senator, we run ads.” The senator’s peers also raised similar questions. Instead of being grilled, Facebook CEO confidently gave a lecture to legislators on how Facebook makes money and how the Internet works.    

Notwithstanding lawmakers may be out of touch with the Internet world, this does not mean nothing is being done. For instance, in 2021, the Australian parliament passed the world-first law aimed at making digital giants like Google pay local publishers for news content; the UK Supreme Court ruled that Uber drivers should be classified as “workers" and not “self-employed”; EU leaders agreed in principle to impose a digital service tax (DST) on the world’s technology giants.

However, given that these issues have existed for more than a decade, relatively little progress has been made. In addition, we cannot underestimate the counterattack and lobbying power of the tech giants. Yes, we should always remain optimistic but we should also be realistic: government antitrust regulations as well as corresponding legal and tax reforms may help, but they are slow, weak and unreliable.

Whose voice should you listen to?

COVID-19 has accelerated the trend of people shopping via the Internet. When customers buy online, they want it to be "fast and easy." The CX industry has been tirelessly advocating effortless experience; now it makes even more sense to do so.

On the other hand, tech giants like Amazon have an absolute advantage over any other company in terms of technology, logistics and infrastructure in providing an effortless experiences. As a result, when customers became slaves to convenience, most money flowed into the pockets of tech giants, and income inequality increased.

We have a dilemma here. Income inequality is one of the most concerning issues for everyone (including customers); and "fast and easy" is an important need of customers. However, promoting effortless experiences will help drive income inequality. The million-dollar question is: Should CX listen narrowly to the voice of its customers and ignore the broader voice of citizens or the people?

What’s the right thing to do?

Make no mistake. I am not suggesting that we boycott Amazon. I am not so naïve and unrealistic to think that the CX industry alone can change the customer's need for "fast and easy." But maybe we should stop and think about whether we should continue to promote effortless experience that will exacerbate income inequality.

You wear three hats. You are a business professional, as well as a citizen and customer. These are thorny questions: Should we only meet the most critical needs of our customers and ignore the social impact it brings? Or, let me put it this way: Is it ethical to satisfy the most critical needs of customers while harming the interests of most citizens and people? Are customer needs more important than people's pain? Should CX be socially responsible and stop advocating effortless experience?

Things that once seemed right, such as “The Social Responsibility of a Business Is to Increase its Profits,” may now be wrong. Is it still correct to promote ‘convenience’?

  

 

Replies (2)

Please login or register to join the discussion.

avatar
By michael cooper
16th Jun 2021 01:55

Sampson, a very interesting question. And more to do with consumer psychology than anything else, I think.
Amazon are a good exemplar. Yes, they avoid tax - but so do Google, and FB, and it doesn't stop us using them daily. Because we have little choice. There are monopolies. Amazon didn't even make the list of the top 100 companies in the Corporate Responsibility magazine. Greenpeace slams them for its AWS's lack of commitment to green energy. We've all read of Amazons treatment of workers etc.
So, in an era where conscious consumerism (especially amongst Millenials) is growing, why are Amazon still a convenience favourite? Because society is increasingly narcassistic. And narcissism causes almost all of the things that we hoped high self-esteem would prevent, including aggression, materialism, lack of caring for others, and shallow values and polarised views. In trying to build a society that celebrates high self-esteem, self-expression, and "loving yourself," we've inadvertently created more narcissists — with a culture that brings out 'me first'. Me first = convenience. However, where the 'brand' isn't promising convenience and instead trying to create emotional engagement and isn't monopolistic (absolutely not Amazon) that's when I think conscious consumerism choices tend to kick in - evidenced by the growth of many alternate brands into re-usables, non-plastics, etc. Personally, I dislike 'fast and easy'. I am a Prime user, but not for the brand, for the convenience - I have no loyalty to the brand, just to convenience. I've used the phrase before - they are innovators of effortless. We're dealing with the science of behaviours here, and it ain't logical. 'Me first' is just as irrational as choice, FOMO, and others heuristics. Amazon, Netflix and others leave me full, but undernourished. It's tiresome to have to ignore what they think I want to search out what I want. I haven't answered your question - I can't - but it's a fascinating discussion. Because it has significant implications for CX and brands.

Thanks (2)
Sampson Lee, founder of Global CEM and creator of PIG Strategy
By Sampson Lee
03rd Jul 2021 08:37

I may have watched too many American and Korean dramas on Netflix. All parents are willing to give their lives for their children. But when I look around my friends—regardless of their nationality—almost all of them also put their children first. Maybe the drama is not divorced from the real world.

If so, can we work towards "selfishness"? For example, focusing to deliver this message: if we continue to indulge in convenience, what kind of world our son or daughter will inherit, and what kind of pain they will suffer. This is not about saving the planet or helping the poor. But about the people we cherish the most in the world.

And we – parents – are not alone. When social inequality and other things deteriorate to a critical point, even young people may stand up and fight. For example, the Swedish teenager Greta Thunberg launched an international campaign to fight climate change, which inspired millions of people around the world to join the protests.

This is an idea inspired by your response, because you mentioned that each of us is just thinking about "ourselves." When the power of parents and children can be combined, is this one of the possible solutions to the problems we are facing now? Of course, this is too simple, we definitely need to do more thinking and discussion.

But all in all, Michael, your views broadened my thinking and inspired me to think more deeply about this issue. I do hope and believe that the readers of this post will feel the same as me. Thank you so much for your generosity and sincerity.

Thanks (1)