Is there anything worse than being awarded the “Worst Company in America” by Consumerist.com (which is owned by Consumer Reports)?
The answer is yes, just ask Electronic Arts (EA).
It received the award two years in a row, a first for any company. The awards came during a 7-year period between 2004 and 2013 when its stock (NASD: EA) declined more than 75 percent, and many executives (including the CEO) lost their jobs.
How could a market leader, during an explosion in online gaming, perform so poorly?
The mistakes made by EA are common to all industries. It focused on releasing products quickly and generating additional revenue, while ignoring what customers actually wanted. Every business lives or dies by how well they service.
When EA or any company loses the “customers perspective,” it’s just a matter of time before the business suffers.
New CEO Andrew Wilson identified the source of its problems. EA needed to adopt a “gamers-first” mentality. It had to think about everything it does from the customer or gamers perspective.
Three years later, the stock recovered and hit an all-time high.
Wilson identified the following issues:
- Lack of new and innovative games/products
- Charging customers for small extras
- Ignoring feedback
Here’s the advisory version of those same issues.
Issue 1:
We live in an age of continual updates. Automobiles are innovative and improved. Cell phones tout ground-breaking features (even if they’re not). We’re too conditioned to expect continual improvements from successful, growing businesses. Have you recently added any client-facing changes or services? Although clients expect improved procedures and services, they don’t necessarily want to pay for them.
Issue 2:
Customers are charged for small extras. Nobody likes being nickeled-and-dimed. For advisors, setting appropriate fee levels is an ongoing challenge. Not every client needs or wants the same services. The not-so-easy solution is determining your base level of services and costs, then simplify additional offerings. Services and pricing must be relevant and reasonable from the client’s perspective.
Issue 3:
EA customers complained about issues No. 1 and 2, but it was slow to listen and change. Advisors need to solicit client feedback regularly. Use both formal and informal strategies.
SurveyMonkey provides a simple and effective way to solicit feedback. Client advisory boards are more focused and can review results of a SurveyMonkey campaign. Many wholesalers have both the experience working with, and resources for, client advisory boards. Ask your partners for help.
It doesn’t matter how large or experienced your practice. The lessons from EA apply to all business models at any stage of their growth.
Ross Marino, CFP, CPFA, CeFT, contributing editor to 401(k) Specialist, is the founder and CEO of 401(k) Rekon | Excel 401(k). He can be reached at rmarino@rekonintel.com.