Given two companies – A – with poor customer experience, and good business model, and B – with good customer experience and non-working business model - where would you bet? Of course, most people would not like to bet on either. But, let’s say you have to choose between the two. Which one would you choose? I asked this question in my class sometime last year. In a class of forty, all except one or two students chose B. That is, they felt it was easier to fix a business model than customer experience. Since then, I have repeated the question multiple times. While the response has never been as lopsided as the first time, there are enough takers for A and B in most cases. Let’s explore the question in this article.
People choosing option B feel that fixing customer experience involves external variables while fixing a business model is internal and hence easier. Option-A guys feel that the business model is deeply entrenched in the company’s guts and hence more difficult to fix. I began this exploration with a bias for option A. I was influenced by the Dunzo case I
discussed in class.
We discussed Dunzo’s
customer journey and used it to illustrate journey mapping and how Dunzo
enhanced its customer experience. While customer experience improved for
Dunzo, it struggled on the business model front. For the first few years, its
business model relied on partnerships with local stores from whom goods would
be sourced as per customer demand. Post 2021 it tried to emulate the quick
commerce players like Zepto and Blinkit by moving to a dark store model. This
business model is capital intensive, and the unit economics went from bad to
worse and Dunzo ended up losing eight
rupees for every rupee earned in FY23. Eventually, Dunzo had to shut down.
It was not difficult to find more cases like Dunzo's where a
company couldn’t save itself while fixing its business model. WeWork (global),
Kingfisher Airlines, and Micromax all had good customer experience and a decent
market position. However, they couldn’t save themselves from going bankrupt by
making changes to their business model.
What about a similar situation for companies with poor
customer experience (option A) and not able to make it? It is easier to start
with extreme cases. One area to look at is to see product recalls due to health
hazards. This happened to Philips in 2021 when it had to recall more
than 5.5 million sleep apnea devices due to the potential dispersion of carcinogenic
substances during its operation. It had to spend $1.1 billion to settle the
claims. Its valuation dropped to one-fourth of what it was before this
incident. It is gaining the lost ground slowly.
Closer home, Ola Electric is facing a barrage
of customer complaints and service issues related to its e-scooter. Unlike
Philips, Ola Electric isn’t a case of product recall, at least not yet. However,
the number of complaints is so high (more than 10,000) that various regulatory
bodies like the Central Consumer Protection Authority (CCPA) are stepping in and
investigating the situation. At this point, it doesn’t appear that Ola Electric
is going the Dunzo way. It is holding on to around 30% market share so far. It
is likely to bounce back.
