Saturday, September 26, 2009

Reading the Economic Tea Leaves: This Recession is Still Far from Over!

For the past month, I’ve been scanning newspapers, watching CNBC and other economic news stations and listening to radio talk show experts to find out how our economy is doing. To my surprise, Federal Reserve Chairman Ben Bernanke announced that the recession is all but over. However, in reading the economic tea leaves, I don’t think so. There's no such message in my fortune cookies!

The reasons I have serious doubts about this recession are simple. We still face four serious problems that will continue to stall a recovery until they are solved. First, many consumers are flat broke. They’ve spent their savings during the past two years and cannot afford to buy expensive items like cars and vacations. Secondly, the American economy is still bleeding jobs. Until companies start hiring en masse to replace the millions of jobs lost during the past three years, most consumers will not spend money. They’re afraid their job might be cut next. Thirdly, a staggering number of homeowners continue to struggle with their mortgage payments. Because of wage cuts, job losses and savings depletion, the threat of foreclosure remains serious for many American homeowners. Fourthly, the average American, who has healthcare insurance, is struggling to pay their healthcare premiums which continue to rise. Each day, thousands of Americans are being forced to make the painful decision to abandon their healthcare insurance because they can no longer afford it.

So, while I’m pleased that Mr. Bernanke thinks this recession is almost over, I disagree. I think it’s far from over. And, while I’m pleased Wall Street is making a strong comeback, that isn’t what’s going to revive and sustain the American economy. The ultimate antidote to nursing our economy back to health is consumer spending; and, that’s not going to happen until we solve the four problems I’ve noted.

About the Author:
Tom Hinton is president of the American Consumer Council. He is also a popular business author and speaker who writes frequently on consumer issues and business trends. He can be reached at

Consumers Critical of Airline Service Fees

Thomas Hinton, president and CEO of the American Consumer Council (ACC), has sharply criticized ten domestic airlines for using deceptive pricing practices to take advantage of unsuspecting consumers who fly their airlines. According to the Department of Transportation's Bureau of Transportation Statistics, a recent report shows that domestic airlines collected $3.8 billion in non-ticket fees for checking bags, the cancellation and re-booking of flights, carrying pets aboard planes and assigning seats.

The ten domestic airlines that Hinton criticized during CNBC's Power Lunch program included: American, Delta, U.S. Airways, United, Northwest, Continental, AirTran, Spirit, Frontier and JetBlue. Hinton said the ten airlines collected more than $669 million dollars in baggage fee revenues alone during the 2nd quarter of 2009. Hinton claimed that "many of those baggage fees were collected from unsuspecting travelers and who were unfairly charged."

On CNBC's Power Lunch program, Hinton also stated, "These types of a la carte pricing practices are unfair, deceptive and should be stopped by the airlines or, if necessary, a class action lawsuit."

Hinton explained that most travelers assume when they purchase an airline ticket, it entitles them to receive an assigned seat, check a piece of luggage and receive a snack and beverage aboard their flight. Hinton added, "These ten airlines should be upfront and truthful with consumers by including these traditional items in the cost of a ticket. To do otherwise, is viewed as deceptive and under-handed."

Hinton also questioned the credibility of the airlines industry because of recent problems with extended flight delays, an increase in the number of lost bags and the mishandling of luggage. Hinton referenced the "United Breaks Guitars" You Tube video by musician Dave Carroll, a United Airline passenger, whose expensive guitar was tossed around like a football on the tarmac of Chicago's O'Hare Airport by United Airline baggage handlers. United Airlines denied responsibility for nine months until the popularity of the You Tube video forced the airline to make amends.

Giving credit where it was due, Hinton did praise Southwest Airlines as the only major domestic airline that practices ethical and fair pricing because they do not charge under-the-table fees or service charges for baggage, pets, or in-flight meals.

Hinton noted that unsuspecting travelers must often pay an extra $50 - $100 per flight as a result of the service charges and fees issued by airlines. He called on consumers to express their displeasure with the ten domestic airlines that are "manipulating ticket prices by using under-the-table fees and service charges to boost the true cost of travel" Hinton encouraged CNBC viewers to "tell the airlines you don't like their deceptive and unfair pricing tactics."

Hinton also renewed his call on Congress to pass the Airline Passengers' Bill of Rights claiming, "Nothing has been done by the airline industry during the past year to improve customer service, treat consumers fairly or instill ethical pricing tactics so the real cost of travel is transparent."

Monday, September 7, 2009

The Mood of American Consumers Remains Cautious: An Interview with ACC President Thomas Hinton

The following interview on the mood of American consumers was conducted on September 7, 2009 with Thomas Hinton, President & CEO of the American Consumer Council, by Consumer News & Views.

CNV. Most economic data suggest that the United States remains in a deep recession. What is the mood of American consumers and when do you predict the economy will turn around?

Hinton. There's no question the United States remains in a serious recession. Consumers are still hurting. We are still losing jobs and small businesses are reluctant to hire people until they see stronger signals that the worst is over.

CNV. Do you think the worst is over in terms of the recession?

Hinton. That's a tough question because companies are still laying-off thousands of employees and consumer confidence remains low. I'm also troubled by the number of home foreclosures and bankruptcies. Those numbers are too high and that's not a good sign for a recovery to begin.

I just returned from Europe and Scandinavia and it's apparent that America's economic woes are having a negative impact on many countries around the world. As long as American consumers refrain from spending and traveling, the global economy will suffer. As far as predicting a turn-around, I think three things need to happen. First, the federal government's stimulus plan needs to take root and federal agencies need to start pumping money into state and local coffers. Secondly, we need to reverse the job losses by generating millions of new jobs. Frankly, this is President Obama's biggest challenge because without job creation, consumers are not going to spend money they don't have and the economy will remain stalled. Thirdly, we need to correct some fundamental flaws in how we do business in this country to ensure we don't repeat the same economic mistakes again. I'm talking about strengthening federal regulations that prevent large companies and Wall Street from holding our nation hostage, economically speaking. Most consumers resent the federal bail-out of Wall Street companies and the billions of dollars taxpayers had to spend to set things right. Also, it's time Congress got serious about passing legislation that protects consumers in the critical areas of health care coverage, environmental protection, airline delays, credit card fees, foreclosures, student loans, and identity theft. Frankly, all eyes are on Speaker of the House Nancy Pelosi and her Democratic majority to see if Congress delivers. If Congress doesn't deliver, I think Speaker Pelosi will have squandered a once-in-a-lifetime opportunity to do great things for American consumers and the nation.

CNV. Do you see any consensus among consumers on the issue of health care reform?

Hinton. There's certainly consensus among the 40 million plus consumers who either have no health insurance or are under-insured. I think the entire health care debate really boils down to three key questions. First, should every American have access to quality health care? If the answer to this question is yes -- and I believe yes is the right answer -- then the second question we must ask is: What system should we create that ensures every American has access to quality health care? And, thirdly, how will we pay for it?

The current national debate is all wrong. Our leaders should be focusing on America's moral obligation to its citizens to ensure every American has access to health care. Until we have agreement on America's moral obligation to provide health care to every citizen, we will not arrive at the proper solution.

TR Reid, a respected journalist, has written a great book entitled The Healing of America. Mr. Reid studied the various health care systems of many countries and found that the United States is the only developed nation that does not provide universal health care to its citizens. Why is that? It makes no sense that the richest nation in the world has not made the moral commitment to ensure its citizens receive the finest health care in the world. It is generally acknowledged that America has the finest health care professionals, hospitals, and research facilities in the world. But, unless you have health insurance, you cannot access our doctors, hospitals, or research facilities. Frankly, it's an embarrassment to our country.

Opponents claim a universal health care system will create socialized medicine -- whatever that means -- or eliminate a person's freedom to choose their own doctor or hospital for treatment. That's pure nonsense. These statements are nothing more than a scare tactic on the part of the special interests who don't want Americans to have open access to health care -- plain and simple. It appears this deceitful misinformation campaign on health care is being funded largely by a few health insurance companies that stand to lose billions of dollars in sky-high health insurance premiums if Congress adopts a single-payer system. The reality, however, is unless we change the current system -- and, specifically, how we pay for health care -- we will be bankrupt within 25 years because we cannot keep pace with the ballooning costs of health care. So, a meaningful solution must be found soon. That is the reality regardless of one's political views or special interest.

I would encourage consumers to read The Healing of America to gain an objective understanding on the various health care options that are working in other countries. I also think we need to stop protecting the "sacred cows" of health care -- like the health insurance companies -- that are controlling life-and-death decisions such as who can be treated and which treatment patients can receive, how much money doctors and hospitals get paid for a procedure, and which pill you can take to get well. It's not the federal government consumers should be afraid of when it comes to health care. It's the health insurance companies we should fear because they are the ones who are making life-and-death decisions for patients. It just doesn't make any sense. There are better options for American consumers.

CNV. Where will the new jobs come from?

Hinton. I mentioned earlier that America needs to rethink how we do business. But, we also need to reinvent our business growth model if we expect to remain the number one global economic power. I can assure you that China, India and other countries are not sitting idle.

I think the long-term answer for job growth in the United States will be found in three key areas: Green, Information Technology, and Knowledge Management. Certainly, bio-sciences, health care, education, defense, entertainment, agriculture and smaller specialty industries such as space exploration and scientific research will support America's economic growth over the next 25 years, but we need to recognize as a nation that we have entered a new economic era and begin to train a new generation to fill the jobs that will be created in these growth industries.

We also need to retrain the millions of Americans who have lost their jobs, and give them new skills and a renewed sense of economic hope. The unemployed are good, decent people who are trapped in an economic downturn not of their making or choosing. So, we owe it to them to provide the necessary training and education to put them back to work.

CNV. Are you optimistic for consumers in 2010?

Hinton. I think the short answer is yes, I am cautiously optimistic for 2010. But, my optimism for 2010 depend on a few key issues. First, I think consumers need to see measurable progress in Washington on the major issues we've discussed in this interview. Secondly, I think President Obama is on the right track and he needs to press ahead and get Congress to adopt his proposals and quickly implement his plan. This probably means that some regressive members of Congress will be left behind, but that's politics. The sooner Congress and the president act, the sooner we will see a meaningful recovery. If Congress lacks the political courage and will to act, all bets are off. 2010 could be another dismal year. If that happens, I'm concerned that China will pull ahead of the United States and become the dominant economic force for the next 20 years because they have the resources and economic capacity to beat us. So, the political and economic stakes are very high.

In terms of consumer confidence, it's beginning to inch upwards because -- despite the naysayers and political commentators -- most consumers think Mr. Obama is on the right track and he is addressing the tough issues that need to be resolved in order to create long-term economic growth.

If there is a silver lining to our current economic crisis, it is this. Out of adversity comes opportunity. One of America's greatest strengths is good old Yankee ingenuity. Americans have a tremendous innovative spirit as well as the ability to take an idea to market quickly and cheaply. So, new ideas for products and services will flood the marketplace as soon as the economy recovers. There is certainly pent-up demand among consumers to buy new cars, clothes, electronic goods and other staples that drive our economy. But, until we see job growth and a spirit of cooperation in Washington, I think consumers will sit on the sidelines with their hands on their wallets and purses and not spend money. And, every day consumers sit on the sidelines is another day we postpone the recovery.

Thursday, August 6, 2009

Free Doesn't Always Mean Free

by bill Kalmar

Our cable provider, AT&T, just offered us one month of free service for Encore and Showtime. Two months ago, we took the free HBO offer for two months. After two months of “Caddy Shack” and “Willy Wonka & the Chocolate Factory” reruns, we decided to cancel. Now after just two days of Showtime we are ready to cancel again. What pushed us over the top was a rerun of “How the Grinch Stole Christmas”... in July. So come tomorrow we will return to our regular programming. Frankly, we don’t need 300 channels anyway.

What I learned from previous experiences with cable companies is that if you fail to cancel within the allotted time of your free subscription, your account will be charged and it may be difficult to obtain a refund. In the case of AT&T, I canceled the HBO subscription within a week of the free deadline, however, our statement recycled prior to that date and thus we were charged a monthly fee. It was easily reversed but I think it points out that many companies are in a financial bind and may look for unusual ways to increase their cash flow.

One case in point is our health care provider. Our payments have been due the first of the month since my retirement in 2003. Then on July 16th we received a notice that our payments are now due the 25th of each month starting with the July payment—a nine-day window for payment. This was done unilaterally without notice to subscribers. I have written to senior management concerning this and hope to receive a response before my next column.

I pointed out to management that before decisions are made the question should be raised: “How will this affect our customers?” This is a basic quality concept that is often overlooked and one that generally results in adverse reaction from customers when ignored. What makes this decision so impractical is that our prescription coverage from the same company is still due on the first of the month.

It seems companies that have reduced their staffs are having difficulty with quality control. I wonder if anyone has weighed the cost of replacing defective merchandise with the cost of having an experienced staff on board who verifies the quality and proper response to orders. I would bet that having trained staff costs less than all the miscues that are occurring.

We just unpacked a ceiling fan for installation in our family room and as luck would have it, two of the light fixtures were shattered. A call to the fan company had replacements sent to us but when the new lights arrived, the wrong ones were in the package. Another call to a different rep caught the error and new lights are on the way. I’ll let you know if the second time is the charm, but normally it takes three times, doesn’t it? Also, a sports chair we ordered has a rip in the fabric, so back it goes.

Have you seen that some of the bailed-out companies are now prepared to pay extravagant bonuses to staff members? Senior management reconciles this idiotic practice as a way to “prevent talented people from leaving the organization.” If these people were so talented, why was the company in financial trouble? I say, prohibit bonuses and let these people leave. Then let them find a job, especially in Michigan where unemployment is at 15 percent and rising. When these so-called brain-trusts leave there will be thousands of qualified people seeking those positions.

Speaking of people leaving, here is where some of you will be counting me for sure among those dining on loco weed—but understand that I'm immune to criticism and am bullet proof. Just as in the business world where CEOs are obliged to retire at a predetermined age, most likely at 65 years of age, the same should be done in the political world. Do I really want some senator or representative in his or her 80s or 90s making decisions that will effect me or my children and grandchildren? Absolutely not!

It's time for these dinosaurs to pack up their orthopedic underwear and hit the road; and I say that as a senior citizen myself.

Now go ahead, write me, and tell me that I am discriminating against the aged. Candidly, anyone who is making laws in their 80s and 90s is discriminating against me, because he or she no longer identifies with reality and the world I'm living in.

Speaking of senior citizens, how about the run 59-year-old Tom Watson just made at the British Open? He forced a playoff after leading most of the time in the four-day event and then lost on the final playoff hole. But he provided loads of excitement and certainly outplayed many younger players. Maybe some of our octogenarian senators could caddy for him.

Well, time to give cable TV another try. They're showing “The Maltese Falcon” with Humphrey Bogart. Now that’s real moviemaking

Wednesday, July 22, 2009

United Airlines is Broken

by Tom Hinton

Perhaps you’ve seen the You Tube video entitled United Breaks Guitars by Dave Carroll. Dave serenades us with his composition about the United Airlines baggage handlers at Chicago O’Hare Airport who tossed around his expensive Taylor guitar (in its sturdy case) on the tarmac as he and other passengers looked out their airplane window in a state of shock and disbelief. Of course, when Dave Carroll and his band members arrived in Nebraska and retrieved their musical instruments from UAL’s baggage belt, they discovered his custom-made Taylor guitar was broken.

For nine months, Carroll tried unsuccessfully to resolve the matter with UAL. But, United Airlines representatives gave him the run-around and denied any responsibility for breaking his guitar. Frustrated by his experience, Carroll wrote a comedic song entitled United Breaks Guitars and posted it on You Tube. Carroll’s story has become a public relations nightmare for United Airlines. More than three million viewers have seen Carroll’s story-song and many have responded on You Tube and Twitter with their own horror stories about United Airlines. To make matters worse, several evening news programs have shared Carroll’s saga with millions of their viewers.

Succumbing to the negative public relations caused by Carroll’s song, UAL offered to repair his damaged guitar. However, Taylor Guitars of El Cajon, California, which hand-makes each instrument, beat UAL to the punch. They seized on Dave Carroll’s story immediately and contacted him offering to repair or replace his guitar. Bob Taylor, the brilliant owner and founder of Taylor Guitars, also made his own You Tube video to counsel musicians on how to care for their precious cargo when traveling by air. Taylor recommends not checking guitars, but instead, carry-on these items which is permissible by the TSA provided they can be stored aboard an aircraft.

While Dave Carroll and Taylor Guitars have come out winners, one must wonder what in the world United Airlines’ management was thinking? Did no one at United Airlines call a “time out” to ask colleagues, “Hey, how do we come out of this broken guitar scenario without egg on our face?” Sadly, this isn’t an isolated case at United Airlines. Acts of stupidity and customer abuse are repeated multiple times every day by a growing number of disingenuous United Airlines employees who lack common sense and do dumb things that alienate passengers and those hard-working UAL employees who are customer-focused. I’ve witnessed it personally in Chicago and Denver several times. Of course, it begs the obvious question -- why?

The answer is United Airlines is broken. Organizationally and culturally, UAL lacks a spirit of service. While the majority of UAL employees are dedicated, fair-minded people who give their best every day, a growing number of toxic UAL employees have been infected with the deadly workplace virus that is best described as “I don’t care!” Regrettably, this virus is spreading throughout UAL’s ranks and is spawning an attitude of disinterest and apathy from the top down. When the “I don’t care” virus seeps into the cultural blood stream of an organization the results are often fatal for the company. In the case of United Airlines, management must act quickly to curb the spread of the “I don’t care” virus and re-orient its employees in the ways of service, courtesy and empathy for customers, passengers and each other.

I am not recommending this action without careful consideration. In addition to interviewing many UAL passengers about their negative experiences, I’ve reviewed two key documents that tell me UAL is flying blind when it comes to customer relations and meeting the needs of its passengers. Consider UAL’s mission statement, which I could not find on its website or in any public documents that were easily accessible from UAL. However, a UAL representative told me that its mission statement reads, “To be recognized worldwide as the airline of choice.” This bland statement is ineffective and says nothing about the company’s commitment to its employees, customers, suppliers or profitability. UAL is operating with a very weak mission statement that offers employees no guidance on how to treat passengers and customers.

Secondly, I evaluated UAL’s Customer Commitment Document (CCD) which consists of 12 statements that provide greater clarity and insight as to how UAL employees should behave and respond to situations like the Dave Carroll broken guitar saga. Statements #3 and #4 of the CCD read: “Provide on-time baggage delivery” and “Provide a fair baggage liability limit.” CCD Statement #12 reads, “Respond quickly, appropriately and courteously to customer questions and complaints.” That’s positive, effective and clear.

Unfortunately, nobody Dave Carroll dealt with at UAL followed the airline’s CCD. If UAL was customer-focused and had trained its customer-contact employees to respond based on the CCD, the Dave Carroll problem might have never happened. However, once it happened, UAL employees should have relied on Statement 12 to guide them to a speedy and fair solution. By ignoring their CCD, it’s obvious that UAL employees do not know the CCD exists or they have been instructed to ignore them by management. In either case, the customer loses and, eventually, so does United Airlines.

My experience in dealing with broken companies like United Airlines is they often try to gloss over these negative incidents by dismissing them as an isolated customer service glitch or a training issue. Perhaps, this is why UAL is seeking permission to use Dave Carroll’s United Breaks Guitars as a customer service training tool for its employees. But, doing so is farcical. It’s akin to the captain of the Titanic ordering a pump to drain the water after the ship has struck the iceberg and the captain ignored all the warning signs.

My deeper concern is that United Airlines’ management doesn’t get it. Having worked with many companies to help them create a culture of excellence, I know from experience that what happened to Dave Carroll and his Taylor guitar goes far beyond an isolated customer service glitch. Frankly, it’s the result of a corporate cultural that pits employees against passengers because of outdated policies and procedures as well as verbal mandates from management not to spend money on customer complaints. In the short-term, the airline wins the battle but loses the war. Ultimately, customers realize they have a choice and they choose not to fly United Airlines. But, the damage in this case doesn’t stop with one passenger deciding not to fly UAL. In the Dave Carroll situation, millions of people who fly have been negatively influenced towards United Airlines and how it mistreats passengers. To compound UAL’s problems, those 3 million You Tube viewers are telling their friends and families to watch Dave Carroll’s United Breaks Guitars and then communicating via MySpace, Facebook and Twitter to tell the world how terrible United Airlines is. So much for UAL being the “airline of choice!”

Let’s not forget that every company has customer issues and gets complaints. However, best-in-class companies pounce on these moments-of-truth to practice the ABCDs of customer service -- going Above-and-Beyond-the-Call-of-Duty -- to win back customers. As Jim Nordstrom of Nordstrom Stores once told me, “Whenever we solve a customer’s complaint on the spot, we’ve not only fixed the problem at little cost to our company, but we’ve also earned that customer’s loyalty for life.” That’s why Nordstrom is noted for its outstanding customer service. It was also Jim Nordstrom who told me that "when you've discovered that you've made a hiring mistake, it's best to acknowledge your mistake and invite that person to move on to their next career." He added, “You can’t fix stupid!”

This raises another important point: toxic employees who abuse customers are not tolerated at best-in-class companies. I’m willing to bet those guilty baggage handlers who played football with Dave Carroll’s Taylor guitar are still on the UAL payroll at O’Hare Airport. Furthermore, I bet UAL will claim they are union employees and, therefore, their jobs are protected. But, such explanations are nonsense and only prove my point that management doesn’t get it. Furthermore, this attitude only serves to spread the deadly “I don’t care” virus. When an employee commits an egregious act that results in tarnishing the brand or damaging the company’s reputation, that employee should be terminated regardless of union rules. When toxic employees are sacked, it sends a strong message to the rest of the team -- champion customer service and protect our brand and image at all costs.

I actually had one UAL employee tell me that this entire problem was Mr. Carroll's fault because he failed to follow UAL's policies and guidelines for properly filing a damaged property claim. I rest my case!

When management turns a deaf ear to customer complaints and performance improvements, employees will follow management’s example; and, through subtle actions, employees disrespect their customers. Sometimes it’s unintended. But, more often than not, it’s blatant misbehavior. This is why the baggage handlers at O’Hare Airport thought is was okay to play football with Dave Carroll’s guitar. This is why the flight attendants aboard Dave Carroll’s airplane ignored his pleas to stop the baggage handlers’ from tossing his guitar case on the tarmac. This is why the baggage claims representative in Nebraska dismissed his claims when he reported his guitar broken. Countless other UAL employees gave Dave Carroll the cold shoulder for nine months. It wasn’t until he sang his song on You Tube that United Airlines decided to recognize the legitimacy of his claim and respond to his concerns. But, mind you, United Airlines was only reacting to the negative public relations caused by Carroll’s song, United Breaks Guitars. I doubt they acted out of a sense of customer concern or a spirit of service because UAL has no such corporate credo to guide its employees.

Broken companies seldom get it. It wasn’t United Breaks Guitars that should have prompted United Airlines to act and resolve Dave Carroll’s problem. It should have been United Airlines’ compassion, empathy and concern for a loyal passenger whose livelihood was disrupted because UAL’s baggage handlers abused his property. But, when the “I Don’t Care” virus infects employees, nobody gives a damn and bad things happen.

Ironically, the Dave Carroll incident could have been nipped in the bud by an attentive and understanding UAL flight attendant aboard his flight or a senior baggage handler representative at his destination who knew and practiced CCD #12. But, in a broken company, passengers like Dave Carroll get bounced around from one customer service rep to the next -- just like his Taylor guitar. In Carroll’s case, he let his broken guitar tell his story to millions of You Tube viewers who are now disgusted with United Airlines and will probably choose to fly a competitor given the option.

It would do UAL’s senior management good to revisit the first law of profitability -- acquire and maintain your customers! If this credo was part of UAL’s mission statement or guiding principles, incidents like Dave Carroll’s broken guitar would not mushroom into a public relations disaster for United Airlines.

About the Author. Tom Hinton is president of CRI Global, LLC, an international training and consulting firm that helps companies achieve a culture of excellence. Mr. Hinton is the author of four books including The Spirit of Service. He is also a frequent air traveler and supports the Airline Passengers’ Bill of Rights that languishes in Congress due to opposition from airlines including United Airlines. He can be reached at

Friday, July 10, 2009

Riding the Green Wave for Certification

There’s a new wave of environmental consciousness rolling across the landscape of American business. In certification circles, we refer to it as the Green Wave. But, companies are discovering that going green isn’t easy, and getting green certified is even tougher! Research data from the American Consumer Council suggests that fewer than 42% of companies that apply for green certification earn some form of recognition, and fewer than 22% pass the bar in terms of earning ACC’s Green C™ certification, a tough standard that gauges a company’s environmental compliance, safety and corporate social responsibility (CSR).

Transforming a business from the status quo to a green company reminds me of the quality movement’s early days as companies scrambled to implement Deming’s 14 points and play catch-up with the Japanese and Germans. Books by Philip Crosby, Joseph Juran, Tom Peters and Masaaki Imai were required reading for anyone who was serious about launching a quality initiative.

Some 25 years later, American business finds itself behind the eight-ball once again. However, this time, we’re trying to catch the Green Wave and compete with companies in Europe, Asia and South America that have already gained a foothold with consumers who are demanding green products and services. This includes everything from energy to carpet, and clothing to automobiles.

So, what’s the big deal? Why are so many American companies scrambling to get their products and facilities green certified? The answer is simple. Credibility with Generation Y and competition for their business!

Credibility means everything to Gen Y, those 82 million under-30 consumers, who will likely spend more than a Trillion dollars in the next five years, but will refrain from buying anything that harms the environment or depletes Earth’s natural resources. Furthermore, Gen Ys are the consumers with a conscious. They don’t want to do business with a company that is not considered socially responsibility. This is one reason why the emerging green economy has already spurred the development of a host of eco-friendly products such as electric cars, alternative wind and solar energy sources, cell phones, computers, recyclable glass (not plastic) products, carpets, furniture, buildings, and even clothing. It’s what Gen Y demands.

An example of a company that is riding the Green Wave all the way to the bank is Patagonia. By developing an environmentally-conscious corporate culture and supporting environmental causes and various groups its customers care about, Patagonia has struck a winning business formula that set it apart from other outerwear marketers. Today, Patagonia stands as a positive example for any business trying to decide whether or not to catch the Green Wave.

But, going green and earning a green certification from a reputable, third party organization are two entirely different strategies. The first is a marketing tactic companies are using to position themselves as eco-friendly with consumers. While this strategy might sell more widgets in the short-term, it is a precarious path to follow if the company cannot prove its products or services are, in fact, eco-friendly or truly green. Consumers are more sophisticated and they know the difference between an eco-friendly brand versus one that simply claims to be green. Consider the top fifteen eco-friendly brands of Generation Y. According to Outlaw Consulting, a qualitative research firm that monitors popular trends among Generation Y, the following companies enjoy “most favored status” with the under-30 crowd: Apple, Whole Foods, Trader Joe's, Toyota, Honda, Google, Aveda, Zipcar, American Apparel, Ikea, 7th Generation, the Body Shop, Starbucks, Netflix and Method.

As leaders search for a comprehensive strategy that goes beyond marketing tactics and positions their company as a real player in the green economy, they will have to include such key factors as conserving energy, saving water, reducing greenhouse gas emissions, shrinking carbon footprints, reducing waste, being more socially responsible, improving employee morale, and participating in causes that a new generation of consumers support. Environmental managers and CSR managers will play a significant role over the next ten years in helping companies set eco-policies and design eco-friendly programs. They will also be a valued member of the corporate team that melds environmental programs and green practices into the marketing message and product launches.

This brings us to getting your product or company green certified. It’s the prudent path because it offers your company a significant return-on-investment as demonstrated by companies in Europe and Asia that have already made the investment, and now, are reaping the benefits. Consider companies like Honda, Toyota, Apple, the Body Shop and Starbucks which are well-positioned to capture greater marketshare as Middle-Class America shifts its buying habits to more green products and eco-friendly companies based on the influence and pressure of their children, Generation Y. It’s no surprise that Wal-Mart saw the light a few years ago and adopted its green initiative. The world’s largest retailer understandably wants its fair share of Gen Y customers!

Of course, earning a reputable green certification is hard work. To certify a specific product requires that it passes a series of tests and meets certain environmental and industry standards. But, to earn a green certification for your company, facility, or agency requires a top-down commitment from leadership as well as a company-wide initiative that addresses such key factors as environmental leadership, environmental awareness, environmental compliance, environmental improvements, corporate social responsibility, and financial results. Frankly, obtaining green certification is not for the faint-hearted. But, earning green certification will set your company apart from competitors and endear you to a new generation of wealthy consumers.

So, what does it take for a company to get green certified? Based on my experience with the American Consumer Council, a non-profit consumer education organization that administers the Green C™ Certification program (, three things are required.

First, senior leadership must make a commitment to go green! This requires not only changing the way you do business, but a philosophical shift -- respecting and accepting your company’s role as a steward in protecting and preserving our environment and natural resources. Several companies including Gap, Green Mountain Energy, Patagonia and Whole Foods have successfully demonstrated how to complete this transformation while generating a healthy ROI. Ultimately, you’ll race ahead of your competitors and be well-positioned to capture a new generation of consumers who want to do business with you.

Secondly, study and compare the criteria of several green certification programs before you make a decision to apply. I lean towards non-profit, independent third party certification programs because they have a social benefit purpose and they are not profit-driven. Make sure the certification program you select challenges your employees to raise the bar and the criteria effectively measures how well you’ve deployed your environmental programs and policies. Also, make sure you will receive a site visit from a team of trained auditors -- assuming your preliminary score merits a site visit.

Be sure the contents of your application will be held in complete confidence. A respected certification program will sign a confidentiality agreement to this effect. Finally, insist on a comprehensive feedback report from the certifying body. The feedback report should be prepared by the auditors and address your strengths and opportunities for improvement based on your application content and site visit. My experience has been that a well-written feedback report often can serve as your environmental roadmap for continuous improvement as well as a viable marketing tool to help your company boost sales and position itself with new customers.

Thirdly, be sure you can leverage your green certification with customers and the media. A well-developed green certification program will offer some type of media recognition event, a conference or forum where you can share your best practices and successes, and a formal certification presentation ceremony that recognizes your employees and garners favorable media coverage.

Catching the Green Wave isn’t easy. But, my experience has been that for those companies that make the commitment to ride that elusive Green Wave and become certified, it can pay a handsome return-on-investment in terms of recognition, product innovations, profitability, boosting employee morale, and repositioning your products and services for the next generation of customers.

About the Author. Thomas Hinton is president of the American Consumer Council and a global expert on green certification. Mr. Hinton is a frequent speaker for companies and associations on the topics of Going Green and CSR. He can be reached at: For information of the Green C™ Certification program, visit:

Monday, June 8, 2009

Embracing the Single Payer System for Health Care

Thomas Hinton
President & CEO
American Consumer Council

There was a time when the United States of America provided the finest health care in the world. Today, the United States is a good example of how not to build a health care system for patients.
What happened? While the answer is simple, the solution to fixing our health care system is complex because of politics, profits, and protecting special interests. The solution requires political courage and leadership. It also requires a grass roots movement on the part of millions of Americans who believe the health care system must change and health care should become a right for all Americans and not a privilege for the few who can afford high health insurance premiums.
Consider these facts. There are 305 million Americans. Some 46 million Americans are uninsured. That’s just over 15% of our population. Nationwide, 202 million Americans are covered by private insurance programs. The average annual premium for a family policy on the open market is nearly $5,800. But, with premiums rising, and private insurance programs being more selective in who they will cover and how much they will pay for certain medical procedures, there is serious concern that premiums will increase while the number of insured Americans will drop significantly because they can no longer afford basic health insurance.
There is a solution that would produce better quality, more research, healthier patients, and entice more health care professionals to return to their chosen profession. It is the Single Payer System.
Regrettably, the Single Payer System solution isn’t even on the table as the president and Congress grapple with how to fix America’s broken health care system. While President Obama should be commended for bringing together key health care industry leaders representing the various factions to create a solution to the current health care mess, the patient -- the American people -- is dying of neglect!
As long as the entrenched health care insurance companies control the Congress and the White House through their lobbyists and campaign contributions, meaningful reform will never happen. Our system has been corrupted at the highest levels of government by profits and greed when action is required, and now!
It is time the political leadership in Washington showed real courage by standing up to the health insurance industry and its lobbyists and changed the way health care is purchased and delivered in the United States. Specifically, President Obama, Speaker of the House of Representatives Nancy Pelosi, and Senate Majority Leader Harry Reid must step forward and endorse the Single Payer System. This would eliminate the need for health care insurance companies and streamline the current system saving an estimated $400 Billion annually -- more than enough to cover those 46 million uninsured Americans who are at risk.
While the naysayers will argue that such a system will ruin health care and compromise the delivery of outstanding care, they are flat wrong. In fact, if we do not move quickly and boldly to correct our broken health care insurance system, more Americans will suffer, die, and face serious financial hardships because they will be shut out from obtaining insurance and, therefore, receiving proper health care.
In the words of Senator Max Baucus (D-MT), who chairs the powerful Senate Finance Committee which oversees health care reform, “Our health care system is in trouble: costs are rising at an unsustainable rate, too many Americans are uninsured, and quality of care isn’t up to par. High costs are making it increasingly difficult for Montana’s families and businesses to afford comprehensive health insurance, which means that Montana’s rate of uninsured is growing rapidly. Although the United States spends twice as much on health care as any other country, we clearly don’t have twice as much health care.
Ironically, it is Senator Max Baucus, the one elected official who could jump-start serious health care reform, who is blocking Single Payer legislation like HR 676. Why? Because, Senator Baucus is one of those Washington politicians who is beholden to the health care insurance industry! Senator Baucus is the third-largest recipient of contributions from the health care and pharmaceutical industries since 2005. Senator Baucus has received $413,000 in donations from health care and pharmaceutical companies and lobbyists. This is according to a March 8 article by Dan Eggen in the Washington Post (''Health Sector Has Donated Millions to Lawmakers''). While this money might be significant to the senator’s campaign fund, it is surprising that -- in the scheme of things and the greater good that could be done by the chairman of the Senate Finance Committee-- such a small amount of money could skew Senator Baucus’ judgment, shade his thinking, and compromise his leadership at a time when Americans desperately need his direction to change the status quo in health care.
It doesn’t take a rocket scientist to figure out why, at the recent Senate Finance Committee hearings on Health Care Reform, chaired by Senator Baucus, he refused to invite anyone who supported the Single-Payer System to appear as an expert witness. Senator Baucus did ensure several slots for his cronies from the health insurance industry as well as association leaders and others who endorsed President Obama’s simplistic health care ideas.
Also disturbing was the fact that Senator Baucus had several Single Payer advocates, who tried to speak out at his hearings, escorted from the Senate hearing room and arrested. This raises serious questions about Senator Baucus’ objectivity, balance and sincerity when it comes to championing health care reform. It’s clear that the United States needs a new health care champion who is objective and untainted by health insurance contributions. Is there such a politician who has the courage and will to stand up against the greedy insurance companies? We’ll see.
The number of uninsured Americans is growing at an alarming rate of nearly 14,000 people every day due to the economic recession and mounting job losses. This is unacceptable. But, what is also unacceptable is the band-aid approach by the president and Congress to keep our greed-driven health insurance system in place while more Americans suffer and die as a result of the policies, rules and procedures dictated by health insurers who only carry about profits, not patients! It is time for a change in how Americans pay for and receive health care.
Let’s define what a Single Payer System is and is not. In a single-payer health system, everyone has health insurance. It is either obtained through a private insurance company like Kaiser or Blue Cross/Blue Shield, or through a government funded program such as Medicare. Also, every person is free to choose their own doctors, hospitals and related health care services. When patients receives care or treatment, they sign a statement that verifies the services they received from their health care provider (doctor, nurse, hospital, etc.). The health care provider then sends a bill for services rendered to the Single Payer -- that is, a national health care administration created by Congress to pay the health provider for your treatment. It’s simple and straightforward.
The Single Payer System does not limit or dictate the type of treatment you can receive. Those decisions are made by you and your doctor. The Single Payer System will not dictate who can treat you. It only affects how your health care provider is paid. And, yes, it eliminates the need for all the health insurance companies currently in business which cost taxpayers about $400 billion annually.
According to the Institute of Medicine, 18,000 people in the United States die every year because they lack health insurance. That’s two people every hour. The United States also has a higher infant mortality level (more children under 1 year of age die) than many other democratic countries.
For many decades, several medical associations claimed that “health care is a privilege not a right.” In an era of human development, certainly the wealthiest nation in the world should make health care a right. The Single Payer System is a step in the right direction to establishing that right.

Tuesday, April 21, 2009

Who Needs Banks When You Can Join a Credit Union

by Tom Hinton

There's a great deal of consumer unrest sweeping across the United States. Many consumers are frustrated with their banks because we can't get loans, the interest rates on our credit cards are excessive, and banks are charging excessive fees on everything from checking to ATM transactions in order to squeeze a few extra dollars out of their preferred customers.

But wait! There is another option that your bank will never tell you about because they don't want to lose your business despite nickel and diming you! The option? Join your local credit union!

I realize changing your banking relationship is almost as much fun as having your wisdom teeth extracted. But, nowadays, joining your local credit union is simple and credit unions are eager to enroll new members. Also, they have money to lend at very reasonable terms. And, as far as credit cards are concerned, why pay 18-24% on your Visa or Mastercard when you can get the same credit card and benefits through your local credit union at low interest rates ranging from 4-9%. This is not rocket science, folks!

How can credit unions charge such modest rates? Consider the fact that credit unions are non-profit, member-owned organizations. They exist to serve their members. While they need to show a reasonable return-on-investment, they are not greedy like so many banks that must answer to shareholders. And, they are fully insured by the federal government up to $250,000 per account -- just like the banks. Gee, you can get the same protection for your money and pay lower rates... it makes sense to me!

So, stop your whining and go online and join your local credit union. To make it easy for you, there's a list of outstanding credit unions from California to New Jersey that are sponsoring members of the American Consumer Council. You can join them at no cost through the American Consumer Council by visiting ACC's website at:

Let me know how it goes!

Wednesday, April 8, 2009

Customer Service Champs or Chumps

by Tom Hinton

In the March 2, 2009 issue of Business Week, the magazine’s cover story was entitled Extreme Customer Service. Business Week touted a list of 25 companies they referred to as “Customer Service Champs.” I’m wondering if there was a typo. Perhaps, it should have read “chumps.”

Frankly, these types of annual customer satisfaction lists amount to little more than beauty contests. In this case it appears that Business Week wiggled and waggled the criteria in so many different ways, the Wicked Witch of the North might have come out a winner! Consider how Business Week arrived at its results. First, Business Week tinkered with the credible criteria of its sister-company, J.D Power & Associates. Next, Business Week padded the scoring with bonus points for industry leaders while punishing companies like Starbucks, which scored high among readers, but was penalized because none of its peers-competitors scored well (duh!). Finally, Business Week included the randomly subjective views of 1,000 of its own BusinessWeek Market Advisory Board. Seriously, folks, this is how Business Week gets us to their Top 25 Customer Service champs. Hmmm? It causes me to wonder if this exercise is about crowning customer service champs or selling more issues of their popular weekly magazine?

As I examine the rankings of the top 25 companies, I note that nearly half, 11 in all, of the 25 companies cited for customer service excellence received a grade of B+, B, or B- on one or both of the major criteria -- Quality of Staff and Efficiency of Service. This begs the question: How can a company that scores less than an “A” be crowned as a customer service champ?

Another consideration for the scoring was a company’s industry ranking. What does that have to do with customer service excellence? A company either gets it right with its customers -- like a Starbucks -- or it doesn’t. Incidentally, I only mention Starbucks because by Business Week’s own admission, Starbucks might have deserved to be on their top 25 list, but was not included because its industry peers scored poorly. So what? If that principle was followed across all industry sectors I seriously doubt a single automaker would be listed. But, somehow Business Week came up with four credible selections from the auto industry to grace their top 25 list of customer service champs. How interesting.

Another question I have regarding Business Week’s criteria is how does a customer judge the Quality of Staff? It’s superficial criteria because rarely do customers get close enough to an organization to competently judge its quality of staff. Just because Joe Hustler or Susie Saleswoman smiles and remembers my name does not mean they have superior product knowledge or customer service skills. Quality of Staff is tied to a company’s hiring and training process. It’s determined by a company’s culture and level of investment in people. Certainly, customer satisfaction is a byproduct of Quality of Staff, but to suggest a reader of Business Week would know the intricacies of how or Lexus develops its staff is nonsense.

And, what in the world does “Efficiency of Service” have to do with customer satisfaction? The answer is nothing. If Business Week had called it “Effectiveness of Service” I would be impressed. But “Efficiency of Service” is nonsense.

Let me offer an example that demonstrates the difference. This week I met a client for breakfast in a well-known chain restaurant. Miguel, the waiter, was friendly and efficient. When we asked for coffee or juice, he responded. When we requested a refill, he responded again. If I used Business Week’s criteria, the chain would score an A+ because Miguel was efficient. But, despite Miguel’s positive demeanor, the order was wrong. The bacon was not crispy and the scrambled eggs were dry. Yes, he served us quickly but that was not our criteria for customer satisfaction. We wanted him to get the order right! When a customer needs to flag down the wait staff to request more coffee or hot water that’s not deserving of an A or a B score. When the cashier failed to add the gratuity to our final check as requested causing us to wait until he could reprocess our credit card, that’s not deserving of an A or a B score. Efficient? Yes! Effective? No!

But, let’s set aside the flawed methodology of Business Week for a moment and examine their top 25 customer service champs. Maybe, by some stroke of luck, they got it right. Among the 12 companies that scored ratings of A+, A, or A- are:, USAA, Jaguar, Lexus, The Ritz-Carlton Hotels, Publix Super Markets,, Hewlett-Packard, Ace Hardware, Four Seasons Hotels & Resorts, Cadillac, BMW, and JW Marriott Hotels. At first glance this appears to be a solid list. But, what’s disturbing to me is that between #1 and #25 JW Marriott, there’s a spread of 170.14 points. What’s wrong with this picture?

The answer lies in the “B” squad results. You see, 11 companies -- T.Rowe Price, KeyBank, Nordstrom, Enterprise Rent-a-Car, American Express, Trader Joe’s, JetBlue Airways, Apple, Charles Schwab, True Value, and L.L. Bean -- all outranked JW Marriott (#25) despite the fact that their grades included a B+, B, or B-. Are you kidding me? So, you can see how a flawed criteria can skew the scoring results.

On that subject, I seriously wonder how three of these companies even made the list. Based on my personal experience and knowledge of their service performance I am amazed that Enterprise Rent-a-Car, American Express, and JetBlue Airways got past the first cut. For the past year, American Express has been canceling credit worthy card members to reduce its exposure in tough economic times. That’s understandable, but it's not good customer service. And, my experience with Enterprise Rent-a-Car has been disastrous. In three rentals, Enterprise never got it right. Of course, their rental car competition leaves much to be desired as well. And, fair or unfair, JetBlue Airways cannot possibly be considered a serious contender for customer service champ as long as the image of passengers left stranded on JetBlue airplanes for up to 11 hours during an ice storm at JFK on Valentine’s Day 2007 remains fresh in our minds. Sorry JetBlue, but that’s a deal-breaker in my book. For what it’s worth, Business Week scored JetBlue Airways above Apple, Charles Schwab, and BWM among others. Go figure?

Of the remaining 8 companies on the “B” Squad, I seriously question how top performers such as Charles Schwab, which rates a perfect score based on my personal experience, and Apple, which continues to run circles around its competitors as the leader in consumer electronics innovation, rank below the pathetic “Double B” score of Enterprise Rent-A-Car? Business Week can’t be serious!

Perhaps it can be argued using valid data that companies like Nordstrom, the once-legendary customer service role model, and True Value, the hardware store that only scored a pair of B+s, should have scored higher in the Business Week customer service poll. But, these are tough times and some companies have cut staff and training to save money. If that’s the case, they don’t belong on the top 25 list.

KeyBank of Cleveland and T. Rowe Price, the brokerage firm, get a pass. I cannot dispute their service performance since I have no personal experience with either company, nor have I studied their customer service ratings.

I do find it interesting that four automakers -- namely, Jaguar (#3), Lexus (#4), Cadillac (#14), and BMW (#22) -- all scored A+ ratings with Business Week despite the fact that most consumers rank the auto-buying experience just below a visit to the dentist. Perhaps, Jaguar has done some remarkable things in the past 12 months to earn its position as the customer service champ of automakers. But I doubt it. Jaguar would have to be wizards to push ahead of Lexus and BMW on their customer service scores.

So, there you have it, folks. The top 25 customer service champs. With all due respect to Business Week, the numbers just don’t add up. Having said that, I do consider Business Week to be among the top 25 business publications in America!

About the Author. Thomas Hinton is president & CEO of the American Consumer Council, a non-profit consumer education organization which administers the Green C Certification program for companies and organizations. For more information, visit: