Proof That It Pays to Be America's Most-Hated Companiesby
The potential buyout offer for Time Warner Cable serves as a reminder that the stock is up 39 percent this year through Dec. 13 and has surged 450 percent over the past five years. This is why companies don’t really care if you hate them.
For all the usual complaints—such as “I hate dealing with this company” or “These guys are the worst at customer service”—about the usual suspects from the ranks of cable and Internet providers, airlines, and banks, it turns out they just don’t have much incentive to care. The companies you hate are making plenty of money. In fact, the scorned tend to perform better than the companies you like.
The American Customer Satisfaction Index scored 190 major brands this year on a 100-point scale for customer satisfaction. The highest score went to Mercedes-Benz, with an 88. Filtering the list to include only publicly traded companies with at least one full year of trading data allows a comparison between 2013 stock market returns and the customer-satisfaction rankings of 146 companies.
You won’t be happy with the result. Basically, the customer-service scores have no relevance to stock market returns. If we wanted to dig in a little deeper, we can add a regression line on top of the data to show the trend:
As you can see here, the trend is actually downward, suggesting that the most-hated companies perform better than their beloved peers. More specifically, notice the R-squared is basically zero—there’s no statistical relationship between customer-service scores and stock-market returns. Your contempt really, truly doesn’t matter to these companies, with no influence on the bottom line. If anything, it might hurt company profits to spend money making customers happy. For cable-TV providers, an industry whose customers famously have few options, happy users could be a waste of money and bad for shareholders. And so many of us angry subscribers are also the shareholders through, say, our retirement accounts.
Another quick comparison (right) showing that the most-hated companies, no matter how narrow or broad you define them, always beat the most-loved companies.
So the next time your call to customer service involves conversations with an obtuse robot followed by a 17-minute wait for a less-than-helpful human—all while anxiously hoping not to hear a sudden dial tone that sends you back at square one—at least you’ll know it’s the smart way to do business.