Why Customers are Boycotting some Businesses & Suppliers
December 10, 2012
Kaye Adams recently interviewed me, on Radio Scotland, about the trend towards
customers boycotting businesses. One of
the cases cited was Starbucks who have been under fire for not paying as much UK
corporation tax as some people expected..
Starbucks is not the only company in the public eye over the non-payment
of corporation tax. Amazon and Google have also been questioned by the House
of Commons Public Accounts Committee.
In the interview I made the following points:
1. Starbucks has done nothing illegal. They fully complied with UK law.
2. However despite abiding by the law
Starbuck’s customers are taking a moral view on the way Starbucks runs it’s
3. Starbucks and other companies operate under the pressure of two opposing groups of people
a)Shareholders who want maximum return
in the investment i.e. they want Starbucks to produce the best share return possible
and that may mean minimising tax.
b) Customers who want best value and good
customer service. They do not however
want to do business with a company that breaks the customers morale code.
4. Customers boycotting businesses is NOT new
Gerald Ratner said he sold rubbish and customers effectively boycotted his business and Ratner empire collapsed.
5. Without customers no business survives
6. Businesses need to remember people do business with those they know, like, trust and respect …that includes with businesses they know, like, trust and respect.
The Problem with UK Banks
I then went on to give a personal example. My bank is paying 0.06% interest on business savings accounts. They can do this as they know that if I move business money into another account it is taxed as a salary, dividend or directors loan … so they pay less interest. In other words they are exploiting both customers and the current UK tax situation.
I could move banks but all of them do the same thing and I’m unlikely to get much better rates
My answer has been to take the dividends I would have taken over the year at an earlier stage ……. AND to take all my personal accounts away from the bank. In other words I’m boycotting them where I can.
Other financial organisations are exploiting the banks unwillingness to pay decent rates by advertising that you need a bank account but don’t need a bank!
Going back to Starbucks: they have a problem as there is plenty of competition for coffee shops. Even by offering now to pay more tax they may find that customers have long memories and will never return. Amazon
and Google may not be affected so much as they have less competition. There are fewer alternatives if we want to buy cheaply or search online at nil cost. When the alternative is to pay more customers are often quite selfish; they will often continue to deal with businesses that have transgressed if it saves them money.
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