Trust hard-won, easily lost
what’s always been suspected. Fuel companies play silly bugger games when it comes to pricing.
Rather than a transparent and prescriptive formula for allocating costs and then adding a fair margin, BP appears to have a ‘‘make hay while the sun shines’’ approach to pricing, if the leaked memo about the Horowhenua region is anything to go by.
The leaked material suggests that BP arbitrarily increases prices when it can get away with it, and will raise prices in neighbouring regions to match. It also gets close to advocating price-fixing by explicitly stating its wish that competing companies will match the price increases. That’s a move that would be consistently anti-consumer.
Clearly it ticked off Prime Minister Jacinda Ardern. In her post-Cabinet press conference this week she warned BP that ‘‘the usual explanations do not exist’’ for the large discrepancy between crude oil and retail prices.
Not a great look for a company that’s only just managed to move away from the PR fallout surrounding its Deepwater Horizon disaster – an event acknowledged as being a case study in how not to handle communications.
I imagine it’s got BP New Zealand’s managing director, Debi Boffa, fully occupied right now as she tries to work out how to clean some dirty laundry in a way that means they won’t look like a bunch of opportunists who got caught out.
But perhaps that is the essence of trust. Trying to do the right thing, and fessing up when you fall short of that. And doing it quickly.
Warren Buffet famously noted that it takes 20 years to build a reputation and five minutes to ruin it and that’s what these companies are grappling with. I suspect that both firms normally try to do the right thing, but when thrown into the spotlight they simply panicked. Rather than opening up, they tried to contain the damage.
Imagine the difference if Russell McVeagh had responded to the initial allegation by asking the Law Society to appoint an independent investigator on day one, and had been the one launching the survey about sexual harassment in legal workplaces.
Likewise, instead of telling media outlets that it wasn’t able to use an internal memo, consider if BP’s managing director had fronted the issue and answered questions rather than ducked. There’s nothing wrong with dynamic pricing, but there’s everything wrong with not talking straight to the two million motorists who buy your product.
The next Edelman Trust Barometer isn’t due out for another 11 months. Here’s to hoping that business will be able to deliver a better score in 2019. Mike ‘‘MOD’’ O’Donnell is a professional director, writer and consultant. His Twitter handle is @modsta and he’ll trust a person until he has a reason not to.