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Renewed Customer Focus can Help
Customer Management | Expert Opinion

Disney and Twitter had a Rough Year: Renewed Customer Focus can Help

Opinion by Professor Vikas Mittal

By Vikas Mittal, originally published on The Hill

Opinion by Professor Vikas Mittal

In October, Elon Musk took Twitter private, firing the previous CEO Parag Agrawal. In November, Disney’s board fired Bob Chapek and brought back Bob Iger as its CEO.

Despite a spate of new content moderation policies and proposed software improvements to enhance user experience, Musk’s Twitter has lost half of its top 100 advertisers including major automotive and pharmaceutical companies. Analysts project Twitter will also lose 32 million customers by 2024.  

Meanwhile, Disney’s Thanksgiving release of  “Strange World” lost more than $100 million. Customers remain upset with Disney’s price hikes affecting tickets, food and beverages at its parks. 

However, customer and shareholder dissatisfaction was already festering at Twitter under Agrawal and at Disney under Chapek. From August 1, 2021, to August 31, 2022, Twitter lost 43 percent of its stock price and Disney lost 36 percent (compared to Dow Jones Industrial’s loss of only 9 percent). Restoring customer focus to gain shareholder confidence is the key challenge confronting Iger and Musk. 

The top priority at customer-focused companies is to satisfy consumers. Research proves that higher customer satisfaction increases customer retention and referrals, pricing power, sales, margins, cash flow and stock price. 

Under Agrawal, Twitter became inward-looking by streamlining content and participants rather than enhancing user experience. At the 2020 EmTech conference he stated: “Our role is not to be bound by the First Amendment… Where our role is particularly emphasized is who can be heard.”  

Agrawal deployed 2,000 content moderators to assess, label and manage information flow. Meanwhile, investments in essential areas such as software development, advertising measurement, and user experience lagged. Over time, Twitter’s customers became increasingly frustrated with the user experience and fractious with the content moderation team accusing it of favoritism. Twitter lost both credibility and customers. 

At Disney, Chapek emphasized content distribution and became mired in corporate political activism. He plowed money into Disney+, its streaming service and raised subscription prices. But with lower-priced competitors like Amazon and Netflix, Disney lost more than $4 billion in 2022. At Disney’s amusement parks, Chapek replaced the fixed-price FastPass+ system with flexible pricing Genie+ pass — customers saw it as being “nickeled and dimed.” Chapek also laid off 32,000 employees and fought a political battle that cost Disney its special tax status in Florida.  

At both companies, customers became just a source of cash flow to create and support internally-focused bureaucracies that focused on initiatives unimportant to customers. For example, Twitter executives like Vijaya Gadde became more concerned with content moderation than customer experience. At Disney, internal clients like the distribution chief and other employees tilted Chapek’s attention to distribution, pricing and political activism — rather than the magic of storytelling. 

Iger and Musk can restore customer focus by making three strategic moves grounded in peer-reviewed research.  

  1. Excel on satisfying the two most important customer needs: Amazon’s customers value the online shopping experience and on-time home delivery. Apple satisfies its customers through beautiful, easy-to-use products and reliable after-sales support. Disney and Twitter will need to focus on their customers’ two most important needs. Disney’s customers have always valued its high-quality, family-friendly content and the unrivaled experience at its parks. Twitter’s customers want an easy-to-use and safe platform.   
  2. Guide employees to keep the main thing the main thing: Customers’ most important needs should become the central focus of all employee efforts. Research shows that when customers are more satisfied, so are the frontline employees serving them. Iger intends to lead with “a clear mission focused on creative excellence to inspire generations through unrivaled, bold storytelling.” According to the Wall Street Journal, Iger has already returned decision-making power back to the company’s creative teams, emphasizing storytelling over distribution. Musk has made it clear that the main thing at Twitter is to rebuild the coding and programming team to make the user experience fast, friendly and enjoyable while supporting it with “light-touch” moderation, though recent decisions surrounding banned accounts have raised questions about his approach.  
  3. Keep the company out of political activism: A large body of peer-reviewed research shows that when companies with a diverse customer and employee base engage in political activism, they polarize their customers, dampen worker productivity and reduce shareholder returns. Injecting corporate political activism into the company’s value proposition to appease one group invariably alienates other groups. Research shows that CEOs’ political activism distracts them from delivering customer value. CEOs of customer-focused companies carefully walk the tightrope of staying socially engaged without becoming political activists. Costco, for example, focuses its charitable giving only on supporting children, education or health and human services, not on political causes. Twitter and Disney should make it a priority to increase customer satisfaction and not try to appease customers through political posturing.   

For both companies, this will be an uphill climb. But, with a strategy that puts consumers first, they can emerge stronger and more resilient than before.  

Vikas Mittal

Vikas Mittal is the J. Hugh Liedtke Professor of Marketing at the Jones Graduate School of Business and author of “Focus: How to Plan Strategy and Improve Execution to Achieve Growth.” 

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