Verizon Brand Can Weather Strike Until Unions Find ‘Smoking Gun,’ Marketers Say

The strike “hasn’t really penetrated the broader public consciousness yet,” said Dorie Clark, a marketing strategy consultant. While 39,000 off-the-job workers is a big number for a strike, it’s relatively small compared with the total U.S. population of about 300 million, she said. The power of unions in this country has declined, with less than 7 percent of private sector workers unionized, she said. It’s harder to get the public energized about a strike, she said. “The feeling of universal brotherhood that union members could count on in the immediate post-World War II aftermath when 30 percent of the private sector workforce was unionized has really diminished markedly in recent years.”

The Verizon brand could be hurt if service suffers, said Kirk Parsons, JD Power senior director-technology, media and telecom services. Strikes in themselves don't typically hurt brands, he said. “The one main issue will be if service suffers. If so, then there could be negative repercussions on the brand, but they tend to be short lived.” Any problem affecting performance, delivery or reliability of service -- “the bread and butter” of Verizon -- will negatively affect customer satisfaction, agreed American Customer Satisfaction Index Managing Director David VanAmburg. “You want people not to have to call you.” Clark said, “What is really going to get the attention of American consumers is seeing service disruptions or delays of some kind that affect them personally.”

Until the strike ends, Verizon should focus on keeping customer problems to a minimum, said Stephen Beck, managing partner of cg42, a marketing consulting firm. “Clearly, from a PR standpoint, this has not been good for them. But PR comes and goes. It’s when their customer base experiences incremental frustration associated with the using of Verizon services … that it creates greater attrition risk for them.” Verizon must “figure out how to continue to provide reliable service during what amounts to a labor shortage,” VanAmburg said. “Can they keep the level of service where it has been pre-strike?”

On public relations, Verizon should present itself as the “calm, reasonable side, and position the other guys as being too demanding, unreasonable and irrational,” Clark said. Verizon has done well so far to show it has put offers on the table, while the unions haven't found a “smoking gun that they can point [to] about some particular egregious action that Verizon has taken,” she said. The statements of solidarity by Democratic presidential candidates Hillary Clinton and Bernie Sanders amount to “presidential primary theatrics,” she said.

Reputation problems often don’t hurt Fios because customers in many markets lack strong alternatives, Standard and Poor’s analyst Angelo Zino said in an interview. “The second option in many of these markets isn’t a great option,” Zino said. “Verizon still looks positive, given their superior technology relative to many others that are being offered on the market today.” In markets with Fios, a cable company usually provides the only broadband alternative. Comparing how Verizon and AT&T treat their respective employees “starts getting a little bit interesting, but they operate in completely different geographic regions,” he said.

Clark agreed that Verizon customers may be unlikely to jump ship. “It is going to take a lot to get your average consumer to be so angry or concerned that they would switch carriers,” she said. “Verizon is competing in a universe where the bar is extremely low for customer service, so that is a built-in advantage.” Even so, Beck said he wouldn't be surprised if cable companies spend more on advertising their competing triple-play bundles while the strike festers.

“Our company remains in constant communication with our customers about these issues and many others,” a Verizon spokesman said. “Listening and responding to customer needs and concerns is in our DNA. While we strongly desire to reach a reasonable agreement with union leaders, we are also confident that Verizon customers fully understand our position. Providing outstanding customer service is and will continue to be a top priority for Verizon during this work stoppage. Nothing will keep that from happening.”

CWA believes "the prolonged strike will lead to long-term damage to Verizon," George Kohl, senior director-collective bargaining and technology, said on a conference call Tuesday. He cited a recent study by market researcher YouGov that found consumer perception levels of Verizon Wireless and Verizon Fios dropped to three-year lows in the first two weeks after its union workers went on strike (see 1604280064). Kohl predicted brand damage, worsened service and permanent customer loss for Verizon. Even after the strike ends, he said, there could be "long-term productivity issues of a workforce that's been alienated by management and been treated unfairly."

Verizon workers, who hold about $1.3 billion of company stock, announced plans Tuesday to vote for a series of shareholder proposals to change corporate governance at the telco's upcoming annual meeting. The union shareholders plan to vote in favor of three proposals: (1) require that the board chair be an independent director, (2) require shareholder approval of “golden parachutes” for executives, and (3) require executives to retain 75 percent of shares they receive as part of their compensation packages. Verizon plans its annual shareholder meeting Thursday in Albuquerque.