Companies, the customer, and the mutual respect make a great company

Often in the jungle of growth, orders and profits, we lose sight of how an ordinary customer perceives a company. We are all familiar with the story of how Peter Lynch found a great investment because her wife had discovered that a new brand of panty hose was better, “Carolyn didn’t need to be a textile analyst to realize that L’eggs was a superior product. All she had to do was buy a pair and try them on,” writes Lynch. What had Hanes done? It talked to women about the essential garment. None of them remembered the brand they bought. Hanes also realised that women went to the neighbourhood store almost every alternate day. Hanes therefore stocked the pantyhose in those stores, as Lynch says, right next where eggs and chewing gum were stocked. And it gave them great quality.

Similarly, when Air travel became so frequent, as Making of An American Capitalist an excellent biography of Buffet states, " Air travel having become affordable, the middle class was embarking on the Grand Tour, and the traveler’s check had become its passport. (“Checks That Never Bounce,” Reader’s
Digest gushed.). Half a billion dollars of the company’s scrip was in circulation, accepted as readily as money itself."
Then American Express was hit by a scam and its scrip nose-dived.

What did Buffet do? "As these events were unfolding, Buffett paid a visit to Ross’s Steak House in Omaha, in the same inquiring spirit as when he had earlier dropped in on the clothier Sol Parsow. On this evening, Buffett was interested not in the customers’ steaks, nor in their suits or hats. He positioned himself behind the cashier, chatted with the owner, and watched. What Buffett observed was that, scandal or no, Ross’s patrons were continuing to use the American Express card to pay for their dinners. From this, he deduced that the same would be true in steakhouses in St. Louis, Chicago, and Birmingham.

Then he went to banks and travel agencies in Omaha and found that they were doing their usual business in traveler’s checks. Similarly, he went to supermarkets and drugstores that sold American Express money
orders. Finally, he talked to American Express’s competitors. His sleuthing led to two conclusions, both at odds with the prevailing wisdom:

  1. American Express was not going down the tubes.
  2. Its name was one of the great franchises in the world."

Buffett saw a type of asset that eluded Graham: the franchise value of American Express’s name.
This brings us to a very important issue. Its alright that a company is respected by its customers, but what about the company, does it respect its customers?

In the case of Hanes, it did what a company should normally be doing. Identifying the customer, her needs, and then giving them good quality.

But there is more to it. Suppose there is an issue with the traveller’s cheque issued by American Express. A customer is seriously concerned that the company should take steps to quickly, and without fuss resolve it.

People liked Amazon because of its no questions asked return and refund policy. When I received a lens, which did not open and therefore could not be attached to my camera, I had to approach the CEO himself to get my refund.

Similarly, in 2020-21, when I had booked costly air-tickets through a well-known service provider, they made me fight for refund (I had to cancel my trip because of the pandemic) for more than six months, telling me lies all the while.

Would I again book a ticket through that provider?

Bigbasket is liked by the house-wife because she knows that she only has to contact their customercare service on the chat, upload a photo of vegetable which is not upto the mark, and she would get her refund.

Approaching Jio, either the phone/broadband provider or JioMart is not that easy.

We have seen in the case of restaurants that customers move to another joint if the quality goes down. A neighbourhood restaurant served us lukewarm sambhar, the management when approached, did nothing about it. It is closed now.

A friend has recently closed his demat account with a well-known bank because it made him run around.

So, like Buffet, who disregarded his guru Graham’s dictum that a stock ought to be purchased on the basis of “simple and definite arithmetical reasoning from statistical data,” and went by how a customer perceived the Bank, we cannot ignore the important aspect on which success of a company depends- how friendly the company is towards its customers. That, and only on that depends the success of that company providing service or goods to common man.

And that may not be immediately apparent from data. There is more to a company than merely its Annual Report.


Personal experiences not always reflect the collective experiences, the conclusions we come to may not be the same conclusions that others have come to, and even we may not strictly adhere to our decisions of not using a particular service if we don’t have other options. Such personal experiences have a limited role in investing, and extrapolating them may not be the correct way.

Quantitatively speaking, negative feedback unless unanimous in most of the cases is negligible, it does not reflect in the numbers. So while we can develop a way of looking at businesses from our personal experiences and inferences and stay from certain businesses, market may think differently and reward those businesses, if the businesses keep growing.

Even I am wrong in a way in saying all of this, because these are my inferences, which are not shared by all.

Just saying.

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With regards to customer service, sometimes multiple personal experiences with the same company is a good indicator of how that company is perceived by others as well. We can further corroborate our experiences with online reviews and come to a conclusion. I agree with most of @meekinvestor’s observations. There are very few companies that can be compared to Amazon India’s customer service. They go way beyond expectations in my experience.

Can you guys list a few other listed companies that are as good as or close to them?

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The sample size that we may have is too miniscule compared to the size of companies, so it does not serve any purpose other than us not participating in such businesses. And if each such experience is not regarding the same aspect, then it is even less useful. And if our bitter experience happens with a middle man, there is no point in juxtaposing that with the company. And in a company’s journey of decades, there will be a lot of mishaps, unsatisfied customers, disgruntled employees etc., so there are a few variables here to come to a conclusion.

So I guess it helps to consider our experience as personal and accept market’s perception as the broad consensus.

This is from One Up on the Wall Street
" I’d already invested in United Inns, the largest franchiser of Holiday Inns, and I was keeping my ears open for other opportunities. During a telephone interview with a vice president at United Inns, I asked which company was Holiday Inn’s most successful competitor…
““La Quinta Motor Inns,” the vice president of United Inns enthused. “They’re doing a great job. They’re killing us in Houston and in Dallas.” He sounded very impressed, and so was I…”
Peter Lynch studied the way La Quinta Motor Inns conducted its business. Then, “I followed up on this conversation by spending three nights in three
different La Quintas while I was on the road talking to other companies. I bounced on the beds, stuck my toe into the shallow end of the swimming pools (I never learned to swim), tugged at the curtains, squeezed the towels, and satisfied myself that La Quinta was the equal of Holiday Inn.The La Quinta story checked out in every detail…”

That is how he invested in the motel.

The first time I heard of Astral Pipes was from the contractor who was doing repairs on our building (big project, costing several crores). He talked of shortage of pipes as import from China had stopped (that was 2020). Among the Indian pipes he said Astral is the best.

Unfortunately, I thought it was too costly and let of an opportunity of investing in India’s best pipes manufacturer. Its PE today is 89.7. The share price has more than tripled since I heard of this company.

Our experience is personal. So is the decision to invest. Never ignore what your wife, children, friends, even your maid tell you of a company’s product or their attitude towards its customers.

Remember why the PSU banks floundered for a long time? Everybody who dealt with their employees had a tale. Its only competition that is making them mend their ways.


I agree that our personal experience does not make a sample. What do you mean by “market’s perception”? Stock market or customer base?

If you mean stock market, I am not sure I can agree with the argument. Stock market might consider factors other than customer service to come up with crazy valuations which might not reflect the earnings growth of the company in the long term.

Also I understand that customer service alone does not mean a good stock, unless customer service is the product the customer is buying like in the case of Amazon. For illustration, I am sometimes comfortable making purchases on Amazon, as opposed to another site, just because I know that if should something go wrong with the purchase, Amazon will resolve it 90% of the time even if it means a loss for them for that particular purchase. I would like to know other listed companies in India that do the same!

In addition to customer service, companies need Purple Cows.

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Market’s perception is the price which on most occasions reflects the business over the course of time. What we experience may not necessarily be the same as what investors collectively think about the business. I have read customers leaving negative feedback for many large cap stocks, and it does not show any effect. Earnings and valuations are a different topic.

Amazon is a platform, so Amazon cannot afford to lose its customers, more so when it also sells its own brands in its own platform, even more so when it has direct competitors doing the same thing.

You may be living abroad, where customer awareness is more and companies do value customers’ experiences and feedback and bring in some changes due to various business related and regulatory reasons, but you know that India is a different country, in many aspects, customer reactions included.

Personal experience can help in investing due to following reasons.

Idea generation
If you like a product, you may like the company. Detailed analysis can be done before investing.

Behavioral reasons
It will be easy to hold the stock during a downturn if you have used its services. You can check if their products are selling and find the courage to hold them.

Risk analysis
If you have used a product made by the company, you know that the business exists and the products are available. The quality of product can be compared to competitors.


With regards to mutual respect between customers and the company, I would like to bring up the example of L.L. Bean which had to modify its no questions asked return policy. Sometimes, the customers also have to be deserving of good customer service. It’s unfortunate when customers don’t play fair either.

For example, Amazon sells in packs of say four items. Say, the customer received only 3 out of four and calls the Amazon customer service, Amazon’s customer service for some strange reason will offer to refund the whole amount and ask the customer to keep the 3 items. Should a customer accept this or not? At the very least, customer should hesitate before accepting. On the other hand, Amazon should just take the return and either exchange or refund the sale amount as they are actually hurting customers character by tempting them to take advantage of their generous offer. So I guess a good customer base also begets a good company.

I can add a few Indian examples on how the respect that a company commands reflects in its Annual Report. I am not saying that that is the only factor which propels its growth, but it is a significant factor. Of course, no company can blossom just on smiling faces.

The first example is Titan. Everybody knows that jewellery bought from Tanishq comes at a premium. But we yet buy our jewellery from them because of the trust that they command.

Then, IDFC First Bank. People may open their accounts in that bank because of the higher interest rates offered by them, but they stay because of the customer-friendly culture in that bank people often talk of.

My wife loved the Lord Krishna bank because the staff made her feel so welcome and important despite the fact that her account never had large sums of money.

I would like to get my hands on the financials of Air Asia and Vistara. While Vistara staff usually comes in for praise, the Air Asia crew and the ground staff are said to set standards of rude behaviour. So, do the travellors decide to bear with that because of the low fares? I am not sure.

There may be many companies which do not come into contact with its customers. A Tata Steel or a Dalmia Cement for example. So, my post was of course was about companies having direct interaction with its customers.

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