General Mills New Legal Policy

Consumer Reaction Causes Cheerios to Pull New Legal Policy

The makers of the heart-healthy brand Cheerios General Mills, had a lot of heartache over the introduction of their new legal policy on their website earlier this month. They learned the hard way that consumers really don’t like to lose anything, even if it was something that they would probably never use. 

In an unprecedented move for the food industry, Cheerios introduced a new legal policy on their website that bound consumers to arbitration if they downloaded coupons or joined their social media sites. This type of “forced arbitration” is common with credit card companies and mobile phones, but not for food manufacturers. Consumer reaction was so negative after an article on NYTimes.com reported the change, that Cheerios pulled the controversial policy just a few days later.

The crux of the reaction was that consumers felt that Cheerios was treating them badly with the new policy. This shows me there is a poor customer culture. They informed the company on their Facebook page that they had plenty of other choices on the food aisle, so why wouldn’t they choose a company that treats them well.

The phrase “treats them well” is a telling one as it implies that consumers felt that the change in policy was the company “treating them badly”.

I would argue that very, very few of the consumers that were offended by this change would have ever considered suing anyone in their life, let alone a giant food manufacturer. But their reaction is a common human one because the policy is morally wrong. According to Professor Daniel Kanheman, from Princeton University and Nobel Memorial Prize Winner for economics, this is all part of prospect theory.

What Kaneheman tells us here is that we think of things in gains and losses. Our attitudes to each are very different. His conclusion was that, “People hate losing even more than they like winning…. It’s a fundamental fact about people.” Kanheman explains why most of these consumers that would never see the inside of courtroom facing the giant food manufacturer were mad that they wouldn’t’ t have the chance.

In my post, “Why We Hate Losing,” I talked about how customer dissatisfaction is associated with a perceived loss of value. This is a classic example of exactly that.

But the General Mills example is also an example of the damage that can occur with a company-focused move like this to the emotional relationship with the brand for consumers. As an important part of decision-making process for consumers, emotional relationships are what cause them to reach for one brand over another when they are shopping.

Take for instance cereal. Most consumers feel they can trust Cheerios. It is well known for being one of the first finger foods you give to a baby when they are transitioning into solids. If you can feed it to a baby who doesn’t even really know how to eat anything solid, it must be pretty trustworthy. So using this as a basis for my logic, I would argue that consumers feel that Cheerios is a brand they can trust.

When their parent company decided that consumers could no longer sue them in a court of law, it makes one suspicious almost immediately, raising questions like, “Who sued Cheerios and why?”

Part of the emotional response they got from their customers no doubt is based on this subconscious interpretation of the new legal policy. General Mills was surprised by the reaction. This shows what the company is really like; more worried about themselves than customers. It shouts, “we can’t trust you!” to consumers.

Everyone knows that no one reads terms and conditions. Consider the prank a couple of years ago where online shoppers sold Gamestation their immortal souls.  But just because this is the case it doesn’t mean that companies should try and ‘get away’ with things. While it adheres to the legal law, it’s a clear violation of a moral law.

General Mills listened and reacted, which is the best any organization can do in this situation, after they have upset customers with a policy that makes them angry. And they gave it all back.

What I love about this story is that this is a great example of how these deceptive and sneaky practices by companies can now be exposed by social media and they are shamed into changing things by consumers. Excellent customer experience with an exceptional emotional signature is a great differentiator in a time when your every move can be tracked, commented on and publicized by the public at large.

Do you remember a time when one of your favorite brands ticked you off with a sweeping policy change? How did you react?