It was a quick about-face. Just days after announcing it would try to keep up with growing demand for its upscale bourbon by watering down its whiskey, Maker’s Mark said “never mind.” After an angry reaction from bourbon drinkers, the Kentucky distiller’s management decided it wasn’t worth alienating its loyal customers by messing with the recipe.
Critics derided Maker’s Mark management for poor judgment, but I say kudos to Maker’s Mark’s top brass: They knew when to listen to the customer and pull the plug on a bad decision.
“The first mistake was a doozy, but they didn’t compound it by making the second mistake,” says Robert Kaplan, a professor of management practice at Harvard Business School. “You see other companies make a mistake and say, ‘Damn it, we’re sticking with it.'”
Corporate America has plenty of those examples — situations where companies don’t listen and get stubborn, or where leaders stand by a dumb decision for fear of looking weak if they waver. Look no further than Wall Street, which invoked Main Street’s wrath by continuing to award fat compensation packages and hefty bonuses amid the financial crisis. The banks and investment firms ultimately had to slash pay to deal with the mounting public relations crisis — probably exceeding the cuts they would have had to make if they’d just responded to the first wave of complaints.
After all, Americans can be a forgiving bunch — if you listen to them. Consider Coca-Cola’s redemption story after the 1985 introduction of New Coke, one of the biggest marketing disasters of all time. New Coke was the cola maker’s response to the “Pepsi Challenge,” a marketing campaign that seemed to show that Americans favored the sweeter taste of Pepsi. The only problem? Coke traditionalists hated the new product.
It took Coke longer to reverse its decision than Maker’s Mark — almost three months. But beyond just saying you’re sorry, knowing how to do it is incredibly important, and few can rival then-president Don Keough’s speech from the day the company announced the return of Coca-Cola Classic. Keough used a liberal amount of humor to make the message easier to swallow, razzing Coke management, himself included. He shared some of the more colorful responses from consumers, including a letter addressed to “Chief Dodo” that asked: “What ignoramus decided to change the formula of Coke?” Ultimately he won over consumers and investors: Coke’s stock price soared 70% in the year after the announcement, prompting some cynics to suggest that the whole debacle was in fact a sophisticated marketing ploy to reenergize America’s love affair with Coke.
The lessons from the Coke turnabout remain relevant today. Maker’s Mark clearly took a page from the Coke playbook, responding to customers’ complaints. Another liquor company embroiled in a controversy would do well to follow suit: Anheuser-Busch InBev is dealing with allegations from former employees that it was intentionally diluting some of its beer brands. To be sure, former employees sometimes have axes to grind. But the company didn’t help itself with its initial response, stating, “These claims against Anheuser-Busch are completely false, and these lawsuits are groundless. Our beers are in full compliance with all alcohol labeling laws.” That may or may not be true, but it surely sounds as if they are listening to their lawyers rather than their customers. A better response might have been: “We never have and never will water down our beers. Our customers always come first, and we would never do anything to violate their trust.”
In business, the customer may not always be right, but his complaints should get a hearing. Maker’s Mark and Coke listened and reacted. Wall Street learned the hard way. If I were advising Anheuser-Busch or any other business faced with a similar plight, I’d suggest taking a glance at history, and then just listening. You may be surprised how loud and clear the answer is.
–Becky Quick is an anchor on CNBC’s Squawk Box.
This story is from the April 8, 2013 issue of Fortune.
