CEOs: Loving Your Customers Means Saying You’re Sorry—Right Away

When your company wounds a customer in a high-profile way, the stakes couldn't be higher for your brand in 2019. AMC Entertainment offers up a case study how to handle it.

Adam Aron AMC
Adam Aron, CEO, AMC REUTERS/Mario Anzuoni

It is common these days to condemn CEOs for misconduct, but we should also learn from after-action reviews of successes—not just the pathologies of failures. That’s why it’s worth taking a few minutes to dig into how theater chain AMC Entertainment’s CEO Adam Aron and his team handled every corporate leader’s worst nightmare, a racially-insensitive and very-public screw up by employees that posed a potentially devastating hit to the company’s reputation.

The essential, movie-themed takeaway: While the line “love means never having to say you’re sorry” may have worked for Ali MacGraw and Ryan O’Neal in Love Story back in 1970, (ranked by the American Film Institute as the 13th most famous movie quote ever, FWIW), when it comes to handing upset customers in 2019, the exact opposite is true. When your company wounds a customer, how you apologize—who does it, how quickly, and with what outcome—could make or break your brand.

Disaster Movie

Such was the case for Aron and AMC. This month the biographical film Harriet—based on the life of abolitionist Harriet Tubman, who escaped slavery and then led hundreds of enslaved people to freedom on the legendary Underground Railroad—opened in theaters across the nation. In Metairie, Louisiana, Sandra Gordon, a 65-year-old black woman, was attending an evening showing during the film’s opening weekend at an AMC theater with friends. The women—14 African-Americans, all members of a charitable community organization called the 504 Queens—bought their tickets as a block in advance.

While Gordon sat in seat E8 alongside her friends, immersed in this emotional, dramatic, historic profile, a late-arriving patron entered the theater and started hovering by Gordon’s seat, looking confused. Soon after, a series of three white theater employees showed up, one after another, demanding Gordon show them her ticket. She did each time. Then they informed her she had to move because she was in the incorrect seat.

When she refused, pleading that they were mistaken, things got ugly quickly. The film was stopped, the house lights were turned on in the theater. Audience members got angry, calling for Gordon’s removal while her friends defended her.

But—you guessed it—it turns out that Gordon was in the right seat. The three theater employees had hastily misread the ticket of the late-arriving patron, who had purchased a seat for a showing an hour later in a different auditorium.

Following the show, Gordon, her friends and several strangers from the audience stayed at the theater to complain to a manager. They all received refunds, but they still contacted a civil rights attorney to explore how such offensive misconduct could be avoided in the future.

The next day Alison McCrary, a Catholic nun and a civil rights lawyer in New Orleans representing Gordon contacted the local newspaper about the incident. The newspaper contacted AMC Theaters.

Do Not Wait

In a firm of 1,000 theaters and 35,000 employees, it’s easy to imagine something like this getting lost in the tidal waves of messages—at least for a few days—but not here. Within minutes AMC’s communications team transmitted this information to the general counsel and the CEO—who quickly responded. Rather than denying the claims, rationalizing the misconduct, or blaming the victim, AMC responded immediately, taking the matter seriously.

First—that same day—AMC apologized and offered to atone. “We are aware of what occurred,” the company said in a statement, “and we take this situation very seriously. Based on our initial investigation, operational mistakes by the theatre team led to this unacceptable and unnecessary disruption, and we are working with the theatre to address what occurred. We sincerely apologize to our guests in the theatre for this disruption and for the frustration they experienced as a result of it. We have reached out to work directly with those impacted to ensure they feel welcome and excited about returning to AMC Theatres.”

Second, management verified the misconduct and the three offending AMC were fired for violating the company’s guidelines and racial sensitivity training. Third, the theater chain promised to donate the profits from all tickets and concessions sold at the theater on Nov. 29—a huge, peak-season audience—to the 504 Queen philanthropy. Gordon suggested that this gift will help her community service organization give more food, clothes and toys to children and their families this holiday season. Fourth, as the women requested, the company opened its doors to students in the Metairie area for free showings of Harriet.

Sister Alison said she was encouraged by AMC’s “positive” response to the letter from the 504 Queens. “I think they’ve done what we have asked to try to make this right,” she said.

Lessons Learned

The lessons for CEOs are clear:

Do not rely on diversity training as a panacea. Even good programs are a start, but they aren’t foolproof in preventing stupidity and misconduct. Just last year, Aron had enhanced AMC’s racial-sensitivity training for all employees in the aftermath of parallel incident at a Philadelphia Starbucks.

Respond quickly. Racial intolerance and offensive customer service can escalate throughout communities quickly when management seems inattentive, dismissive, or accusatory. AMC’s comms people, general counsel, and CEO instantly took this matter very seriously. Aron offered to talk personally with Gordon, but was informed she’d rather AMC work through Sister Allison, her attorney.

Do not circle the wagons. Getting defensive and attacking the victim is exactly the wrong thing to do. Just keep in mind what happened to United Airlines CEO Oscar Munuz, who, after the abuse of customer surfaced on social media in 2018, thought his most important task was to defend his employees. How’d that work out?

Get real. Atonement for an incident like this requires true contrition—as well as accountability, compensation, and commitment to preventive measures for the future. Nothing less will do.

For Aron, the situation had a strange echo from his youth. As a class officer running a film festival at his high school in the 1970s, he says the principal had the projectionist stop a film and switch reels to get kids home earlier from an evening double feature showing. “We had a near revolt,” he remembers now. “Knowing this I can’t believe I’d experience my own theater ever stopping a film in progress decades later, let alone for the purpose of offending a viewer!”