Friday, February 10, 2012

Penalizing returning customers. Bad idea.

Want to lose a customer quickly? Charge them $390 for returning as a customer!


Yes, that scenario is real.

Some companies have such a feeling of self importance that they think that it is a privilege for their customers to be served by them.

We have a small business client that uses a particular IT appliance in their environment. We were the reseller of that appliance and we continue to support them. Today, during the process of a normal software maintenance renewal, the vendor of this appliance came back to us with a quote of $293 dollars for the support of this appliance plus a "support synchronization fee" (late fee) of $390.

Now, I understand that there is some difficulty that arises from a customer that doesn't renew their support on time, and there is a cost to that. However, when the cost for the late fee is 1/3 more than the actual support cost. That's crazy.

To make things worse, this support is for a device that costs approximately $600 to buy new. So, that comes out to $683 for support on a $600 device. Nice.

We obviously couldn't put this in front of the customer. Small businesses today are struggling to keep their heads above the water and an unnecessary fee like this is not fair.

Our account rep went back to the vendor to argue our case. It took several communications, and an escalation to our partner manager, but eventually they removed the fee. That's great, but it should not have come to this.

Charging late fees to returning customers is ridiculous. If they were the only game in town they might get away with it. But they aren't. In two years, when the appliance is ready for refresh, we will be shopping around for better service from a vendor that wants the business.

Have any good example of bad customer fees? Comment below.

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