A few years ago, one of my then-colleagues wrote an article titled "Why I'm Never Using Priceline Again" about her experiences using a plane ticket she bought on Priceline.com (NASDAQ:PCLN). I thought this particular column was off base because it conflated a poor customer experience with the overall value of the company. Even with the best of companies, bad things happen.
There is a great difference, though, between things going badly and a policy that seems designed to stick it to the customer. I HATE these and think that they ultimately cost the company more in good will and repeat business than the small gain it gets at the time. You know what I'm talking about: those niggling nuisance policies that companies have, and ones that make certain components of customer service and care much more difficult for the customer. Inevitably, they breed resentment in me, and when I resent, I take business elsewhere. I'm sure I'm not alone in this regard, and I've noticed that there are two places where companies take most advantage of their customers: when customers are trying to leave and when they have no real choice or power. It makes me wonder: Are these companies just desperate for revenues, or are they so arrogant that they think you don't have options?
I have a deep well of ire, and this week the company that has raised it is Netflix (NASDAQ:NFLX). Some dear friends of ours gave us a three-month gift subscription to Netflix, which we enjoyed thoroughly. One would think, though, at the end of a gift subscription, that a company would let you know that, for the first time, your credit card was going to be charged should you wish to continue with the service. So being a naturally unaware person, without such notification I allowed the three-month mark to come and go without canceling. I missed by one day. It's not really the company's business to save me from myself, so my fault.
But check this out: When I went to the Netflix site to cancel, one day too late, I found that I could cancel at any moment, but at the moment I cancel, my subscription ends, and company policy is for no refund for the unused portion of the month to be granted. Miss canceling by a day? That's $23.
Obviously, that's not huge money, and it's my fault that I missed the date. But the combination of rolling over a gift subscription without notification and the no-partial month refund is so aggravating that I'm canceling at the end of this month, and I'm not coming back to Netflix. Ever. After all, I've got options now: Blockbuster (NYSE:BBI) has a service, as does Wal-Mart (NYSE:WMT), both of which are cheaper alternatives. Netflix may perhaps be worried about its high level of customer churn, but I can assure it that smacking leaving customers on the rear end on their way out the door is no way to fix this. Is it desperate for the cash and customer retention, or is it arrogant to think it can do whatever and customers will just take it?
Who knows? But customers who don't feel appreciated don't stick around -- or come back. Witness Motley Fool Hidden Gems selection Overstock.com's (NASDAQ:OSTK) foray into the online auction territory that is absolutely dominated by eBay (NASDAQ:EBAY). Overstock.com CEO Patrick Byrne has expressed tremendous admiration for eBay but also paid close attention to what he sensed was rising dissaffection among eBay's community, particular among its highest-volume sellers. Sensing opportunity, Overstock launched an alternative. Will it succeed? Man, who knows -- eBay is extraordinarily powerful and has network effects that will be difficult for anyone to overcome. But the reason there is an alternative is that a potential competitor noticed a weakness and leapt. Maybe it's just a function of eBay's mass that it cannot respond, but maybe eBay has learned a few bad habits, as Byrne says, "in the absence of competition."
Just some observations from someone who wasn't going to be watching too many movies in the next few months but will certainly be someone else's customer when he does come back.
See also:
- Rick Munarriz's Is Netflix Doomed?
- or his Nothing But Netflix
- or Daniel Hong's Last Word on Netflix
- or Bill Mann's Dashed Upon the Rocks of eBay
Bill Mann owns none of the companies mentioned in this article. For his complete list of holdings, check his profile.
