Contracts and Startup Fees
Customer loyalty seems to be coveted by many organizations. Naturally it’s important if repeat business is important to a company’s survival. What irks me is when organizations achieve customer loyalty through coercion rather then through superior product or service. I see a bright future for a new wave of business which preserves their relationship through paying attention to their customer’s needs rather then penalizing them for leaving or before they even start.
The contract
Contracts tend to go along with services. When you ask me to sign a contract your really telling me that you don’t think your service is good enough to keep me around. Many companies counter that they need to have a contract to protect from losing money from a short membership yet tout the best service around. If they have the best service why would their customers leave them and why do they contractually obligate their customers to stick around?
Comcast is a fine example of a company which understands contracts. They provide reliable Internet service with no contract and at a reasonable price. Very simple plan and I must admit their excellent service is making me more then loyal. I tell people they should use Comcast for their Internet provider too. On the other hand SBC, whom provides a competing DSL service, demands a contract or pay them a lot more for a month to month agreement. After using their service for a couple months I came upon the opinion that this service was below standard and not worth it. Being stuck in a contract I had to pay an early termination to get out. I won’t be using them ever again and I advise everyone I know to avoid them as well.
The contract may be useful in some industries but it seems to me that it only opens the possibility to leave a bitter taste in your customer’s mouth. Furthermore it can actually drive away some potential customers. It seems like a much safer bet to preserve your customers through good service.
Startup Fees
Startup fees seem to be a tactic to make you want to stick around till you’ve spread that startup fee over several months of time. Many times a startup fee is charged and there is no apparent added value gained for paying that fee other then the fact that you can now pay a recurring fee and use the service. When people ask me for a startup fee I immediately want to know what I am getting in return for this extra payment. Usually you get nothing and if you do get something you aren’t really paying a startup fee. Your paying for installation, labor, equipment or something. Business’ should never call these startup fees but rather bill for exactly what they are selling. Customers feel a lot better when they see they are getting something in return for their money.
Again if you are trying to preserve your customer subscriptions by charging a hefty up front fee think again. Fees make a great deterrent to most people. You might have exactly what the customer needs and are just scaring away a stream of recurring revenue. If you won’t make enough money without the startup fee then drop the fee and raise your membership fee. As usual if you want to keep your customers around just make sure you serve them the best you can.
No Contract or Fees
As odd as this might sound its difficult to get some customers to understand a no contract or fee service. I’ve sold a service for some time to customers and when they find out we have no contract or fee they are confused and ask repeatedly about it. They think suddenly a huge hidden fee is going to pounce on them that I was secretly hiding until they sign up.
This leads me to believe a lot of people get screwed over by contracts and fees. Furthermore a lot of people must get hidden charges dropped on them that they weren’t told about. I find this shocking and think a consumer revolt is in order. There’s no reason we should buy from companies that don’t trust themselves to keep us around based on their quality of service. Unless of course there is no other option out there. So join me in my boycott of companies who are not willing to constantly compete for our business with great service. Let’s force companies to serve us not themselves. Without us they would have nothing.
If you know of a great no fee service please comment on it below…