Take Your Pick: Lose A Few Bucks or Lose A Customer (and your reputation)

What is with companies that would rather squeeze a few extra pennies out of a customer than keep that customer happy?

A few personal examples:

I'm going to Hawaii for a friend's wedding in a few months. For a variety of reasons, they had to change the hotel we would all be staying at. I had booked a room at the initial hotel through a service called BookIt.com (no link, because they don't deserve any traffic from me).

Here's the cancellation policy as it appeared in the reservation confirmation e-mail I received:
"No Penalty if cancelled before Jul 24, 2008 Lose 1 Nights Room & Tax if cancelled on or after Jul 24, 2008"

Great. This was part of the reason we felt so comfortable booking so far in advance.
But guess what they told us about when we tried to cancel due to the hotel change...

Yup, hidden in the small print is a contradictory statement:
"All cancellations are subject to cancellation fees ranging from $19.95."

Okaaaay... I assume they can get away with this because they define "penalty" differently than they define "fees". But, whatever, it's still deceptive. Basically, the "No Penalty..." line is nice and prominent in all their materials, but the "...subject t cancellation fees..." line is hard to find even if you know it's there.

But ethically questionable behaviour aside, what really bugged me is that we had to fight to get the $19.95 fee waived.

The dumbest parts:
1. We would have gladly re-booked through the same service for the replacement hotel.
2. The cancellation was made within just a couple of days of the booking. The credit card deposit hadn't even been processed yet.
3. The wedding party isn't huge, but we still account for several rooms. You'd think this would earn us some respect if nothing else.
4. We spent quite a while on their 1-800 arguing with their call centre rep.

Perhaps realizing that I could simply cancel the credit card transaction, they finally relented and gave the full refund without a fee (or penalty or charge or whatever they want to call it).

As a result of their actions and attitude they:
a.) Lost me as a customer. Not just for this trip but for any trip in the future.
b.) Lost the others in the wedding party as potential future customers.
c.) Probably spent more than the $19.95 fee in call centre costs.
d.) Guaranteed that I'll remember the poor experience and will tell everyone I can not to deal with bookit.com


Another example:
I'm a customer of Citizens Bank and have been very happy with them. Strong and ethical brand, good customer service, good interest rates, low fees...

My wife has had an account with a local credit union her entire life, and even though we're gradually consolidating all of our accounts, she was hoping to keep an account open with her credit union.

Seeing that our joint account at Citizens was earning a very nice rate of interest and had no monthly fees, noted that her credit union account was actually costing her money each month and wanted to see if they (the credit union) could address this. She had only a handful of transactions in a typical month, but had a fairly healthy amount of savings sitting in the account. But, she was earning a pitiful interest rate and had to pay ridiculous fees for even her minuscule account activity.

When she approached them looking for a more reasonable fee structure or better interest rate, they seemed to forget that:
a.) She could easily transfer all of her business elsewhere
and
b.) She had been a lifelong customer and could be retained quite easily

Long story short(er), they wouldn't budge, despite the above simple facts. So, she's now left them entirely and has no intention of going back.

Even if all might have earned off her in the future was one loan or mortgage or RRSP, etc. the profit from that would have easily covered what they lost in monthly fees.


Maybe in both cases it's simply a case of frontline workers not having the authority or knowledge to recognize and react appropriately to situations like this. But it seems much more systemic.

So my question is simply: Why would ANY brand make the conscious decision to lose (and annoy and alienate) a customer for the sake of just a few dollars?


I'll end on a positive note:

My wife also recently tried to renegotiate her cell phone plan. She's been been a customer of TELUS for many many years. Her family were extremely early adopters of mobile phones and have been with TELUS the entire time.

After a mediocre experience with one independent dealer, she spoke with another dealer who then passed her over to the phone company directly. They recognized her history with them, saw that she could be retained as a strong customer with minimal effort, and immediately did whatever it took to match or beat anything the competition was offering. Needless to say, she's still with them. Sure, maybe they're missing out on a few dollars each month, but there's a very good chance she would have switched to a competitor if they weren't willing to budge -- perhaps just out of principle. Just as importantly, though, she remains an advocate for TELUS. If they hadn't treated her right, though, it's quite possible she would be telling all sorts of people how TELUS has gone downhill lately and really let her down...