Milking your customers is a bad PR move. It's ok to increase prices as long as you increase the value they are getting also. Simply increasing prices to increase profits is a sure fire way to kick your brand in the nuts (pardon the french).
Bell Canada recently pissed me off (and I'm sure many others) raising their prices seven per cent for no apparent reason. Although I think it's due to the failure of usage based billing.
Netflix jacked up the prices on their customers also not long ago. It was a move I disagreed with and wrote about in a post - Where Netflix messed up (what happens when you ignore PR). Since then their stock has crashed from $298 a share to $112 a share (that's around a 60 per cent hair cut in under three months!)
And now Bank of America has announced that it is going to start charging customers $5/month for debit card usage. Perrrrrrrfect! This is just what you want to do. After the tax payers bail you out turn around and start charging them more. Heck, if they were willing to give you hundreds of billions I'm sure they won't mind paying an extra five bucks a month on top of it.
I honestly don't know which of the above companies is dumber.
I think Netflix takes the cake, only because they went from a position of 'for the people' to 'milk the people' and essentially imploded their entire business model.
Bell gets second place (if you combine their price hikes with the UBB fiasco).
And I give Bank of America third place, although this is a photo finish for dumb PR moves.
Corporations have to return profits to their shareholders (we all get that), but picking customers pockets to do so doesn't work in the long run. BAC and Bell are more insulated from bad PR moves because of the near-monopoly status they hold, whereas NetFlix got crushed because government has no interest in protecting them in any way.
Yet, government regulations, lobbying, and market control won't protect your brand over the long run.
As we enter 2012, we know that we are likely facing higher rates of inflation, an anemic GDP, and high unemployment. Which means that people are going to be suffering worse than they are today. To pick their pocket when they are barely surviving is a dumb move.
Sure it may increase the share price a tad as investors assume increased profits resulting from the additional service charges. But six months later when revenues actually decline because customers not only stop using thier BAC debit card, but leave BAC all together, the stock price then declines.
Not to mention this is just a sweet talking point for politicians, it plays right to the populous rage over the banks and Wall Street.
It should be interesting to see whether customers flock to players like Ally Bank. I wouldn't be surprised if the big banks keep going as they are if some politician, looking for votes, just says 'enough is enough' and takes a proverbial sledge hammer to the big boys.
Bell Canada recently pissed me off (and I'm sure many others) raising their prices seven per cent for no apparent reason. Although I think it's due to the failure of usage based billing.
Netflix jacked up the prices on their customers also not long ago. It was a move I disagreed with and wrote about in a post - Where Netflix messed up (what happens when you ignore PR). Since then their stock has crashed from $298 a share to $112 a share (that's around a 60 per cent hair cut in under three months!)
And now Bank of America has announced that it is going to start charging customers $5/month for debit card usage. Perrrrrrrfect! This is just what you want to do. After the tax payers bail you out turn around and start charging them more. Heck, if they were willing to give you hundreds of billions I'm sure they won't mind paying an extra five bucks a month on top of it.
I honestly don't know which of the above companies is dumber.
I think Netflix takes the cake, only because they went from a position of 'for the people' to 'milk the people' and essentially imploded their entire business model.
Bell gets second place (if you combine their price hikes with the UBB fiasco).
And I give Bank of America third place, although this is a photo finish for dumb PR moves.
Corporations have to return profits to their shareholders (we all get that), but picking customers pockets to do so doesn't work in the long run. BAC and Bell are more insulated from bad PR moves because of the near-monopoly status they hold, whereas NetFlix got crushed because government has no interest in protecting them in any way.
Yet, government regulations, lobbying, and market control won't protect your brand over the long run.
As we enter 2012, we know that we are likely facing higher rates of inflation, an anemic GDP, and high unemployment. Which means that people are going to be suffering worse than they are today. To pick their pocket when they are barely surviving is a dumb move.
Sure it may increase the share price a tad as investors assume increased profits resulting from the additional service charges. But six months later when revenues actually decline because customers not only stop using thier BAC debit card, but leave BAC all together, the stock price then declines.
Not to mention this is just a sweet talking point for politicians, it plays right to the populous rage over the banks and Wall Street.
It should be interesting to see whether customers flock to players like Ally Bank. I wouldn't be surprised if the big banks keep going as they are if some politician, looking for votes, just says 'enough is enough' and takes a proverbial sledge hammer to the big boys.
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