How to make people love you while taking their money

Warning: Boring Customer Satisfaction Story.

My wife and I had, stupidly, been paying for individual MobileMe accounts ($99/year each) instead of sharing a Family Pack ($149/year for up to 5 people, with some minor storage limitations). I just went through the process of fixing that.

Our accounts renew on different dates, so I fully expected we’d have to call Apple, wait on hold for a while, explain what we wanted, lose some money, and beg to keep both account names and all the contents.

Instead, all I had to do was log in and click some stuff. Apple charged a prorated amount (about $5) to upgrade my account from Individual to Family and refunded the unused balance of my wife’s old account (136 days’ worth, or about $37). There was no punishment for having signed up for the wrong plan initially, or for having our renewal dates out of sync. We didn’t have to spend one extra penny.

In contrast, when I lived in the Bay Area, I once used SpeakEasy for my broadband service. There was a one-year contract with a $300 early termination fee. I moved after exactly a year, but they had initially taken so long to connect me that I was only on my eleventh month. Instead of doing the reasonable thing and charging me for just the unused month on my contract, they sent me to a collection agency for the $300. (I’d moved, so obviously just sending a bill wouldn’t work. Mail forwarding? Who does that?) It took months to sort out the mess, and SpeakEasy never got my business again.

Too many companies jump at the chance to punish a customer’s poor planning. They think they’re doing smart things called price discrimination and market segmentation: you put some hoops in front of the low prices, customers who can’t pay the high prices will jump through the hoops, and everyone else won’t care, so you get the maximum price out of everyone without much effort. But when you use punitive tactics such as lengthy commitments, termination fees, and other “nonconforming lifestyle” penalties, what you’re actually doing is selling off your good reputation for a one-time billing bonanza. The customers who get punished don’t come back (unless they have to, which is why AT&T is still in business).

Two diner customers order the same meal: eggs, bacon, and coffee. Customer A’s waitress says “Oh, you want the breakfast special, that’ll save you $2.00.” B’s waitress knows about the special but rings it all up separately. B’s bill is higher, but who do you think leaves the bigger tip? Who’s more likely to come back the next day?