A recent example of a company squeezing customers for ‘bad profits’ is being demonstrated by GoDaddy:
Fred Reichheld wrote a great article in his 2012 LinkedIn article Is Your Company Hooked on Bad Profits? (read here https://www.linkedin.com/pulse/20121009201046-7928939-is-your-company-hooked-on-bad-profits. It focused on how this damages a company’s reputation, hinders growth and creates opportunity for competitors, using common airline practices as an example.
Common sense you think – yet missed by many CEO’s.
What are bad profits?
Earnings at the expense of customer relationships.
They leave customers feeling coerced, misled and ill-treated.
(in Canada? think of the last time you felt nickel & dimed by your cellular provider Telus, Rogers or Bell).
The Godaddy example:
We signed up for Godaddy Website builder over a year ago to test concepts and show the developers we hire how each business website needs to look so they can code the associated back end. Godaddy’s plan is to sign up annually paying an initial lump some which covers the monthly fees; they offered to prorate this if customers discontinued prior to the end date – this flexibility is one of the reasons we signed up.
Certain limitations with their website builder required us to start using another product [Squarespace], and when we called to disconnect two of our subscriptions, they refused to honour their agreement.
This wouldn’t be as big a deal if was minimal – one site only has 3 months left; but Godaddy said since we were 3 days past the annual renewal date for the other site we would be charged for a full year.
Most companies will over look a couple days to maintain a positive client relationship. Using this to charge a full year against the original terms is an example of bad profits.
We still have other products with them providing revenue, so why would we be forced to cover more than consumed? Is Godaddy really struggling to such a degree? If so (and we doubt it), it only serves as a disincentive to customers.
This is such a small amount to our operations it’s immaterial – we’ll be fine without the money – it’s Godaddy’s move to knowingly charge for undelivered goods that’s destroyed our trust. We buy several products from them; are they going to take advantage of customers with products on similar billing platforms?
It’s not worth the time searching for another vendor to relocate our remaining business with them to, but when one comes to our attention we’re moving away from Godaddy’s shifftee practices to scrape ‘bad profits’