Saturday, April 23, 2016

How to lose customers via failure of your core business proposition

Mayhem
Just last month I receive a congratulatory letter from REI MasterCard - 10 years of a mutually beneficial business relationship ....  until .... chaos ensued (thank you Mr. Mayhem).  So I accepted the opportunity to communicate with my business lender on an incident that made me very dissatisfied with their policies.


Subject: Re: Congratulations on your REI World MasterCard anniversary! 
Thank you Robert,
     Just to let you know - I’m sure this will interest you - I will shortly be canceling my 10 year relationship with REI MasterCard, because of the quality of service you have just required me to deal with. I’ve got a great payment history and have been using our card to pay bills on line and automagically for years. Recently through my oversight, I forgot to pay my bill on time. So in response to this great customer who always pays his bills and once in 10 years paid late, your organization saw fit to block all payments, causing further confusion and customer / client dissections with your service level. When I called in to rectify the situation your senior rep. could not do anything to help - your policy prevented customer satisfaction. Said policy created even more denied automatic payments for my accounts, creating a snowball of unpaid bills. All from a company that is in the business of extending credit. This is unacceptable. So I will be canceling my relationship and moving to VISA. 
David Koontz, very unhappy customer.
Here is the response I received from the Office of the President, US BANK Cardmember Service




One technique for losing customers is to make the very nature of your core business proposition an oxymoronic meme.  Let's use this US Bank - REI Credit Card issue as a case study.

The back story:  I've been a REI Credit Card user for around 10 years, I've built up a very good customer relationship, paying bills on time for those year, sure there may have been a slip through the cracks from time to time, yet my credit score reflects that I'm a very sound risk for credit.

So when a job transition happened in the sprint of 2016 there was much confusion with cash flow and various credit cards transition from one service vendor to another (seems as if Master Card is losing clients to VISA) and Costco moved away from Am Ex.  Lots of changes in the card industry.  These had various impacts upon my personal fincianal life...

Some few years ago I started moving auto pay bills to my REI card (US BANK) we loved the cash back rewards at one of our favorite shopping stores, REI.  So by 2016 almost every bill I get, from water bills to Amazon to Apple App Store to Netflix etc. is on the card.

Now in March, I missed the $30 min. payment to US BANK.  So in silence they blocked all debits and transaction to the card.  There was no communication to me about such a significant event.  However, I get plenty of alerts of various natures, such as payment due, minimal balances, large transactions, etc.  But, for unknown reasons explained by the Office of the President, they are just unable to communicate with customers about this type of event.

I've canceled the card.  Kinda hate to lose the REI relationship, but they have not responded to any inquiries either.  In today's credit industry there are plenty of reward programs to choose from and I've made other arrangements - did all the work to transition payments away from US BANK's card to a USAA Signature card.  Maybe I'll probe that system and see how they respond to a missed payment.

So what would US BANK needed to have done to keep a 10 year customer?  A simple alert - your account has been frozen because of late payment.  AND then been able to recognize a good customer and rectify the issue over the phone - by extending credit and reinstating the account with the promise of the check is in the mail.  After all their core business proposition is extending credit.


Full Disclosure:  I own MasterCard stock as well as Amazon, Apple, Costco, Netflix.

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