One of the greatest benefits of paying attention to the world around us is that we can learn from the mistakes made by others. When we see someone make a decision or take an action that leads to an undesirable outcome, our response might be “Note to self: Never do that!” While observing the mistakes of others does not serve as insurance that we will not fall into similar traps, we can have our eyes opened to missteps and consequences that we may not see otherwise.
Businesses have the same luxury of learning from the mistakes of others. After all, business decisions are made by people who have the capability to exercise bad judgment. But, even savvy businesspeople sometimes fail to take advantage of the opportunity to avoid mistakes made by other businesses.
Case in point: Verizon Wireless and its short lived plan to charge a $2 “convenience fee” for certain payments. The fee would have been levied on certain payment methods that were already available to customers… for free. No additional service or benefit being added; just a fee tacked on to the bill total. Customer backlash was swift and vicious in social media, and Verizon quickly backpedaled and announced it would not implement the fee based on “customer feedback.”
From the outside looking in, it seems Verizon Wireless could have saved goodwill and not created customer angst if it had only paid attention what happened in the banking industry just a few months ago. Banks that announced a $5 monthly fee for debit card usage were besieged with customer protest, and the plans were scrapped. But, damage was done as banks that did not plan to implement fees used that point in their marketing in contrast to the “greedy” banks.
What can we learn from the banking industry and Verizon Wireless and their ill conceived plans to implement fees? Price increases are inevitable, but it is better to increase price via new value. Adding fees without new value being offered is bad business. Consumers are too savvy and these days too connected to passively accept higher costs without more benefits delivered. And, for most products we buy there are enough alternatives that enable us to not have to do business with companies that seek to extract extra dollars without giving anything new in return.