Customer Revolt Succeeds, Again


by Samuel Greengard

In late December, Verizon Wireless decided to institute a $2 "convenience" fee for one-time payments made online or over the phone. The company said that the fee was necessary to offset costs related to processing payments "through alternative channels," whatever the heck that means. Then, after customers went nuclear and the FCC said it might investigate the fee, the company dropped the idea.

The entire process took place within a day.

The telecom giant forgot that we're living in an era in which the physics of pre-Internet gravity no longer apply. Technology allows businesses to concoct introduce new and novel charges in the blink of an eye, but the same technology lets customers organize and revolt in a matter of minutes through the blogosphere and via social media.

Verizon president and CEO Dan Mead tried to put a positive spin on the event by issuing a statement saying: "At Verizon, we take great care to listen to our customers." I'm left to wonder what this means exactly. Seems that Mr. Mead, even if he's a great listener, doesn't have a very good sense of what his customers are thinking and feeling. How in the world would a $2 per payment transaction fee sit well with anyone?

Netflix almost blew itself up over a self-inflicted wound a few months ago. It too had no idea that previously loyal customers would revolt when it tried to separate its DVD business from its streaming business and, in the process, take away features and convenience. This type of trauma is occurring with growing frequency because many executives have turned over basic decision making to computers and bean counters. Common sense no longer prevails.

The Corporate Executive Board recently found that more than 40 percent of employees trust computer analysis over judgment and only 20 percent go with their gut.

An organization is in serious trouble when people stop thinking and rely on computers and technology to identify and map out a business strategy. Combine ridiculous fees with consumers empowered by social media and you have the ingredients for a full blown customer rebellion. Expect a lot more self-inflicted wounds in 2012.