Verizon $2 fee Fuels a Customer Revolt

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Of all strategic mistakes the leadership of large corporations makes, one stands out: Taking the customer for granted. Blinded by market dominance, leadership reaches the conclusion that large corporations can get away with everything. They can raise the price of their products or impose service fees that their captive customers will have no choice but pay.

While this mind-set may have worked in the past when corporations were at the center of the economic universe, it doesn’t apply in today’s world, where customers occupy that position. With a few exceptions, products are neither unique nor indispensible, as competition catches up quickly with fast growing corporations. This means that customers will search elsewhere for value, when corporations fail to meet their expectations or they become greedy. Worse, they can use the power of the Internet and social media to act with one voice, teaching corporations a good lesson.

Six months ago, Netflix (NASDAQ:NFLX) tested the loyalty of its viewers by raising the price for its product. Big mistake. Subscribers fled in droves for competing services, sending its stock skidding.

Three months ago Bank of America (NYSE: BAC) announced a $5 monthly fee for its debit cardholders–a way for the bank to offset the loss of revenues caused by the Durbin Amendment of Dodd-Frank Act (a reduction in the fee banks can charge merchants from 44 cents to 24 cents per transaction).

An unexpected customer-revolt that spread like a fire. Some customers moved their money to smaller banks and credit unions. Other customers took the streets, joining forces with Occupy Wall Street to protest against bankers’ greed. A third group spread the WOM and buzz over the Internet, telling their friends, their neighbors, their colleagues, and their lawmakers about bank greed.

A few days ago, Verizon introduced a $2 on-line fee for paying their bills by phone or on-line. Customer response, once again was swift, forcing Verizon to withdraw it.

Customer-revolt teaches large corporations a very important lesson: Don’t be greedy; and don’t take the customer for granted. Don’t assume that your services are unique and indispensible. The customer is the ultimate boss of every bank, the ambassador, and the community advocate. Just make sure they aren’t on your wrong side.source