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Bancography | Branch Planning, Marketing Research, Brand Strategy

How To Implement A Price Hike

And you thought 2011 was going to go out on a quiet note.

With one working day left in the year, Verizon Wireless announced that it would impose a $2 “convenience” fee on customers who make a one-time payment using a debit or credit card, online or by telephone. The company claimed that the fee was:

“… designed to address costs incurred by us for only those customers who choose to make single bill payments.”

Given the events of 2011, it’s hardly surprising that consumer advocate groups and the press jumped all over this, creating a ton of bad press for Verizon Wireless. The company’s attempt to justify the fee because of “costs incurred” is indefensible.  

The bad PR could have been avoided had Verizon Wireless been a graduate of the Snarketing School of Public Relations.

If Verizon Wireless were a certified snarketer, its press release would have looked like the following:

Verizon Wireless Announces A $2 "One-Percenter" Fee

Starting January 15, 2012, Verizon will impose a $2 fee on
customers who make one-time payments using credit (and debit)
cards online and over the phone.

An analysis of customer records indicates that customers who
use their credit card to make one-time payments are predominantly
wealthy millionaires working in the financial services industry. 
For the vast majority of Verizon Wireless customers who pay their
bills by check, cash, online through their bank site or through
recurring payments on the Verizon Wireless web site, no additional
fee will be charged.

PR problem solved. 

Ironically, I’m only half joking. In a 2008 Aite Group report that I wrote, I found that:

“Consumers that earn more than US$100k are more than twice as likely as those who earn less than US$50k to pay monthly bills with a debit or credit card.”

Not-so-ironically, however, is that the purpose of the report was to demonstrate to marketers (specifically those who bill customers monthly or frequently) that card-based payers were an attractive segment of customers because of their demographics and attitudes (e.g., they’re more likely than other customers to want to receive marketing communications from the firms they do business with). 

Of course, there’s no better way to shoot yourself in the foot than to impose a fee on the customers who may be your best customers.


Ron ShevlinRon Shevlin is a senior analyst at Aite Group, a Boston-based research and advisory firm serving the financial services industry. Ron is a frequent speaker at industry events and bank and credit union strategic planning sessions. His soon-to-be released book, Smarter Bank: Why Money Management is More Important than Money Movement to Banks and Credit Unions will be published in January 2015. Ron's popular blog, Snarketing 2.0, is now a permanent fixture here at The Financial Brand. You can follow Ron on Twitter.

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Comments

  1. Ron,
    You’re so darn SMART, er…I mean snart. Well.said. Think vzn needs to hire you as a pr consultant. Now do us all a favor and get STUPID on NYE at least to make us feel better about ourselves. Here’s to a Happn’in N(b)oo(zy) Year “!”

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