How IT Costs Businesses Millions
Shelly Palmer writes of a very expensive customer loyalty program that worked flawlessly for two decades only to be derailed by several remarkable misuses of technology.
Palmer is managing director of Advanced Media Ventures Group and president of the group that awards the Emmys. In his Huffington Post blog, he tells the story of a high-value customer who charges and pays off between $25,000 and $35,000 a month and can't get loyalty points he earned using his credit card to be posted immediately.
How is it possible that an electronic transfer takes four days in 2008. American Airlines can transfer miles in and out of your account while you're on the phone with them and you can see the transaction by refreshing your browser. You would think that a bank would have more robust transactional software than an airline, wouldn't you?
The executive and his assistant spent hours unsuccessfully on the telephone with customer services representatives, including a supervisor, and the Internet trying to find the right person to resolve his problem to no avail. Palmer cited seven "technology" failures behind the customer's woes. Because the customer didn't get satisfaction, he said he'll no longer use that credit card.
A high-value customer gone, no one responsible for customer acquisition will ever know. No one responsible for customer retention will ever know. Thousands of dollars wasted, millions lost [on creating and supporting the loyalty system]—all of which could have been avoided by a half-way decent CRM system or a little bit of SEO, SEM and an XML wrapper or two. How unbelievably sad for the credit card company—how inconvenient for the customer--what an object lesson in applied technology (or lack thereof). Customer loyalty is a terrible thing to waste.
Comments (4)
Oh please.
Of course it's IT's fault, the business couldn't possibly take any of the blame.
There's far too little information here to lay this at IT's door.
Have any IT departments had budgets constrained with no money for new development?
Have any IT personnel had ideas for better ways to get things done and serve the customer, only to be stymied by bureaucrats and penny-pinchers?
Or perhaps some executive was sold a glitzy bill of goods, and all resources are tied up trying to keep it afloat?
Gimme a break. I'm tired of IT being a whipping boy.
Posted by Jared Still | August 20, 2008 12:26 PM
Many companies are proud of the cost savings they can prove by outsourcing customer service. The other day I spent an hour trying to find a particular person at IBM, in the end to be told by the call center lady that "for security reasons we are not allowed to give out that information." And this was a marketing guy I was trying to reach.
Likewise I am sure banks are proud of the float they generate by not crediting your deposits for two days, especially large ones. So, leave that bank. The credit card companies likewise.
When such cost savings proposals are put forward, few of them consider possible lost customers and revenues, only cutting the cost of a call by 15 cents (times three thousand per week, that's a lot of provable savings). Not bad IT management, just bad management.
Posted by Tom Lodahl | August 20, 2008 3:53 PM
Oh, the joys of the last few years with IT.
I have had voluntary direct deposit for salary for 20 years and always received a credit the day before payday (when checks were written, so our midnight crew got paid on Friday at 12:01 a.m.), until it became mandatory. Now, I receive my salary the following Wednesday--five days later--into my bank account. My mortgage also is held by my bank and was at one time an electronic transfer; it's now a snail-mail check, which means it could be late, so I have to make payments to them a week earlier. These are two examples; there are more.
Instead of addressing the problem, I am usually asked to authorize them to take it from my account automatically. In the last two months, they misapplied payments and with authorization to take the amount due, would have cleaned out my checking account and possibly activated the overdraft protection that I haven't ever used. This is infuriating. I so understand the customer who stopped using the card. I receive services from my employer and payment is snatched out my account five minutes after I authorize it, but I have to wait five additional days to be paid. Seems the more technological advances we make, the more uses we find to irritate the people who use them. I actually sent a paper check to someone Friday afternoon ( outside the U.S.) and came home to find a message on my voice-mail that it had been received and deposited before I had lunch today. Makes you wonder or at least I do.
Posted by danise | August 25, 2008 6:40 PM
Add to that the credit companies allowing businesses to make charges after accounts are closed to the closed account.
I recently went to close an account, only to find it had a long unused Compuserve account extracting $250 every month. Unable to remember what the account name was, I tried to get Compuserve to cancel the account. No dice. They had been able to move my automatic payment twice throughout my time with them as the account number changed, but even though they continued to charge against the newly re-numbered account, they wouldn't cancel my account. Having already had the problem of having Bank (Bunk) of America allowing charging against a closed account, I knew I couldn't close the account without canceling the Compuserve account. Pure luck that my wife found my old Compuserve account address, and I forcefully had Compuserve close the account.
No more credit card business for bank of america (intentionally misspelled) from this household or ever again.
Posted by Bill | August 27, 2008 12:11 PM