With a US economy that continues to fluctuate wildly, and continued bad global economic news, it's probably a safe bet that more companies are going to look to raise prices and implement new charges to boost their embattled bottom lines. It's also a safe bet that as they do so, other companies (besides Netflix and BofA) will mishandle their communications around the price hikes.
You can check out Nine Lessons from Netflix and the 'Half Apology."
Here are some thoughts about lessons from BofA:
- Some companies may feel that their customers are captive and don't have much of an alternative, but even if that's true -- and I think it's more difficult to change banks than to switch TV channels -- companies need to realize there is a price to pay for mishandling communications. Beyond a company's reputation, publicly held companies have seen their stock prices fall as a result of negative consumer backlash.
- Companies need to provide context for restructuring their prices and fees. Blaming new government regulations, as BofA has done, will likely appeal to some customers, but when so many people think the government bailed out the banks while holding consumers accountable for bad mortgages will not generate much sympathy overall or provide enough of an explanation as to why BofA will soon start charging $60 a year for the privilege of using debit cards instead of checks or credit cards. Especially right now, when there's a lot of anger towards Wall St., with in-person and online protests like #OccupyWallStreet. So for BofA and other banks like Chase, SunTrust, Wells Fargo, Regions, establishing new fees will likely be seen as another example of banks putting their interests ahead of their customers.
- Communicating solely by Twitter can be partially effective to get what amounts to a headline, but is not effective in providing detail. Our advice to BofA: Consider steps to take to mitigate the consumer backlash, especially since some reports attribute the drop in its share price to the negative consumer response to the new fees. If the only place BofA has addressed this issue is on its Twitter feed, @BofA_News, the bank should start communicating beyond Twitter. First, because its 140-character limitation, Twitter is not the right means to communicate a complicated message. Second, fewer than 9,000 people currently follow @BofA_News so the bank can't be sure it's actually and effectively reaching its customer base.
For example, the bank should prepare a detailed FAQ inserts to accompany its monthly statements and post that information on its website, about the new fee. The FAQ should explain the economics of the fee, should include a statement that explains the reluctance with which BofA realized it had to initiate the fee, and include information about ways that customers can avoid being charged the $5 per month fee -- for example, apparently using a debit card at an ATM won't trigger the fee but using a debit card at a retailer will. Meanwhile, explaining that Platinum customers will be exempt from the debit card fee, will not placate the majority of customers who will soon be charged the fee.Other companies considering price increases or the implementation of new fees should learn a lesson from Netflix, which did an arguably poor job in communicating the context for its increase of fees. Even if you're in a position where you must pass along higher fees, it helps to explain the reasons for the increase. Otherwise the increase will seem like a slap in the face to its customers. Again, I have no doubt that we'll see more companies considering raising prices and charging new fees in the near future -- and that there will be negative response if the increases are not communicated effectively. What's also clear is that companies that mishandle their price increases may also pay a price -- in their stock price, as BofA and Netflix have seen. With the right planning, companies can announce price changes that don't have to lead to crisis communications.