Verizon’s Fee Flip Flop Signals Deep Trouble

Verizon’s “con­ve­nience fee” is more than just a stu­pid mis­take, it’s a symp­tom of how unsus­tain­able busi­ness has become.

A quick sum­mary: Thurs­day Ver­zon put a $2 fee on cus­tomers who pay their bills with a credit card one-bill-at-a-time. While this move tar­geted very spe­cific cus­tomer behav­ior, there was a gen­eral out­cry on social media. Between the out­cry and an FCC inves­ti­ga­tion to the move, Ver­i­zon backed off the plan in just a day.

A New York Times arti­cle today won­dered why they didn’t just “ask cus­tomers what they’d think”. Really? The author makes a good point though. What they should have done was explained more about what they were doing, why they were doing it, and who would be affected.

Trans­parency.

It’s affect­ing every­thing. A cou­ple of years ago there was a big scan­dal in the UK because the gov­ern­ment was (essen­tially) cheat­ing on expense reports.

I’m off point. Maybe I’ll get back to that, as I think we assume com­pa­nies have the trans­parency they need inter­nally. (They don’t. In fact, most times they have the data but don’t/can’t use it the way they’d like, and we think they should. That’s fuel­ing the trends around data ana­lyt­ics, mas­ter data man­age­ment, and com­plex event pro­cess­ing.) Wouldn’t it be great if they sim­ply sent a good expla­na­tion to all cus­tomers who would have been affected by this change based on their pay­ments for the last 3 months, explain­ing the sit­u­a­tion and help­ing them avoid any fee in the future? That’s too much effort. What I see in what hap­pened is lazy busi­ness. Com­pa­nies do some­thing that’s rel­a­tively small in the big pic­ture, and get away with it because it’s too hard to fight. This has been accepted because cus­tomers haven’t had a voice to won­der out loud.

Per­son­ally, and I have no spe­cial knowl­edge of the sit­u­a­tion, I think some team in Ver­i­zon had an inter­nal (performance/cost) num­ber to meet, and thought this would be a good way to do it with min­i­mal ser­vice disruption.

Is there so lit­tle slack in the sys­tem that Ver­i­zon needs the money from this fee?

Indi­vid­ual credit card pay­ments are more expen­sive for them to process. If you spin this well, they were sim­ply try­ing to ensure that cus­tomers who did not need the flex­i­bil­ity of pay­ing month-by-month with a credit card, didn’t have to pay for the priveledge.

Isn’t that what the air­lines said about pay­ing for bag­gage? When the air­lines started charg­ing for bags, they didn’t lower fare prices. They said, to avoid a gen­eral fare increase, we’d rather that peo­ple who use a ser­vice pay for it. There­fore, if you don’t have bags to check you don’t pay for your bags to fly.

What’s the alter­na­tive for Verizon?

1. They can raise everyone’s prices, or
2. They can stop tak­ing credit cards for indi­vid­ual payments

And, by the way Mr FCC, you do real­ize the IRS doesn’t take credit card pay­ments for just this rea­son. It costs a lot to accept a credit card payment.

Why are these their options. Why can’t things just stay the way they are?

This, for me, is a burn­ing ques­tion and some­thing that fas­ci­nates me in the cur­rent busi­ness cli­mate. (I prob­a­bly shouldn’t have taken so long to get to this point; it’s the rea­son I’m writ­ing this article.)

There has been so much cut­ting, in peo­ple, in ser­vice, I won­der how things don’t just col­lapse in on them­selves. But, we’ve got­ten so used to cut­ting, to squeez­ing. Last year’s “let’s just push a lit­tle harder” level of work, is this year’s stan­dard. It’s like tem­po­rary cuts are all per­ma­nent, and com­pa­nies are still look­ing for places to squeeze. Ask most white col­lar work­ers. We’re work­ing more hours, under more demands, with less pro­vided by the com­pany to help us get our jobs done.

So why does Ver­i­zon need this fee?

Sta­tus quo isn’t good any­more. Com­pa­nies are micro-managing their fis­cal pic­ture, and nit-picking the plea­sure out of every­thing. The plea­sure of being an employee, the plea­sure of being a cus­tomer. All for what? Why? I don’t thing it’s an issue of greed. It’s an issue of pri­or­i­ties. Con­sumers want cheap, and ven­dors say yes because they feel that if they don’t some­one else will. You can do cheap for a while, but it’s not sus­tain­able. You can play the num­bers, but if you’re not accept­ing real­ity the cliff you fall off is just higher when you do fall.

Prices are way up. Wages have been stag­nant for years. Our busi­nesses are unsus­tain­able, and employ­ees are unhealth­ily trapped in between it all — being the con­sumers whose con­sump­tion expec­ta­tions are dri­ving busi­nesses, their employ­ers, to keep cutting.

Ver­i­zon needs this fee because it’s one more place to squeeze, with­out accept­ing the unsus­tain­able real­ity we’ve cre­ated with all the cut­ting that’s hap­pened these past few years.

2012 is going to be very inter­est­ing, as I believe this is the year some­thing sig­nif­i­cant breaks.

Happy new year.