Originally Published 10/05/2010
If you offer a service or product that includes hidden costs, terms and conditions, or steps your customers need to take after purchase, even if you don’t profit from them, you will profit in the end if you reveal them upfront.
Consider the events that led to our current economic climate – banks selling adjustable rate and sub-prime mortgages to homebuyers unschooled in legalese. If you’ve purchased real estate, you know how difficult it can be to decipher all the terms and conditions, not to mention the variables that affect your rate. Even though I’ve never bought property, I know exactly how well these documents are constructed to deceive or at least obscure the simple truths of balloon payments, exorbitant rate adjustments, and all those fees that need to be paid out at closing. What strikes me as particularly twisted is not just how accepted this practice has become for the financial services industry as whole, but how antithetical it is to good business.
How loyal will customers be to an institution that deceives them or fails to provide the basic information necessary to make smart decisions about their products and services? Are they likely to buy more products and services from this company or recommend them to their friends?
Recently, I took a closer look at my newly redesigned American Express statement. Beginning in June the credit card industry is required to reveal the cost over time of paying only the minimum payment due each month. AMEX does this, plus includes the information needed to pay-off the debt in just three years. While that’s all fine, they go a step further and label the difference between these two total pay-off amounts, which includes all the interest and fees accrued, as “Savings.”
Really, AMEX, am I saving money by paying you only three years’ worth of interest and fees instead of four? While they’re not technically lying to me, they are trying to deceive me in a very clever way. Hey, I get it; they don’t like having to reveal just how much interest and fees they’re racking up on my debt if I don’t fully pay my bill each month, which is one big way they make money from me. But, is this really the kind of customer relationship they want to perpetuate: one built on deceit and mistrust?
Like me, you probably don’t run a bank or large financial services company, but, who knows, maybe you do or will someday. In the meantime, take a lesson from this industry’s extreme practices. If you offer a service or product that includes hidden costs, terms and conditions, or steps your customers need to take after purchase, even if you don’t profit from them, you will profit in the end if you reveal them upfront. And, don’t ever do what AMEX is doing: dress up a wolf in sheep's clothing. Honesty and transparency are the bread and butter of strong customer relationships because successful businesses thrive on repeat customers, referrals, and word-of-mouth endorsements.
There are better ways to turn negatives into positives than deception or sleight of hand (or language). Contact me for customer-friendly strategies to overcome the sales barriers impeding your success.
Get Growing is a syndicated business. blog. Many posts are also published on business2community.com.