Avoid this Marketing Ploy

While I’m more interested in blogging about innovative marketing ideas that help you promote your message and products and services, I thought this would be a good time to site an example of what not to do because it is a great way to piss off your client base.

The other day I received a letter (direct mail piece) from one of my credit card companies (unfortunately I have several) with one of the “teasers” on the outside of the envelope reading “IMPORTANT INFORMATION CONCERNING CHANGES TO YOUR CREDIT CARD ACCOUNT.”

Typically, I trash this kind of mail because I get so much mail I just don’t have time to read credit card offers especially because I already owe them so much money and don’t want to know about another great deal that is going to be so attractive I end up further into debt.
But this one, I decided to open.

Surprisingly, it was not a bunch of legal mumble jumble. It was clearly written and I understood right out the gate that they were INCREASING my APR about five (5) per cent! Furthermore, if I missed a payment after the new increase went into effect (about two months from now), my rate would go to 29.99%!!

The back-panel went into detail about my options which pretty much included LOVE IT or LEAVE IT. I was even given an automated 800 number to call whereby I could automatically cancel and close my account.

While my business, Innovative Marketing, is involved in a number of public relations and advertising enterprises, our mainstay is selling promotional marketing products. We’re pretty small operators when compared to some of the big players, but we still run about $30,000 worth of charges monthly through a number of different bank credit lines and credit cards. Over the years, the suppliers in our industry have gotten more and more strapped for cash so have begun to require either a credit card or check upfront before processing our orders. The biggest in the industry, Norwood, just filed for bankruptcy.

Although most of my cards get paid to zero each month, that credit is very important to the smooth operation of our business. When I have a client having difficulty paying me right away, then often we have to let some of the balance linger a month or two getting even with the card company when our account evens up with us. Again, our numbers are small, but it would not be unusual for us to have $5,000 or $6,000 to push off to the next month.

Somehow I’ve justified that the “REWARDS” we get from using these cards pays for the finance charges which we encounter about three or four months out of the year. However, take a look at the differences in monthly finance charges with these examples:

$6,000 @ 12% APR = $60 per month (which is what we were averaging).

$6,000 @ 17.99% APR = $90 per month (which is what the INCREASE was doing).

$6,000 @ 29.99% APR = $150 per month (I’m borrowing from someone else to pay that off).

Needless to say, I was pissed and began calling the automated number to shut down my account when the cool head of my beloved prevailed telling me “don’t cut your nose to spite your face (idiot)!” She went on, “you rarely have a balance on that account and you need the credit so either make sure you never have a balance or call them and find out if there is something else that can be done.”

Unfortunately, I know me and for one reason or another, one day, a balance would show up and I would be blowing my blood pressure over not paying that bill in full. And I hate to talk to the credit card “customer service” people because…well you know why and I don’t have to explain.

But guess what. I did call and got to talk to someone who understood exactly what I was jabbering about and before I could finish my complaint, he said, “Mr. Berger, sir, we send that pamphlet to everyone; but the increase is for everyone else and does not affect your account which reflects the lower, priority rate for our better, more preferred customers.”

Of course, I was ready for battle so began arguing that what he just said is not what the pamphlet reads and my voice started rising. “I know Mr. Berger, sir,” he calmly cut me off. “But I’m telling you, sir, your rate stays the same and I’m even putting a note here in your account file about this discussion so if you have any problem in the future you can refer to these notes.”

OK, so I let him win that argument.

While I’m feeling very special about my “preferred” status, I’m blogging this so everyone will know that a protesting telephone call does make a difference. Had I done nothing, I’m confident the rate would have gone up the extra five percent. If I cancelled my account, I guessing I would have received a mailer in a few months offering me some sort of introductory rate to get a card and other free services (I may still go for that option when my cash flows better toward the year end.)
Make the call. It will save you some significant money over the long haul and even more importantly, it will let the biggies know we’re not going to let them get away with taking advantage of us. Now I’m wondering, out of the millions and millions of credit card customers who receive these pamphlets, how many actually just go along and end up sending the extra $300 or $400 in finance charges every year?