wtf?!

I had an instructor who was a patent attorney and he said the best part about being successful is that he could get rid of clients that were a pain in the rear. This way he didn't have to deal with them and his competitors would end up taking them on as clients.

Same principal as a hairdresser, it was wonderful to get so busy that you could tell the clients you didn't like to go screw.

How does this work? Timmus, a Consumerist reader, explains in a vastly shorter article:

"Pillage the long term profit for short term profit."

Another thing about the higher ATM fees for non-customers. While the higher fees drive away some potential customers, a percentage of existing users will simply decide to open accounts at that bank if they find themselves using their ATMs a lot. The trick comes down to figuring out the balance between the two to maximize profits.

That was the whole idea behind Best Buy's makeover a few years ago. It stopped doing rebates because it realized that rebate-chasers typically are low profit/high maintenance. Other moves were meant to discourage the tech-savvy customer, again because of the high maintenance, and encourage more soccer moms and teens who worry more about convenience and the "cool factor" than price. Looking at the fortunes of BB vs. CC, I'd have to say the strategy is working.

This concept has become more and more common in the all industries (retail, banking, travel, etc). Essentially, if you're a "good" (good meaning- spend a lot of money, carry a large account, carry a lot of debt, etc.) customer you get treated how everyone should be treated. Bad customers get treated far worse. The bar has been slowly lowering for years. The wealthy don't see it because often its not happening to them because of their status. Perhaps that's why there is such a difference in attitudes when it comes to the economy and consumer attitudes.

next stop...100% fee.

@ARP: Most good businesses don't automatically label low-spending customers as "bad customers." Bad customers are generally people that can never be satisfied, always complain, and question every nickel and dime of every bill. Those are the customers that you fire.

What banks are doing is just alienating the costly customers and want to focus on only the profitable ones. If they just went and fired customers, I would agree with them. This sneaky "we want your business but you will pay to keep it" is just...not unethical...not amoral...eh...is assholish a word?

It's may not seem fair, but it's certainly common. I worked for a small web design company that did a lot of back end programming for databases and e-commerce. When we started out our prices were pretty low and we got a lot of work. As we slowly built up a reputation our prices kept slowly climbing too. Eventually we were doing business with local state agencies and larger statewide businesses. What we found was doing work for larger businesses often was easier and quicker. Part of this was they knew what they wanted, the other part was that their business was already in place and the internet was just an extension of that business instead of trying to be the business.

With a lot of the smaller companies they often expected a lot more from us. Many businesses wanted us to create their color scheme's their logo's and some went so far as to want us to create their business plans. These things were well beyond the scope of just designing a back end database or a simple website. We found looking back at the hours logged on projects and the money made from them that we were spending a huge amount of our time working with smaller businesses that were a small fraction of our overall income. So in the end we ended up moving our pricing up to the point where we just didn't get any more small businesses jobs. Luckily there were plenty of small web design startups to pick up the slack and take over a lot of the small businesses we no longer developed for.

Recently Sprint Wireless kicked out a few thousand of their most complaining customers (it was here on Consumerist.com). This was the same thing. How many hours can you pay employees $x/hour plus phone systems, management, facilities, etc, to listen to a customer whine about their $40/month bill. It becomes cheaper in a business sense to just drop them. it makes no business sense to waste $90/month in costs to deal with a $40/month customer

This is a good idea. Let me tell you from working as a head teller. The same problem customers who come in every day are the ones who ask "what checks have cleared", have less than $100 in their accounts, want account printouts, don't get direct deposit, won't get check cards, and other trivial things that can be done on the computer and telephone banking. The large balance customers you almost never hear from. They only come in to talk to a desk person about rates, or making more money. People who refuse to use technology and direct deposit, who have access to it, should pay for holding up the line when people who really need bank staff are behind them. Please don't take me as mean or bitter, I am just speaking from the inside of banking. My staff and I are very accommodating with people who really need help from us, but some people just need to get over their fears of technology.

Banks, just like any other business are here to make money. Customers with large balances allow us to loan their money out to other customers at higher interest, and turn a profit. Customers with $50 in their accounts who tie up lines, cost us money. I am not knocking low-balance customers, I live paycheck to paycheck myself(banking pays low), but I use online banking, ATM machines, telephone banking, bill pay, and direct deposit to bank. Other than going to work, I would never need a teller. We still have tons of customers who fill out withdrawal tickets and wait in line for $40 when they could simply have used the ATM. Those are the people who should be assessed a fee.

@timmus:

Exactly. How many people who get fucked by a bank when they're young and poor are going to go to that bank if/when they're finally making money?

Probably distressingly many, actually.

But I know I follow the "fuck you, you didn't want me then, you will NEVER get me" philosophy.

@sleze69:

Yes, it is.

And you should not give assholes your money.

Umm...am I missing something? Where did Bob Sullivan say this at? There isn't a link to his article (or an article with a quote from him. There is just a link to a article a New York Times article that is almost 13 years old.

You mean a business is able to essentially "shop" for it's best deal just alike all of us do? Sort of like I research 5 different stores before I decide whom I will patronize?

I'm shocked! SHOCKED!

We have used the same bank for over 30 years. They instituted these policies about two years ago. Everything is broken down into wealth brackets now. If your in the high bracket (lots of money at that bank) you get a drastically different set of offerings than the mid level or lower level depositors. They have drastically increased the fees and lowered the service level for lower dollar depositors.

Our loyalty towards them is eroding and we are leaning more toward putting our investments and larger deposits into our credit union instead. So this really is a short term profit that could hurt long term. As our situation is improving we have those sought after dollars to sock away but are less likely to let them reap the benefit.

Evil... yet brilliant at the same time. Freightening.

@boones farmer: exactly what i wanted to post. i believe Best Buy was targeting business men also and would label customers as angels and devils.

I wouldn't exactly compare them to Circuit City given that CC's decline is more likely to do with mismanagement when they fired all of their existing employees and hired all new cheap labor.

I was one of those First Chicago customers back in '95 who had to deal with the teller fee. Not a big deal because I preferred the ATM anyway, rather than waiting in line for a teller. The fee was only assessed if you asked a teller to do something that could have been done over the ATM (check balance, deposit, withdrawal).

I think it was a bad PR move, but clearly helped their bottom line.

First Chicago got swallowed up by Bank One which got eaten by JP Morgan Chase, so the teller fee policy is long gone.

I run a small business and have done this.
I've fired production hampering, needy customers by raising my rates to the point that unless you signed a service contract with me the cost was way out of the range for the market I'm in.
This has been beneficial in a few ways. 1. the whiney customer left. 2. a customer that was sitting on the fence with regards to a service contract signed up.

I actually sort of do this, but its a weird story behind it.

I was talking to my lawyer about some folks giving me problems, and he started saying "Stop thinking like the producer and start thinking like a consumer".

If the person you gave business to treated you bad, wouldn't you dump them for someone better, and if someone if giving you their business, but they treat you bad, do the same thing.

so, yea, I basically have told people to fu%k off, and take their money elsewhere (at times even naming competitors, lol).

Here's the problem with this theory:

I'm not making a lot of money right now. Maybe I just graduated from college. Maybe I'm going through a bad patch. So I don't have $2500 just sitting doing nothing in my checking account.

But ten years from now, I probably will be making a lot more. I'll have credit cards, a mortgage, auto loans, an IRA and so on.

But not with you. Because you blew me off ten years ago because I wasn't a "good" customer.

I was refused homeowners insurance by a large nationwide insurer who had red-lined the neighborhood of my first home. The agent actually said people that lived in homes like mine were "less scrupulous." They weren't on my side back then, and now they'll never get my business.

I'm not sure if anyone knows about the 80/20 rule, because then they will know that this info is old news.

Okay, but what about places like Bank of America that took that old lady's $30,000 cash bond and refused to cash it, or the $5000 bond belonging to the 80-year-old? These were personal accounts and not business accounts, mind you. The bank hassled them or refused to cooperate with their simple requests of cashing them.

With the bank's attitudes like this, I wouldn't be surprised if everyone starts using money orders and putting their earnings in empty coffee cans.

@Corydon: well, in reality, you'll be less inclined to bank w/ them, but here's the beauty of this system:

in 10 years:
-you'll have a credit card & they'll buy the company that owns it.
-you'll shop for a mortgage & they'll beat their competitors by 25 basis points. 50 if you open a checking with them.
-you'll buy a car at a dealership offering 2.9%...thru the bank you refused to do business with.
-their IRAs will pay higher interest
-etc.

my point is that customers hate getting "feed" out the door, but despite that, we almost always provide our business to the company with the best rates. you're not going to pay an extra $15,000 on a mortgage just b/c a bank pissed you off charging a minimum balance fee 10 years prior.

& the whole reason they can provide the best rates? b/c they fired customers that were sapping their profits.

i'm not saying i agree with the practice, but i can understand it. all these things that banking customers need - check & ach processing, online banking, bill pay, debit cards, atm machines, cash at branches...it all costs money. & at the end of the day, some customers paid for it & others didn't.

some of us call this "short-term" thinking, but i don't agree. when it comes to money, we always go to the lowest bidder (when borrowing) & the highest bidder (when saving), so banks can afford to lose you in the short-term by coaxing you back when you're more profitable.

@QuantumRiff:

I'm calling you on an incredible amount of BULLSHIT.
You're basically lambasting the poorer folks for trying to not be poor by making sure that they're managing their money effectively. I'd say that's common sense. Of course you care about a check clearing when you have less than $100 in the bank because PEOPLE NEED FOOD AND HOUSING TO LIVE, thing which cost money.
On the other hand, you congratulate the high balance rich, who really could care less if they get hit with an overdraft charge or if their latest check doesn't clear, because there's another $1k check right behind it anyway. Oh no, they might actually have to have spaghetti with sauce from a jar tonight! Oh boo fucking hoo!
What the banks SHOULD do is rob the high balance customers with high balance fees for transactions, because they don't care anyway.

@mac-phisto: On the other hand, I may not even think to look at that particular bank because of my bad experience, whereas I'll probably start with my current bank.

And yes, when it comes to financial products, I'll definitely look at the rate I'm offered. However, it's far from the only consideration. A bad customer service experience is likely to put me off a particular bank for good.

On the other hand, my credit union has made plenty of money from me over the years, in part because of their willingness to work with me when times were bad. So they're pretty much always my first choice if I'm in the market for a loan. Sure, if someone offered a better rate, I'd go with them. But the credit union pretty much always gets first crack at my business.

The point is, we've built a relationship over the years, something First National Bank of Chicago doesn't appear to be interested in.

@trujunglist:
Yes, lets rob the rich because "they can afford it". The wealthy are typically VERY financially savvy, and would never tolerate such a thing. Most people don't get wealthy, or even to the point they aren't living check to check, by throwing money away. Further, I'm sorry, but with some basic money managment skills, no one has to live check to check. What it boils down to is a refusal to live within their means. They HAVE to have a new car. They HAVE to go out to the bar a few times a week. They HAVE to have this, have to have that. And then you end up with less than $100 in the bank and have to worry about when checks clear. Very few people in that situation are there in spite of careful and diligent money management.

@mac-phisto: Yeah what I think people here are missing is the fact that since you basically cant function in America without a bank account it is horrible for banks to impose fees on the ppl who can least afford them just because they are harder to deal with and make them less money. Banks are given the privilege to handle peoples money and they make plenty of profit from it. They have an obligation to society that other companies that sell non-essential services do not have.

Problem is, they took it too far and now it's backfiring. See Dell, Sprint, Home Depot, and others.

@pylon83:

I guess you'd be surprised at just how hard it is to make it when you have no experience in that situation. You seem to assume that everyone can even make the amount of money necessary to just live. However, I'd say that if like 10% of people are living below the poverty line, then it really ain't as easy as you suggest. But, whatever, I guess everyone can get a really nice paying job when they can't graduate high school due to family circumstances, right? It's their fault anyway, fuck em!

@Aladdyn: hmm reply was supposed to be to trujunglist

@pylon83: You haven't a clue the conditions that some very frugal people are forced to live under in this country.

@NotATool: +5 informative

@QuantumRiff: Yeah, and Spint is doing REAL well, huh?!

@Corydon: & you have a very good point. banks feel they can overcome this thru marketing...throwing millions of dollars into clever tv spots, magazine/newspaper ads, direct mailers, partnerships w/ other organizations, etc. in the end, it's quite possible that it would've been cheaper to just keep you as a customer in the first place. unfortunately, the bean counters can't quantify those numbers well.

i'm glad you've discovered a credit union with great service. isn't it amazing how a company finds time to play nice with their members when they're not playing slave to stockholders?

@tomok97: Ummmm...in a book, as clearly stated in the article. You remember books, right?

@mac-phisto: isn't it amazing how a company finds time to play nice with their members when they're not playing slave to stockholders?

Um, if you have an account with a credit union, your basically a shareholder, so in a sense, in both cases they act like slaves, its just in one case someone else is the owner, and in the other one, your the owner.

some companies piss you off enough to make you NEVER go back to them despite how attractive their later offers become. Believe me... I STILL remember (and HATE) all the companies that have screwed me over or because I wasnt "good enough" for them. They have lost my business FOREVER! They cant make any offer attractive enough to ever win me back. And I'm not some poor, no-money-having schmoe anymore.

This might work until someone sues them. I guess it was depend on the scenario. I have a feeling this happened to me with blockbuster online. I was one of those high volume blockbuster online customers who exchanged in store. This was before they upped the prices and limited in-store exchanges. One day I couldn't get into my queue. I kept getting the next movie but I couldn't edit my list to move a different movie up if i preferred. 5 emails, a dozen calls and ovre a month later, with nearly each time them telling me they know what the problem is and will be fixed the next day, i was still without access. Needless to say, I cancelled but part of me wonders whether they had such bad service on purpose because I was costing them money and weren't really inclined to help me.

I think there is nothing wrong with refusing to do business with certain customers. I, myself, have had to terminate business relationships with some customers for being abusive to my staff or constantly trying to get fees reversed (we are very liberal when it comes to fee reversals, but we expect people not to take advantage of it because we have other customers who may have also had some troubles and need some help). Especialy if a perticular person starts yelling or cussing, they disrupt the experiance for all of our other customers and its not fair to them. If you can't remain calm, resonable, and refrain from yelling or cussing, you can take your business to another branch or another bank. sorry.

@Sonnymooks: i was just trying to be clever with my wording, but alas, you caught me.

i guess what i should have said was that when you take profit (solely for the purpose of profit) out of the equation, a credit union's central function is closer to its charter than that of a banks. banks (like credit unions) chartered to serve their customer-base & issue stock as a method to do so. somewhere along the way, the balance is shifted from serving customers to serving stockholders.

it's just not as fun to put it like that.

@forgottenpassword: i was like that also...then i ran out of places to buy my groceries. pretty soon i was back in the stores i swore would never take my money again. there's only so many grocers in town, ya know?

Ironically now some places are trying to do things to help the "unbanked". The people that banks consider not profitable or have screwed up in the past.

Credit unions and community banks need to take up the slack. Let the ones that installed these rich only policies wither. Sure the big depositors make a big chunk of their business and are easy sources of revenue. But they still need lots of the little guys to borrow money, use their ATMs and pay those obnoxious fees that also help their bottom line. It would be interesting to see how many truly big fish depositors a bank has and what percentage all of the small fish put together have by comparison.

It's usually the bigger corporations that employ tactics like this. The best way to avoid this is to do business with the locally-owned stores or small regional chains. They know if they want to succeed, they have to offer something the "big boys" don't have - excellent customer service.

Yeah, you're gonna have problems with people. That's one you need to try to have someone on your staff that's willing to listen and help solve the problem. Here's an example:

The local bank I do business with had the same type of problems someone else mentioned above; people coming in every day asking for printouts, balance inquiries, et al, and were unwilling (or unable) to use e-banking. Some bright dude at the bank got the idea to put a couple of old computers in the lobby so those customers could check their balances and print out their statements if they needed to, and the tellers were instructed to refer those people to a customer service representative who would assist them in teaching them how to access their account. After some work, the number of problem customers they had nearly disappeared, and some of the older folks (and younger) without computers actually got a kick out of doing that. Sure, it cost the bank some money, but the savings in time and frustration probably cancelled that out.

You just gotta figure out a solution. Driving customers away just because they're a problem isn't the way to retain profits. Word gets around. Why do you think places like Best Buy, et al, have so many dissatisfied customers? Temporary results like those cited above will lead to long-term bad results.

@ogman: This is the wrong medium to basically try to shill this guy's stupid book. There is a time and place for recommending books, and this isn't it.

@mac-phisto:

You musta got pretty pissed off at every little thing then.

this is absolutely true. the ideal customer is one who pays a reoccurring monthly fee, and that you never hear from. I have done freelance computer work for years, and have also worked full time for the companies of my choosing. I was lucky enough to get a job at a good place, and my reputation carried me from there. I now work for the company I want doing the job I want and that check pays the bills. I pick and choose freelance projects that I WANT to do for extra income.

I always had the hardest time explaining to people that not all customers are worth having. If a person is taking up more of your time then they are paying for, you are better off without them.