If this were a political site, the headline might have read “In Election Year Maneuvering, Verizon Flip Flops on Increasing Revenues.” Alas, it’s not, but the end result is the same: Verizon has decided to drop the US$2 “convenience fee” the company announced less than 24 hours ago for customers making one time payments on their Verizon Wireless accounts.
The move was seen as a more-stick-than-carrot effort to get customers to set up autopayments, as the “convenience fee” only applied to customers who made one time payments over the Web or over the phone—customers who use electronic checks or are enrolled in the AutoPay plan will not pay this fee. Nor will customers who use their own banking service website, send in paper checks, use gift cards, or pay at a Verizon store or a kiosk for bill payment.
Not surprisingly, there was a fairly instantaneous uproar from customers who found such nonsense fairly inconvenient. What is surprising, however, is that Verizon blinked, and the company issued a statement on Friday that said, “We take great care to listen to our customers. Based on their input, we believe the best path forward is to encourage customers to take advantage of the best and most efficient options, eliminating the need to institute the fee at this time.”
The only real question is what in the heck Verizon expected would happen—Big Red’s customers weren’t any more likely to find the notion of paying extra to pay online any more palatable than Bank of America’s customers found the bank’s plans to charge $5 per month for ATM cards. With a customer backlash effectively inevitable and the company taking less than one day to blink, why bother announcing the fee in the first place?
The value of autopayments to Verizon is undeniable, but the company may want to try incentives instead of sticks. For instance, back when Microsoft was dumping Internet Explorer onto the market to gain market share against Netscape, the company didn’t charge extra to OEMs who didn’t make IE the default browser, it gave them a $1 discount per PC if they did. Ask Netscape how well that tactic worked.
Verizon could take a similar tact and offer customers a $2 discount for enrolling their accounts into autopayments. Another positive role model is Verizon competitor AT&T (at least in this one area), which offers its customers a $10 gift card for enrolling in paperless billing.