Do You Punish Or Reward Your Customers?

Why companies insist on punishing their loyal customers that they depend on I’ll never understand. Whats more, they do it over and over and again and expect them to come back to them.

This vent is against so called “fees” that business like to use to punish their customers. The fees I want to focus on are the ‘late fees’ that are synonomus with the video rental industry. It is their bread and butter that they reply on and the extra income that comes from this is a large percentage of their revenues, yet they understand to some extent that customers will fight tooth and nail to avoid paying that extra $1 fine.

Now I realise that there is no such thing as a free lunch, but when you slap your customers with fees and fines for doing business with you, you are setting yourself up for disaster. When you call it a late fee it makes it feel like you’ve done something wrong and are being punished for it, and making your customers feel bad is no way to create loyalty.

Now to juxtapose this punishment model employed by all the major video/DVD retailers with a relatively new companys such as Red Room DVD and Quicklix who are trying to disrupt the encombents, they treat their customers a little differently.

When you choose to rent a DVD from Red Room DVD, you can keep it as long as you want. There is a flat rate per day and you simply return it when you are done and pay for the days that you keep it. As a bonus – If the rental charges exceed the replacement cost (Normally around $35), you keep the DVD! This is what we call a win/win situation! So does this mean you actually get a ‘reward’ for keeping the DVD late? What a concept. This what some might call positive reinforcement!

Quicklix (Australia’s answer to Netflix) has a different model again. Here you pay a monthly fee, and depending on the subscription you get a certain number of DVD’s a month sent it the mail to you. Again, no late fees, you simply send your current DVD’s back when you are done and more arrive a few days later.

These are 2 compaines that are innovating and looking for a different model in a what has become a fairly stale industry. It just goes to show you that you can treat your customers with respect and make money.