Overselling Bites Discover Card

Was it worth it? Ask Discover Financial Services who is facing an enforcement action by the Federal Deposit Insurance Corp. over the way it sold its payment protection, identity theft protection and other products.
This follows class actions against the company in eight states and significant buzz on the blogs and airwaves from unhappy customers. The class action suits claim several questionable tactics including enrolling customers in fee services without knowledge or authority, incurring hundreds and thousands of dollars in fees from their customers.

Fee Revenue from these products contributes about 3% to Discovers' net income. During the period of the questionable sales tactics, Discover increased fee revenue by 4%. But since this news, Discover's stock price (DSF) dropped $0.45 the day the FDIC announced the enforcement and fell an additional 3.20 over the next few days, or ~15% of the stock's $26 value.

The company has since discontinued the aggressive sales tactics in question, but significant damage has been done to its brand and customer trust as can be evidenced by several customer blogs. By polluting their water source, Discover has limited its chances for healthy growth and long term customer satisfaction. It also must face fines, legal action, and additional governmental scrutiny that will distract them from their core business.

Discover has fallen to a Bad place among its competitors and earned a spot in the BetterBusinessBanter's "Good, Bad, and the Ugly".

Comments

Creating a Customer Experience Command Center

The concept of a using a dashboard of key performance indicators ( KPI’s ) to measure and manage a business is commonplace. In boardrooms across the world executives are busy looking at detailed charts and graphs that outline their latest sales and operational metrics. But in almost every case, those dashboards focus on business outcomes rather than the customer journey. As business evolve to more customer-centric models, so too should their dashboards. As obvious as this may sound, I hadn’t put the 2 together in quite as powerful way until I had the great fortune to see Jeanne Bliss present at a recent company event. Author and Customer officer for 5 major US corporations, Jean is an amazingly energetic and straightforward leader who has a long track record of blazing the customer trail and making change happen. Out of the many riveting topics Jean shared, I was most inspired by the concept of a Customer Command Center . Here’s 5 poin...

4 Questions to Craft a Contact Management Strategy

Communication used to be limited by the challenges of the message transfer mechanism and cost. Print, telegraph, telephone, all have limitations in terms of delivery regardless of the demand. Today’s Marketing challenge is the reverse; unfettered and almost free delivery of communications to an audience with limited attention. In this supersaturated environment, contact management is key to cutting through the noise to maximize the reach, impact, and cost of your communications . When you finish this blog, you will have a 4 step formula to create a successful contact management strategy for your business. Often coupled with a Customer Relationship Management ( CRM ) system, contact management focuses on the capture, storage and retrieval of customer contact details. A more advanced interpretation supported by sophisticated CRM and marketing automation tools like Marketo or Eloqua , contact management is the systematic management of customer co...

So you need to integrate customer data

Got data? Of course you do. In today’s digital platform enabled world of marketing the challenge is often not what data you have but can and how you use it. With each new tool, custom field, and data warehouse, companies expand functionality but can also reduce their ability to deliver personalized engagement from a single view of the customer. Why is this important? According to Gartner, companies spend close to 30% of their total marketing budget on digital tools meant to deliver personalized communication at scale. While these tools generate, analyze and store rich data elements, the task of integrating the data to be stored and retrieved becomes increasingly complex. This creates several challenges including siloes, conflicts, costs, and compliance. Why is this so hard? Escalating needs : As companies grow and elevate their level of maturity , they often find the need to centralize data from diverse platforms to re...

Better Business Banter

Search This Blog