Enough “Stop Abusing The System” Comments Already!
Every so often I get a comment on one of my posts complaining about people abusing the system, whatever that means. Some even celebrate when things go badly for others because they are “getting what they deserve”. I felt like it was time that I let out some of my frustration with these comments because they are not rooted in reality in my opinion. There was one such comment on my Aspire retention phone call article.
The House Always Wins
I am sure most of you have heard the saying, the house always wins. Usually this talks about gambling and how the casino always has the edge. But as the consumer you are essentially the player going up against the house. They hold most of the cards and you are just trying to get the best odds you can.
These financial institutions’ reach goes much further than credit cards and welcome offers. They have a hand in your mortgage, IRA, 401K, checking account, car loans, student loans. The list goes on and on.
The point I am trying to make is saying that you are a bad customer for taking an offer on a card and then deciding it doesn’t work for you doesn’t make you unprofitable in their eyes. They are trying to get all of your eggs in their basket because the more you have with an institution the less likely you are to leave. They will take a hit in one area to make it up in total sum. It is the same reason grocery stores have products they sell at a loss, they want you to walk in the door. Why do you think banks offer credit card points for checking accounts and mortgage loans etc? Because they want to lock you up.
It’s All About The Money
We got the first part of business out of the way. The institutions are trying to lock you down from all angles. And they want to do that because they want to make a profit off of you. This is about dollars and cents, plain and simple. The time of valuing customers and having a relationship with your financial institutions is long gone. The personal touch left with technology. Why do you think bank tellers tell you to go to the ATM to make that deposit…they don’t even want to deal with you.
So now that we know what value you bring to the table, profit, should you change your expectations or decision making to match? What does loyalty get you in a set up like this?
What About The Moral Angle?
Now that we have the business aspect out of the way what about the moral side of things. Is it immoral to take an offer for something you don’t plan to keep? Is it immoral to ask for a retention offer on a product when you already received a bonus on said product? Before I go deeper into this let me run some other scenarios by you:
Cable Company Analogy
Have you ever asked your cable company to lower it’s price after an increase, like when that teaser offer ends? Did you think it was immoral to ask for a reduction in price for your loyalty? Did you feel bad going to another provider for their teaser offer when they were unwilling to budge?
Free Sample Anology
Have you ever taken a free food sample at the store even though you were almost positive you wouldn’t purchase it? Did that cost the provider money? Did you feel bad about it? Most importantly, have you ever thought you wouldn’t buy it but did after trying it?
Do you find these two things immoral or wrong? If not then why do you think trying out a card with a welcome offer is immoral or wrong?
What Is The Point Of Welcome Offers
Now that the analogies are over let’s get back to the task at hand. Why do these banks offer welcome offers in the first place? It is to entice you “to try” their product. It isn’t a life long commitment. If it was they would offer a tiered bonus over many years etc.
If you take an offer from someone to try their product but at the end of that trial, say one year, you didn’t find it useful then why should you continue to pay for it? Are you going to pay that cable company more money because you owe them something when the teaser rate is up? Are you going to buy that food product because they gave you a small taste and you are morally obligated to buy it now? Nope! So you don’t need to do it with a credit card either.
Some will complain that you knew that you weren’t going to keep the card when you signed up for it. That may be the case to start out but the truth is that you don’t know it for sure. Remember when I asked if you have ever bought that food item after trying it when you were sure you wouldn’t? I have, the point is that things change and products change.
Banks and card issuers add and take away perks all of the time. The product may not be the same 6 months down the road. The Amex Gold card had a major overall that turned many cancellations into renewals etc. The changes to the Platinum cards turned many sure thing renewals into cancellations as well.
Last Thought On The Subject
Canceling or renewing a card is the purest form of feedback a bank could get. What do you think makes them decide to roll out new perks or to reduce perks? It is all based on new accounts, profit, and retention numbers. If the product is worthy I will keep it long term, if it isn’t I won’t.
When the Citi Prestige card came out I planned on keeping it forever and I ended up cancelling it after 12 months because they removed all the best perks. The opposite happened to my wife’s Hyatt card. I planned on canceling it after a year because it was not a great card but with the relaunch I decided to pay more to keep it.
If the banks want more loyalty then they need better products. Don’t reward them by keeping and using inferior products. That leads to stagnation, a lack of urgency and a lack of innovation. Why do you think the Chase Hyatt card got a revamp? Because the retention and usage levels required it. Our “feedback” led to a better product.
This is sometimes called a game or hobby. It is a game we are destined to lose when you look at the big picture. But we are able to level the playing field some by being smart and informed consumers. And we are able to help create better products by voting with our wallet and which cards we use and keep. There is nothing immoral or wrong making a decision based on what is best for your financial situation, that is what the house does after all.