Negative and Positive Options – Buyer Beware:
There have been some really great direct marketing companies thru the years. Most of these companies spawned from traditional snail mail. Do you remember Book of the Month Clubs or Columbia House Records? Do you remember how they marketed to you? Were you ever a member?
What is a negative or positive option?
A positive option is a form of continuity or book club marketing technique that requires the customer to take some action prior to each regular merchandise shipment to indicate that the merchandise is wanted. This technique can be much less effective in terms of revenue per customer. A negative-option program, ships the merchandise to the customer unless that customer takes some action to say no. However, customers can usually be recruited more easily for positive-option programs.
Simply put, negative option turns the sales transaction around. Instead of the merchant having to "sell" you a product or service, it starts with the assumption that you’ve already bought it. It’s up to you, the consumer, to contact the merchant and cancel the order if you don’t want to complete the transaction. The Columbia Record Club and various "book-of-the-month" clubs were early pioneers of negative option marketing. The hook was an offer of five or ten books or records for free or at a heavily discounted price.
By accepting the offer, the consumer agreed to "join" the club and receive regular shipments of other books or records at the full price, unless the consumer took the "negative option," telling the company it did not want to receive that month’s offering.
As you might expect, negative option has been abused as its use has become more prevalent. The widespread use of credit cards and the growth of the Internet have fueled that abuse, to the point that federal and state consumer authorities have taken action to stop it. I personally do not feel comfortable buying products that are a negative option. It used to be worse. In the old days, you could only use the telephone to “join the club”. In order to cancel (after a commitment), you had to go to the trouble of writing in and putting the words cancel across a price of paper or the next invoice. It really was highly effective. For me, it pushed the envelope of what is consumer friendly and what is not consumer friendly. A lot of unmotivated people would get automatically billed in perpetuity.
With the web, we have seen the demise of many of these traditional direct mail / direct marketing businesses. Having said that, the negative and positive option is alive and well.
Credit Cards make Negative and Positive Options Much Easier.
With the proliferation of credit cards, negative option is probably growing more than ever. I know that at my gym, LA Fitness, it took me months to finally cancel my family plan. Signing up was no problem. All you had to do is walk into the club and ask about new memberships, and as long as that club is open you can buy a membership. Believe me, they want to sell you. There all over you when you raise your hand. How come companies do not get it? As easy as it is to join LA Fitness it is murder to cancel. At least that was my experience with canceling my family. If you want to cancel the membership, you cannot do so at the club. Why is that? So I called head office. Sorry, you can’t do it over the phone either. What you can do is mail it or fax it in. Why can’t we just speak to someone! By this time I was pretty annoyed. I did fax it in, only to see the charges continue on my credit card. So I called the head office again and they said they never received the fax. I must have forgot to ask for a fax receipt confirmation (who needs a fax anymore?). So I sent in another the fax. You really have to want to quit to be able to opt out. It felt like one of my morning workouts.
It’s Everywhere
I had a friend of mine write a certified letter to the CEO of AOL because he could not get 2 regular monthly charges off his credit card. He was grateful that he was retired and thus had the time to waste on this. He also is a young guy. He told me he could not imagine how an old person could work thru this problem. You would kind of think after losing 10mm or more dial up customers AOL would understand a little about cancellations. Thank goodness for their advertising model and Time Warner. The shareholder lawsuits are flying!
Netflix Rocks!
One of the greatest success stories of ecommerce is Netflix . Their CEO Reed Hastings was recently interviewed on CNBC Television. In the interview one of the hosts mentioned how she received a 12 month gift from a friend. She had to do 2 things to activate her gift. One she needed to register her name as a recipient, and two she needed to give her credit card on her own gift. Here is where the negative option comes in. Once the 12 month gift expires, she must call or write to cancel or she will be automatically billed in perpetuity. Netflix is what is known in the Venture Capital community as a Home Run!. One of its early investors was Mike Schuh. I met Mike when I set up eAssist in 1999. He knew then he had a winner and he understood the importance of customer service and the customer experience.
Do you realize that Netflix almost bankrupted Blockbuster? Netflix changed the way we watch home movies. They beat the proverbial 2000 pound gorilla, Blockbuster had hundreds if not thousands of bricks and mortar. Netflix executed a perfect strategy by making convenience thru the mail and offering the best customer service. Blockbuster is definitely not dead, they too recently went into the direct to consumer business, as they introduced their Blockbuster Total Access Program (http://www.blockbuster.com/). They will be a formidable competitor as customer can combine the convenience of the mail with the convenience of retail. Yet for me, Netflix will continue to innovate with new services (music downloads) and new products. These guys are too close to their customers to lose!
Offer Easy Service
The best companies using this technique will not make you write in or fax in, they will offer you a menu of choices. I’m sure there is a direct correlation between growth and customer experience and service. That is why Netflix is hitting the cover off the ball and why Columbia House has a membership probably 1/10th of what it used to be. Before you sign up for something automatically ask the question, how do I cancel. I recommend the options should include the telephone, email or the web. Check it out!
There must be millions of consumer complaints about this practice filed every year.
The 11 commandment and 12th commandment for consumers should be:
11. Thou shall make it easy to cancel a product or service
12. Thou shall gain market share thru great customer service.
The consumer has spoken.
Technorati Tags: Customer Service Customer Experience Selling Sales Negative Option
What is a negative or positive option?
A positive option is a form of continuity or book club marketing technique that requires the customer to take some action prior to each regular merchandise shipment to indicate that the merchandise is wanted. This technique can be much less effective in terms of revenue per customer. A negative-option program, ships the merchandise to the customer unless that customer takes some action to say no. However, customers can usually be recruited more easily for positive-option programs.
Simply put, negative option turns the sales transaction around. Instead of the merchant having to "sell" you a product or service, it starts with the assumption that you’ve already bought it. It’s up to you, the consumer, to contact the merchant and cancel the order if you don’t want to complete the transaction. The Columbia Record Club and various "book-of-the-month" clubs were early pioneers of negative option marketing. The hook was an offer of five or ten books or records for free or at a heavily discounted price.
By accepting the offer, the consumer agreed to "join" the club and receive regular shipments of other books or records at the full price, unless the consumer took the "negative option," telling the company it did not want to receive that month’s offering.
As you might expect, negative option has been abused as its use has become more prevalent. The widespread use of credit cards and the growth of the Internet have fueled that abuse, to the point that federal and state consumer authorities have taken action to stop it. I personally do not feel comfortable buying products that are a negative option. It used to be worse. In the old days, you could only use the telephone to “join the club”. In order to cancel (after a commitment), you had to go to the trouble of writing in and putting the words cancel across a price of paper or the next invoice. It really was highly effective. For me, it pushed the envelope of what is consumer friendly and what is not consumer friendly. A lot of unmotivated people would get automatically billed in perpetuity.
With the web, we have seen the demise of many of these traditional direct mail / direct marketing businesses. Having said that, the negative and positive option is alive and well.
Credit Cards make Negative and Positive Options Much Easier.
With the proliferation of credit cards, negative option is probably growing more than ever. I know that at my gym, LA Fitness, it took me months to finally cancel my family plan. Signing up was no problem. All you had to do is walk into the club and ask about new memberships, and as long as that club is open you can buy a membership. Believe me, they want to sell you. There all over you when you raise your hand. How come companies do not get it? As easy as it is to join LA Fitness it is murder to cancel. At least that was my experience with canceling my family. If you want to cancel the membership, you cannot do so at the club. Why is that? So I called head office. Sorry, you can’t do it over the phone either. What you can do is mail it or fax it in. Why can’t we just speak to someone! By this time I was pretty annoyed. I did fax it in, only to see the charges continue on my credit card. So I called the head office again and they said they never received the fax. I must have forgot to ask for a fax receipt confirmation (who needs a fax anymore?). So I sent in another the fax. You really have to want to quit to be able to opt out. It felt like one of my morning workouts.
It’s Everywhere
I had a friend of mine write a certified letter to the CEO of AOL because he could not get 2 regular monthly charges off his credit card. He was grateful that he was retired and thus had the time to waste on this. He also is a young guy. He told me he could not imagine how an old person could work thru this problem. You would kind of think after losing 10mm or more dial up customers AOL would understand a little about cancellations. Thank goodness for their advertising model and Time Warner. The shareholder lawsuits are flying!
Netflix Rocks!
One of the greatest success stories of ecommerce is Netflix . Their CEO Reed Hastings was recently interviewed on CNBC Television. In the interview one of the hosts mentioned how she received a 12 month gift from a friend. She had to do 2 things to activate her gift. One she needed to register her name as a recipient, and two she needed to give her credit card on her own gift. Here is where the negative option comes in. Once the 12 month gift expires, she must call or write to cancel or she will be automatically billed in perpetuity. Netflix is what is known in the Venture Capital community as a Home Run!. One of its early investors was Mike Schuh. I met Mike when I set up eAssist in 1999. He knew then he had a winner and he understood the importance of customer service and the customer experience.
Do you realize that Netflix almost bankrupted Blockbuster? Netflix changed the way we watch home movies. They beat the proverbial 2000 pound gorilla, Blockbuster had hundreds if not thousands of bricks and mortar. Netflix executed a perfect strategy by making convenience thru the mail and offering the best customer service. Blockbuster is definitely not dead, they too recently went into the direct to consumer business, as they introduced their Blockbuster Total Access Program (http://www.blockbuster.com/). They will be a formidable competitor as customer can combine the convenience of the mail with the convenience of retail. Yet for me, Netflix will continue to innovate with new services (music downloads) and new products. These guys are too close to their customers to lose!
Offer Easy Service
The best companies using this technique will not make you write in or fax in, they will offer you a menu of choices. I’m sure there is a direct correlation between growth and customer experience and service. That is why Netflix is hitting the cover off the ball and why Columbia House has a membership probably 1/10th of what it used to be. Before you sign up for something automatically ask the question, how do I cancel. I recommend the options should include the telephone, email or the web. Check it out!
There must be millions of consumer complaints about this practice filed every year.
The 11 commandment and 12th commandment for consumers should be:
11. Thou shall make it easy to cancel a product or service
12. Thou shall gain market share thru great customer service.
The consumer has spoken.
Technorati Tags: Customer Service Customer Experience Selling Sales Negative Option
posted by Dan Plashkes
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