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Discover Card Yet to “Discover” CRM

by Robert Desisto  |  June 3, 2009  |  12 Comments

I am new to the Gartner Blogsphere. I will be using this space to share real world situations. No theory, just plain real world circumstances.  My first post is my own personal experience on how one company, Discover Card, just doesn’t get it when it comes to CRM. 

My story starts on May 22, 2009 when I mistakenly sent a payment to my landscaper for $x,xxx that was intended to pay my monthly Discover Card bill.  The only way I found out I made this mistake was my wife was declined to make a purchase on our Discover Card on May 27th. After she informed me, I went online to my bank and found the mistake, a mistake I freely admit I made. I called Discover Card, they tell me I must pay the bill and only then could they eliminate the finance charges on my account. It seemed like a reasonable request, I complied.  Keep in mind, I have never in 10 years carried a monthly balance on my account. However, I have purchased a significant amount of goods for which Discover has received healthy transaction fees from the merchants. So my expectation was they would waive all finance charges and late fees.

On June 2, after my payment was posted, I again called Discover Card. They informed me that they could waive the finance charges but not the late fee. After being a customer for over 10 years and always making payments in full, Discover Card was not going to waive a $40 dollar late fee!  I asked Discover whether they were willing to sacrifice $1,000s in future potential transaction fees for a mere $40. Discover Card’s response was that it was their policy. After asking for a manager and not getting one, I informed them I was no longer a customer. 

Discover Card demonstrated CRM at its worst.

 

Category: crm  customer-experience  customer-service  finanical-service  

Tags: add-new-tag  crm  customer-service  

Robert P. Desisto
VP Distinguished Analyst
14 years at Gartner
24 years IT industry

Robert Desisto is a Vice President and Distinguished Analyst in Gartner Research. He is responsible for managing the software as a service (SaaS) research agenda. His research focuses primarily on the use of SaaS as a delivery model for applications. Read Full Bio


Thoughts on Discover Card Yet to “Discover” CRM


  1. Bart Johnson says:

    While it would have been a nice gesture on the part of Discover’s CRM program to forgive the late fee, they did wave the finance charge. It’s not unreasonable to expect the customer to pay for their own mistake.

  2. Rob DeSisto says:

    Bart thanks for the comment. Hope you come back. Discover Card did waive the finance charge and were under no obligation to waive the late fee. However, if they deemed me a good customer you would think they would waive the $40 also. A key tenant in CRM is to retain profitable customers because it costs more to get new ones. I guarantee you that with in three months after I cancel they will offer me the world to reapply. Was that really worth $40?

  3. Misha says:

    Hi Rob,
    I have been a customer of Discover Card for 15 years. I have never had any problems with their customer service. I have asked for forgiveness on being late before and was told that it is actually company policy that account managers are only able to make one adjustment per 12 months. That means you have the option of your late fee OR your finance charges being removed, which worked out to my advantage because my finance charges were around $80. They also made sure my rates were reinstated because my rates had gone up significantly because of that late payment. I also agree with Bart that the customer should pay for their own mistakes, as those were the terms agreed to when the account was opened. Sure, it never hurts to ask for forgiveness, but it shouldn’t be expected if it wasn’t an error on their part. You had an account with them for over 10 years and you chose to have a negative report on your credit history by closing your account, over paying a $40 late fee?!?! Your negative credit report is much more damaging than Discover Card losing a transactor (one who pays their balance off in full each month) thagt they don’t really make money off of anyway. You kind of kicked yourself in the *ss don’t you think?

  4. Rob DeSisto says:

    Misha thanks for your comments hope you come back. A couple points. I did pay the $40 late fee. This is not the issue. The issue is not whose falt it is. In fact, I never said it was Discover’s falt. The issue is Discover has to measure the value of fostering an ongoing relationship not treat each customer in a cookie cutter fashion. The key lesson learned in the Discover example is customers will make mistakes, its how you treat customers after they make the mistake that makes the difference. Discover has to make a decsion on whether they want to lose me as a customer. If Discover has tools to analyze whether I am and will be a profitable customer, and determined I will not be then they should not cut me any slack. That is good CRM. If however, they are going to lose me over $40 because they have no visibilty in my potential profitablity then that is not good CRM. The point is not who is at falt, the point is building valued customer relationships.

  5. Tcd57 says:

    Thinkk about this. Is it unreasonable for you to terminate your business with Discover over 40.00 that you admit was charged becauses of your own error. If Discover waives both charges for you and goes against their policy of one a year, then they must waive for everybody else. That sounds reasonable. Then what is the use of having a policy.

  6. Rob DeSisto says:

    The issue is not whether its their right, or not is itpolicy. The issue is the customer has the power in this relationship. If I am profitable to them they should keep me, if not keep to policy and I can cut them loose without any penelty. CRM by nature is not to treat every customer the same.

  7. Cathy says:

    I had a similar experience with Discover. I think that could have waved the 19.00 late fee!! So insignificant yet so important to take off to show they appreciate my business. But even thought I am a great customer they still refused. Needless to say I will no longer be a discover card customer.

  8. netbrowser says:

    I think both Misha and tcd57 both work for Discover. You should have received the $39 forgiveness charge if it’s within a few days of your payment due date if the balance was paid in full.

  9. mark says:

    rob-
    The credit in which a company provides to you is in good faith that you will pay it back on time, each month. As Im sure your aware, credit is an unsecured loan. The minute you miss a payment or break your normal habbits you pose a risk. You are however right about one thing, the customer is right and should have the greater power. But in this instance, the company still extending the privillages of borrowing non-existent money would be your power.

  10. mark says:

    ….and netbrowser….im almost certain you work for discover….

  11. […] was positive, and the second, about DiscoverCard and reported by Robert DeSisto of Gartner on the Gartner Blog Network, was […]

  12. Bruce in Tampa says:

    I enjoyed reading the comments, thanks to all of you for your respective points.

    To Robert’s statement about CRM, let me share a summary of another example, from Nordstrom, and I don’t work for them. I had to buy a pair of shoes in a hurry on a business trip. I bought them at Nordstrom (first time buying anything from Nordstrom), and knew within 24 hours they didn’t fit right. But, my fault, I bought them. Several months later, I was in a Nordstrom in my home town, looking at the same shoe thinking about getting them in the right size. I happened to mention to the employee that I had one pair, wrong size. In the well known “Nordstrom Way”, they offered to exchange them. I declined – it was my fault. They insisted, I declined, several times. Finally I offered a compromise, if they swapped the brown pair, I would buy a new black pair. They said it wasn’t necessary, but they would swap the brown ones, and sell me a black pair. I have repeatedly returned to Nordstom even though I could buy from others nearby or over the internet. I think this demonstrates the CRM point Robert is making. In this case, it is Nordstrom’s policy to reinforce good CRM practices.



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