Attention PMs: Your Alleged Concern For The Environment Does Not Justify Charging Customers Extra To Receive A Paper Statement
This December, Virgin Mobile begins charging customers a $2.20 Paper Bill Charge.
That’s right: If you want to continue receiving a paper bill from Virgin Mobile, rather than switch to electronic billing, you’ll be charged $26.40 extra per year for the privilege of receiving your bill by mail.
After considering a number of factors, including rising costs for paper, printing, and postage, the environmental impacts associated with printing paper bills, and the wishes of our Dark Master, we’ve decided to charge customers who would like to receive a paper bill…
Electronic billing is becoming pervasive. Those who don’t convert are being punished. Worse, they’re also being condescended to by a number of companies masking price hikes behind concern for the environment.
Guess what? Your alleged concern for the environment alone does not justify charging customers extra to receive paper statements. And a pox upon any product manager who doesn’t try to stem that tide.
Pricing decisions are complex
Even in the best of times, pricing can be difficult. After all, there’s no such thing as the perfect price–it all comes down to what the market will accept (eg, pricing strategy requires more than just a cost-plus mentality).
Naturally, when your costs increase, and your profit margins are squeezed, your hand can be forced–raising prices might mean the difference between staying in business or closing up shop.
So what’s a product manager to do?
Develop a customer-oriented price-hike communication plan
A generic customer-oriented price-hike communication plan should include at least three elements:
Tell your customers why prices are going up–is it the rising costs in paper? Printing? Postage? No customer will ever like the idea of paying more for anything, but they may accept the increase if they find value in the product and understand the reasons behind the change.
Who will your customers call when they need help? Customers want a business to be dependable, and available, when trouble strikes or questions arise. Promise to be there for them–prove that the extra money is worth it.
Find cost-effective actions that add real value–a personal touch that will keep your customers coming back for more, even at the increased price.
Pricing strategy, product strategy, and corporate strategy all need to be aligned. Once you have that agreed upon, the tactics will become clear and the messaging will come.
Virgin Mobile gets a C+ for effort
In their FAQ about their new Paper Bill Charge, Virgin Mobile explains:
Paper bills cost us more money to produce, and they have a significant environmental impact. Members who want to receive a paper bill can still do so; they’ll just need to pay a little bit more than those who don’t.
Virgin is explaining themselves in a plausible way, which is a step in the right direction. However, their explanation does not underscore reliability or pledge extended service–the explanation is not really oriented around the customer, it’s mostly about them. About their costs. About their attempts to help the Green. No real value to you, the customer.
Interestingly, other mobile companies have tried similar charades this year, and have been met with harsh customer resistance: Vodaphone backed off their plans to charge customers for paper bills in February, as did T-Mobile in September.
No customer will ever champion a price hike, but most will accept the increase if the reasons are understandable, credible, and demonstrate added value.
Also: If you’re sincere about having your customers make a change in their behavior for the good of the environment, then don’t just punish customers who cling to the Old Ways. Reward customers who adopt the desired change and find ways to underscore the importance of the switch. It works at retail, and may work for you, too.