Why Do Companies Sabotage Themselves?
Just in the last month, three companies have decided to screw over their customers hoping to make a few extra bucks. All three have embarrassed themselves, lost customer trust, and ultimately backpedaled their greedy changes.
Arrogance. All three companies believed their brand was so powerful, that they could charge more, or offer less, and customers wouldn’t notice.
Except they were all wrong.
Case 1. Delta
Delta announced some really awful changes to their Skymiles programme. Delta had suffered from overcrowding at their Sky Clubs, because too many of their customers had loyalty perks. Their solution? cut perks and make them much harder to attain. Not just a little harder. A lot harder.
The internet did not like it one bit. Many cancelled their Delta-branded credit cards, emailed letters of complaint to the CEO, and ranted on the internet.
Unrelated to this, I called Delta about a flight a few days later, and an announcement hit that said “Please do not call about the Skymiles changes. Please go to our website” followed by “We are experiencing longer than average wait-times.”
It was so bad that a bunch of competitors started offering very generous status matching in an attempt to steal customers.
Know someone who fell out of love with their airline loyalty program? 💔 We'll match their status and more with the #1 Airline Loyalty Program in the U.S. (Nerdwallet 2023). Learn more: https://t.co/vS3iW2Invb pic.twitter.com/n6zJXX69OC— Alaska Airlines (@AlaskaAir) September 24, 2023
Eventually, the Delta CEO apologized and admitted that their cuts went too far, promising some changes, which were announced today.
Over the past few weeks, many of you have shared feedback about the changes we announced to Delta’s SkyMiles® Program. Your loyalty matters. We've made changes and added new benefits to make sure you’re rewarded for your loyalty to Delta. Tap this link to learn more:… pic.twitter.com/ATnM4rjIA6— Delta (@Delta) October 18, 2023
The biggest irony of this whole thing is that Delta created this mess themselves. During the pandemic, Delta was worried that with the lack of flying, their customers would lose their status, and might switch airlines. Delta started rolling over status multiple years in a row. In what should have been very predictable, they ended up with too many high-status fliers. Many who, prior to the rollover, would not have had much status at all. I myself, for the first time ever, became platinum in 2023, despite usually only being Silver. So Delta caused the overcrowding themselves. They could have simply waited until 2024, when the Covid-related rollovers had finished. It’s really that simple. the problem would have fixed itself. But no. Delta decided to do something drastic. Delta’s move was so, so bad, and so hated, that people online are convinced Delta did it on purpose, just so they could quickly follow up with a “We’re listening, we have improved things”.
I’ve flown Delta pretty much exclusively since 2000. The best compliment I could give them is that they’re the least bad U.S. based airline.
Case 2. T-Mobile
I’ve been a T-Mobile customer for a long time. As an Amazon employee, I get a pretty good discount too, so I’ve been a pretty happy customer. Due to greed, T-Mobile continually comes out with new, but nearly identical, plans every 1-2 years. They pressure people to upgrade, and sometimes only give phone trade-in credit to people on the latest plan. I’m happy on my plan. I don’t want to change. The new plan costs more and has no extra feature I want.
So, what did T-Mobile do that was so awful? Well, last week there was a leak that T-Mobile was going to mass migrate people into a newer, more expensive plan, without customers opting in. Instead, customers would get a message saying they were being migrated to a different plan, and would have to call to opt out.
Uh-oh! It looks like T-Mobile will be imposing a new change to customers on slightly older plans.https://t.co/3jzVzAcaId— TmoNews (@TmoNews) October 11, 2023
Why can’t T-Mobile be happy with the customers they have. They want to milk a few extra dollars from them at the risk of losing them. It’s stupid. The irony here is that the leaked scripts show them basically lying. When a customer says “Why are you increasing my cost” T-Mobile’s script says the support agent should reply: “We are not. We’re moving you to a better plan with a different cost”. Lies.
What’s the backlash for T-Mobile? well, their CEO just sent an internal email saying that they never planned on doing this, and the leak was just a test, and was taken out of context.
Case 3. Unity
Unity sells a tool to help video game developers make games. They used to charge an up front fee per developer, and out of nowhere, decided they would start taking commission on every game sold. And worse, they’d calculate this number themselves. So if your game was pirated, Unity would still charge the developer its tax. Unbelievable. Plus. Unity would do this even for games you shipped years ago. Even though you built that game under different terms. Despicable.
Today we announced a change to our business model which includes new additions to our subscription plans, and the introduction of a Runtime fee. We wanted to provide clarifying answers to the top questions most of you are asking.— Unity (@unity) September 12, 2023
Yes, this is a price increase and it will only…
There was immediate outrage. The new business model could put several companies using Unity out of business. There was huge backlash. Game developers started saying they’d abandon the engine, and even pull existing Unity-built games from online stores. Companies that fund game development said they wouldn’t fund games built on Unity. It was an unmitigated disaster. This could literally be business ending for Unity, with no developers in their right mind choosing Unity ever again. Unity had no choice but to undo their awful changes.
Rather than have the CEO apologize, they made an underling do it, and later sacked their CEO.
I believe all of these examples got entirely predictable public outrage. This was a combination of greed and arrogance. Some companies aren’t ever going to be trillion dollar companies. And that’s ok. Unfortunately, some CEOs think differently, and do some really stupid things in an attempt to get there.
Of the three, Unity’s actions are by far the worst. Rebuilding the trust they ruined in one day will take years, and there’s a real chance they never recover.