Bad Profits
Bad Profit
This term comes up across many customer experience books and articles I’ve read. Convinced of its importance and negative impact on customer experience, I wanted to write an article on it with several real examples to make the idea clear. At the outset, I’ll note that I deliberately avoided a literal translation of the term to convey a better meaning that will land after you read the article.
This article is addressed to all kinds of customers for awareness, to company and factory owners, and finally to colleagues in the wonderful profession of customer experience and to friends in the user experience field.
Definition of Bad Profit
It’s any unethical or unprofessional method an organization uses to generate additional profits that customers view as unfair or deceptive. Any profit that negatively affects customer feelings or the level of relationship with them can be classified as bad profit. Any fees customers complain about and view as unfair are one form of bad profit.
Leaders who push for this kind of profit do not deserve to be called leaders. They are better described as opportunists who care only about personal interests regardless of the common good — and their interest in achieving bad profits is to claim fake achievements that may shine like gold in the short term but are destructive in the long term.
More Than 10 Real Examples From Different Industries
1
All services that were free and suddenly the company turned into paid services — or services you can get for free in exchange for an annual subscription or membership — may fall under bad profit, especially if the pretexts and reasons the company gave for shifting the service from free to paid aren’t convincing to customers. The value of these services may lie in the free aspects, which customers see as added value that draws them back to the service.
2
Extended warranty: assume an electrical item is warrantied by the dealer for one year, but for an additional fee they’ll extend the warranty to three years. This is considered a form of bad profit because in more than 80% of cases the customer won’t use this extended warranty, and may later feel they were tricked when they were convinced to pay the extra to get it.
3
When the special offers you launch to attract new customers are better designed or graphically more attractive than the offers existing customers receive, without any consideration, discounts, or free periods being offered to existing customers to keep them satisfied.
When certain consumer products are sold in hotels or airports at many times their normal price in the same country, hotel guests are often shocked by the bill and complain because they feel it’s a scam. Yet hotels haven’t changed this practice — they’ve just started placing a tag on the product to alert customers to its price. As for airports, which have started competing to deliver a distinctive passenger experience, I’m sure they’ve begun fighting practices that exploit travelers’ need for a product in the final moments.
4
When any company whose business model is built on annual subscriptions through Visa or credit card charges the next year’s subscription fee without notifying the customer in advance that their subscription is about to end and giving them the choice to renew or not — this is considered bad profit, because if the customer didn’t want to renew, they’ll be very upset that the amount was deducted without notice.
5
When greedy telecom companies impose fees on canceling subscriptions, is it reasonable to ask customers for a fee to cancel a subscription? If there’s any glimmer of hope to win back this customer, these silly fees will leave a final negative impression that prevents them from even thinking about returning to do business with you in the future.
6
Some private schools contract with exclusive shops to produce their school uniforms. That’s fine — but when the purpose of the idea is to generate profit from the uniform rather than just facilitate its tailoring through a third party, the price of the uniform multiplies because several parties have added a profit margin per piece. This is considered bad profit and negatively affects parent satisfaction at these schools.
7
Car rental companies are famous for several practices considered bad profit by the definition above, especially regarding excess kilometers consumed or returning the car to a different branch — especially if such conditions aren’t disclosed to the customer from the start and are left as clauses written in small print at the end of the rental contract. These kinds of sensitive fees that affect customer loyalty shouldn’t be written in fine print at the end of a contract; all employees should be trained to mention them verbally to the customer to confirm understanding and set expectations from the start.
8
Generating bad profit doesn’t require asking for money directly from customers; it can happen through unethical and unprofessional practices behind the scenes — practices that wouldn’t please customers if details were revealed. This applies heavily to food and animal product manufacturers — for instance, by saturating soil with chemical fertilizers or biologically tampering with products to generate the largest possible quantity and weight at harvest. To combat this, some countries require producers to put “genetically modified” on their packaging, while other countries refuse to import them altogether. These greedy practices apply to poultry and livestock through injecting them with hormones and feeding them certain foods to grow and fatten at incredible speed. The greed of these companies ends up in our bodies and leads to diseases that didn’t exist before. All of this is bad profit, and I personally consider it corruption on earth.
9
Cost-cutting is another example of bad profit, especially when it leads to lower product quality through using lower-quality raw materials or reducing quantity to lower costs. It ends up generating profit (but bad profit). This applies heavily in restaurants and cafes, and to all service industries where cost-cutting takes the form of laying off some employees, generating pressure (workload and psychological) on remaining employees, which reflects negatively on their performance and directly affects customer satisfaction.
10
When some supermarket chains distribute promotional flyers claiming they sell at the lowest prices — but when you go in, you discover the products are nearing expiration, or that prices on some products have indeed dropped but they’ve raised prices on others to make up the difference. This is bad profit that customers will discover over time, and they’ll do everything in their power to expose such practices.
11
In this example, I’ll just include the image without further detail.
The Impact of Bad Profit on Employee Engagement
We mustn’t forget the warriors on the front lines — customer service and call center employees whose engagement levels drop significantly and whose resignations rise, because they are (in the cannon’s mouth, as we say colloquially) absorbing the shocks and perhaps the insults due to their company’s greedy policies and practices, in which they have no part.
12
The worst example of bad profit I can think of is the kind that negatively affects resigning employees and severs all bonds of affection with employers who used to repeat to their employees that they were one family and that they cared about them. Example: when the employee is benefiting from exclusive discounts on services at preferential prices (as an employee) and the moment they resign, these benefits are revoked and they’re sometimes asked to pay more than an ordinary customer — as a punishment — for resigning. This applies in industries like banks, insurance, and telecoms. What would these companies lose by leaving these benefits to employees as a token of appreciation for the years of service they gave? Nothing, of course — on the contrary, they might ensure the employee returns, given the rapid employee turnover prevailing today. But these vindictive behaviors lead the employee to hate even hearing the company’s name — let alone returning to work there if asked.
Conclusion
The final advice to business owners is: you must be honest with yourself and put yourself in the customer’s shoes. Would you be happy to pay these hidden fees or be charged in deceptive, unfair ways? Of course not. What you don’t accept for yourself, others won’t accept for themselves either. The equation is that simple. If you don’t allocate some time to study your sources of profit — perhaps approved by sales or marketing managers whose goal is short-term profit to polish their reputation or to earn a year-end bonus for hitting targets — you’ll lose your company’s reputation in the long term, and one day you’ll be shocked to find that every income metric has started to deteriorate rapidly. So you must look at your company’s income sources and follow customer complaints diligently to distinguish between honorable profit and bad profit, and take urgent decisions to eliminate every policy related to collecting money classified under bad profit.
The final advice to customers: always make sure to review terms and conditions, compare more before buying any product, and learn the policies of regulators who impose rules on certain industries — such as SAMA on banks and insurance, and the Ministry of Commerce on the trade sector generally. Some business owners exploit your ignorance.
The final advice to colleagues in customer experience: make sure to monitor customer complaints related to such matters constantly, and review your company’s work procedures and policies to verify there are no forms of bad profit, and try to eliminate them and find alternatives as quickly as possible.
I ask esteemed readers to add some examples they’ve personally experienced of bad profit so everyone can benefit. It’s worth noting that the user experience field has many practices that produce the same result, and I hope our dear UX readers can offer some examples.
A related article of mine: Fairness in Customer and Employee Experience.
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