Use Social Technology to Improve Outsourcing Relationships

The risks and benefits of outsourcing are pretty well understood, yet the management of outsourcing relationships still demands tremendous time and commitment from companies. A recent experience with Ann Taylor, the professional woman’s clothing store, has me thinking about using social technology to monitor and improve outsourcing relationships.

What kind of company charges customers for paying on time?

Earlier this year, I opened a credit card with Ann Taylor to take advantage of a great sale. Typically, I don’t do this. I’m what credit card companies call a “balance payer” and would rather carry one credit card and pay it all off each month. Keeps life simple.

I signed up for online bill pay and electronic statements. The first statement never came. Luckily, I am hyper-organized, and when I got a funny feeling about the account one day, I checked for myself. Just in time, too. That first payment was due the very day I checked online.

This is where it gets interesting. When I went to pay my balance on time (Can I say that again? On time.), I was charged a $10 penalty fee called an “expedited payment” fee.

Ann Taylor charges customers for paying on time. Or, do they?

I disputed the charge, since I had no way of knowing when the billing cycle was on that first bill. You can imagine where this story goes. I have had a heck of a time getting this issue resolved.

I calculated my customer lifetime value and, conservatively, Ann Taylor is risking $100,000 loss over a $10 charge for paying on time. Why would they inconvenience their customers by paying on time? Why would they risk $100,000 for $10 and bad publicity? It just doesn’t make sense to me as a business and marketing professional.

Then I realized why it didn’t make sense. Ann Taylor, the clothing store, wasn’t enforcing this policy, the company they outsourced their credit card services to was, which happens to be WFNNB (no website), a subsidiary of AllianceData.

What I want to know is does Ann Taylor realize this? Do they support this policy? It seems awfully disrespectful to customers. Yes, they can pay early, but do you really build customer loyalty through coercion? Especially when we know that credit cards lead to increased sales.

Social Technology is a Win-Win for Consumer and Company

Yesterday, I finally posted my complaint to the Ann Taylor corporate Facebook account. After months of trying to resolve this issue over the phone and via email with the financial services company, I got an immediate and courteous email and phone response.

In this case, Facebook benefited Ann Taylor, by providing a feedback mechanism on services they chose to outsource. Social technology also benefited me, the customer, since my voice was amplified by the fact that 31,498 people (Ann Taylor Facebook fans) were listening.

What I am really curious about is whether or not Ann Taylor uses the feedback to improve their management of WFNNB?  In today’s networked marketplace it isn’t enough to listen, you’ve also got to respond.

I’m curious, how are you using social technology to strengthen your strategic partnerships?