Friday, October 4, 2013

How Macys Lost Our Dollars: Store Credit vs Customer Service

We've been customers of Macy's for a long time. A long time. For many things, Macy's is an ideal shopping solution:
  • They have lots of brick and mortar locations, making it easy to browse, to make returns, and to buy gifts for people that they can easily exchange in their area.
  • They do a good job with their online shopping experience. The interface is reasonably intelligent, you can return stuff to the brick and mortar stores, and the pricing is usually consistent between online and the store.
  • They have periodic sales and competitive pricing.
  • Most of the merchandise that they stock is typically above-average quality compared to most discount retailers.
These are the kinds of things that we look for in a modern retailer, the benchmark for being able to make a purchase without worrying too much about the caveats and and considerations that might make you look carefully for alternative vendors before you buy.

And, like most department stores these days, Macy's has their own store credit card.

Store credit cards have historically been a way for retailers to make some money on finance charges and entice you to buy in their store. Historically, it's been sort of a win-win for retailers as it increases the likelihood that you'll an active customer while they make money selling their stuff and on finance charges. It's typically such a good business that store workers are given bonuses on the number of credit cards they open up.

In the past, these store credit cards were reasonably tolerant of consumer behavior. It reminds me of the old days when my cell phone bill could be fall a couple of months in arrears, then the phone company would remind me to pay it -- which I always did -- and we would repeat the cycle. Then suddenly, out of the blue, the phone company would freak out if the bill was three or four days past due and threaten to cut off your service. Sometimes you just want to say, "hello, this is the real world calling -- where am I going to go? I've been a customer for six years on the same expensive plan and you have me under contract." But this is the disconnect between the modern science of Accounts Receivable and our traditional understanding of customer service.

This same this-is-the bill-payment-rule-and-we-swear-we're-not-being-dicks-even-though-we-are approach to accounts receivable seems to be expanding to all ends of the business world. In the B2B world, you find yourself rolling your eyes when you hear about your several hundred thousand dollar a year in revenue customer who can't get the $5K replacement part shipped out because they're on credit hold. You get nicknames for the accounting department like, "the sales prevention department". And you wonder -- in all of those accounting classes, do they just not teach the importance of the customer? Do they not teach about how essential the customer is to the balance of the whole business equation and about how so much of our marketing dollars are spent on getting the customer excited and making them happy so that they keep giving us money?

So here's our story of how Macy's finance group sucks and why they cost the company business
We buy a lot of stuff at Macy's -- not just at holdays, but throughout the year. Our charge card and our credit line go back all the way to the 1990s. Within the household, several of us love shopping on line, so it's not uncommon to wind up purchasing things every week or two. A lot of times, it's just clearance items. Sometimes it fits, and sometimes it doesn't, which means a trip to the local store for a return. We've bought luggage there, small appliances, even my mattress.

Since multiple people sometimes shop using the same charge number, it's not unusual for charges on the card to be different than you'd expected. And on several occasions while we've been in the store shopping or returning stuff and shopping some more, we found out that we still had an outstanding balance on the card. Typically, this is easily remedied because you can pay on the account at any of the cash registers. Sometimes, after becoming concerned about how the account got behind, not only did we pay the balance, we payed extra in order to maintain a surplus balance. All well and good. Until recently, when we wound up pulling a credit report and discovered that Macy's had reported several delinquencies.

The Definition of a Clerical Error
Imagine a scenario when you are at a cashier you ask the cashier for your balance so that you can pay it. What happens if the cashier tells you the wrong number? Under some circumstances, that might be difficult to prove, but it doesn't take a detective to understand what happened when the difference on the amount paid is under the balance by less than one dollar and is, essentially, a transposition of numbers in the amount. That, my friends, is what they call a clerical error. Whether that's the clerk telling the wrong number or entering the wrong number, it's a pretty understandable wrong number.

When that small difference unknowingly hangs in the balance for over 60 days, it raises a flag with Macy's accounting software. And that became a hit on the credit report.

So after we learned about the credit report issues, we spent some time with Macy's financial services customer service to clear everything up. For the most part, they were reasonably nice and understanding. They said that they would clear the issues off of the credit report and everything sounded okay.

The Last Nail
Fast forward a couple of months. It looks like the credit report has been cleared up and everything is good. We're sitting around one evening doing some online shopping, and they have a nice clearance sale on coats. We find several that we like, but they don't have stock in any of the stores within 100 miles, so we can't go and try them on. We decide to order all three, expecting to return at least one. But instead of selling us three coats, Macy's sold us zero coats that night. The transaction was rejected.

Alarmed that the balance issues had returned, we were sent into a panic. However, the balance on the account was paid and everything was in good standing. After digging into the cause, we learned that the crew at Macy's finance had reduced the credit limit on the charge account from $2000 to $100. The transaction wouldn't go through because the cost of the three coats was over they limit. Apparently, this kind of thing is not uncommon. In researching this, we even found the story of an employee who got a $50 limit card along with a coupon for a discount on the first $100 worth of stuff that they purchased on the card.

Boycotting Macy's
I'd like to tell you that we're absolutely not going to buy anything from Macy's going forward. But the reality is that, we're not that absolute. But Macy's is now on our avoid list. Shopping and buying habits are hard to change, but Macy's card services is pushing us to change ours. Given a choice, we will probably opt for shopping elsewhere.

Thanks to their card services team, Macy's marketing group has just been handed a tremendous weight. a giant turd that they have to overcome to win our business. As a professional marketer, you feel for them -- perhaps because you've felt their pain and the sense of sabotage courtesy of the accounting group.

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