I know that it seems like much of the posts that find there way here are lately arise out of some business or service pushing my buttons, so I promise that I'll put together something that's not an angry tirade soon -- maybe after this post.
Recently, I found myself embroiled in a situation that serves as a great reminder about how technological progress shapes business expectations. It's the kind of thing where, one day you're selling the "must have" advertising like a Yellow Pages ad or a Thomas Guide listing, then "suddenly" you wake up to realize that your product is obsolete, usurped by the Internet and Google. Not only do you have to re-envision yourself and your business to adapt to the new market climate, but you also have these longstanding relationships with some of your most loyal customers that have stayed with you all of this time. How do you handle dissolving these relationships?
As with other moments in the lifetime of interactions with your customers, how you behave as a business shapes your customer's perception of you and your future reputation, regardless of how awesome the relationship may have been.
Our Story: Longtime Hurricane Electric Customers
When you look back to 2006, it doesn't seem all that long ago. And yet, in the world of servers, 2006 is two to three generations in the past. And when it comes to web hosting, so much has changed since that time. Back in the day, many companies were running on dedicated servers in co-location data centers. The idea of using virtualized servers and grid computing wasn't really in play and a multi-tenant infrastructure was a tough sell for some in the IT world. Amazon Web Services officially launched in 2006. Technologically speaking, 2006 was in many ways BC, Before Cloud.
When you look back through time to those thrilling days of yesteryear, there were some common Internet provider business practices that just seem laughable in today's market. Back in those days, it was all about the box. In 2006, as we compared data center providers, having a local provider like Hurricane Electric -- versus, say, Rackspace -- offered some potential advantages in the event that you needed to do some level of hands-on maintenance to your server box. While it may not have any any real practical advantage, it helped comfort the IT guys who didn't really want to loose touch with the physical hardware. Another common practice was a set-up charge for a dedicated server. Essentially, since you were getting ready to run a server, this helped subsidize the Internet hosting company's costs in case you suddenly went belly-up ala so many dot.coms and start-ups. And it was not unusual to have longer initial term hosting contracts, year or multi-year agreements.
And that, in a nutshell, describes our initial relationship with Hurricane Electric. At the time, they were great, and a good fit within the prevailing business climate. Their hosting services did well, we were a couple of hops off of the main Internet connect running through San Jose, and all was good. During the server build process, we had spec'd one system, but for one reason or another, it wouldn't work with the drives that we had spec'd, so Hurricane offered us a 'free' upgrade to a dual CPU server board that had come off of a recently decommissioned system. As I say, we were happy.
So, jump ahead four years to 2010. With the server getting old in server years, we approached Hurricane about a plan to replace the box with a newer model, ideally with the current one running in the foreground while we built up the other one. Despite four years of consistent, trouble-free business running on hardware that was essentially theirs, Hurricane Electric wanted to charge us another set-up fee. Instead, we began looking at alternative hosting solutions.
In today's hosting environment, virtualized servers and cloud environments allow you to sign up with a credit card, build a server from a control panel, pay nothing for the server until you build it, and, ultimately, pay only for what you eat. Storage, CPUs, processor cycles, bandwidth can all be metered. When measured against the cost of hardware and colocation rent, the cloud was really a no-brainer decision. So move we did.
Leaving Hurricane Electric
This is the part of the story where things get really sad, where Hurricane Electric moves from becoming a respected local partner to one of those companies like AOL that make it very difficult to escape their clutches. Once we had our new cloud server up and running, we reached out to Hurricane Electric to shut down our service. First, Hurricane told us that we needed to send them written notice on company letterhead along with why we were leaving. Next, they told us that we've been under an automatically renewing annual contract and we wouldn't be able to cancel our agreement until Q2 of next year.
Since 2006, we've made consistent monthly payments for our dedicated server. We have been a consistent, no-hassle revenue stream. But now, like AOL's dial-up service, our needs and the terms of our agreement have become hopelessly outdated. And yet, within the halls of Hurricane Electric's accounting and customer service groups, they would rather cling tightly to a few more months of revenue than create a positive customer experience. Somehow, all of that historical value that we represented to them is no match for a couple of months payment. In short, they do not connect this portion of their business with reputation and positive word of mouth.
Where we could have dissolved the relationship with a simple "their service offering ceased to match our needs," we moved into a "their service offering may have been acceptable at one time, but even if they were an okay match for your requirements today, I would not do business with them." In the same way that I would never give AOL my credit card information -- anyone who has ever tried to disconnect from them knows how difficult they make that transaction.
Auto-renew contracts can be a convenience to customers, but too often auto-renew is used like a club, hammering the customer with a commitment that doesn't match their needs. Because it's employed in scams and borderline scams by businesses that look to surreptitiously trap customers in leech-like transactions, businesses should be hyper-vigilant around the use of this tool. When your business becomes knowingly collecting funds well past the useful life of the contracted service, you've entered the land of scam. Let's apply a new term, scamification, to our lexicon.
As marketers, it's particularly frustrating to see this kind of behavior from a business. When you think about all of the battles that you have to go through, justifying budgets in order to attract and win customers or to build reputation, only to watch all of those efforts flipped on their head when other parts of the business act aggressively to piss off the customer, it makes you crazy. Radio and print ads? Wasted. Those billboards? Pointless. When you compare the cost of what you might spend to publish a case study or a customer testimonial, then compare that to the negative word of mouth created by an angry customer -- or attempting to be former customer -- and yet, they don't get it.
After all is said and done, I would not do business with Hurricane Electric again. I would not recommend them to you either. While I would not put them in the same category as those scam businesses that trick you into an online transaction, then leech off of your credit card while you try to find a way to cancel their service, their business behaviors are such that it certainly reminded me of that type of business. Caveat Emptor.