Before you jump on me and vent that you need to protect your margins and you can’t possibly absorb these fees, may I suggest that
you hear me out, as it may be worth some dollars in your business bank account and improved customer satisfaction.
Sound interesting, then read on.
The bean counters, as you might expect, wouldn’t miss a heart beat before they say yes you should charge your customers for the
credit card levy, but is it the right answer?
I say “cautiously” no because by doing so you may just damage your loyalty base of your customers and besides there may be a
better way.
In March 2000 the Journal of Psychology & Marketing ran an interesting piece of research (Sinha & Smith) that proved people are
more sensitive to losses than to gains. That means while they love extra gains (bonuses, better quality, a price discount, etc),
they don’t love them as much as they HATE extra losses.
Let me repeat this for emphasis (and, please, all businesses that are charging an extra credit card levy for the privilege of
allowing customers to pay by credit card, pay close attention):
While they love the “extras” they don’t love them as much as they HATE extra losses.
Put another way -
They HATE losses more than they like gains.
When you charge an extra 2-3 per cent (or whatever) to pay by credit card, how do customers view this?
Well, it’s an extra loss and they HATE it.
Let’s flip the coin and see what happens:
Imagine the same customer upon coming to the cash register being told that they will receive 2% discounted from their purchases.
It will be an unexpected bonus and they’ll smile and say that’s nice …but it’s nothing to get too excited about.
But wait, what about the “mood” of these two customers as they leave your business.
The customer who’s been charged the levy may be somewhat put out and perhaps cheated at the extra loss that has occurred, while
the customer who has received the unexpected small gain feels happy about the unexpected gain.
Which effect would you rather have on your customers?
Hard choice I know. (Clearly the second.)
Now here’s the strategically good bit … stay with me.
If a 2% (or whatever you current credit card levy is) discount doesn’t make your customer’s day – why offer it? Particularly
when there is enough research that suggests a warm smile and other “soft dollar” options can have a huge positive impact on how
your business is perceived.
[“Soft dollar” options – what are these? These are things that have a high perceived value by your customers but a low hard cash
cost to your business. They will be different for every business – but importantly every business can offer them. You just need
to be creative.]
So, what to do? Put up your prices by the amount of the credit card levy and be done with it. Then put some real energy, focus
and spending power into a genuine, committed customer service program that improves the service levels offered by your business
and also offers rewards of some value to your really worthy customers.
Now the crunch is, will you take action. If you are concerned about the impact remember you can always test and measure and make
adjustments as you go. Go on - be bold - and just DO IT!
Have your say. Click here->
This column was compiled by Paul Wright from excerpts originally published by Damien Parker, Publisher of the
subscription only Positive Business Newsletter & Information Service. The Right Team, Sales Strategists & Business Improvement
Specialists, ABN 49006 576 564 ACN 110 466 138 Tel: 1300 66 44 89, have worldwide licensing & distribution rights for the
Positive Business Newsletter. Visit our new website www.rightteam.com.au
| 
