The holiday shopping season has begun in earnest and so today let’s remind ourselves about how some online businesses deserve the equivalent of a Darwin Award for killing themselves as this big opportunity arises.
You might have heard about KlearGear.com, a $47million online retailer of what they call geek toys and goodies. They deserve the aforementioned Darwin Award for resolving a dispute with a customer in a manner that will, in my opinion, destroy their business. Let’s see what you think.
A customer ordered something from the company way back in 2008 which didn’t arrive. The customer then posted a negative review on the web. Nothing very unusual about this so far, I know. What happened next is. Some genius at KlearGear decided it would be a good idea to “fine” the customer $3,500 for disparaging the company, citing a clause in their site’s Terms Of Service that wasn’t even in those terms in 2008. When the customer didn’t pay, they reported the $3,500 as a bad debt to credit reporting agencies, trashing the customer’s credit rating. You can read the gory details here.
Unfortunately for the retailer, the customer fought back and looks set to win a $75,000 judgement against the company. Frankly, that’s the least of the retailer’s worries. The torrent of negative commentary on social media has prompted the company to hide its Twitter account and to close off other social points of contact because of the overwhelming response. Of course, by going into hiding the company has pretty much destroyed its own reputation on the web. My guess is that the rest of the business will follow.
This began with a $20 item. Instead of accepting that there was a problem – perhaps even one of the customer’s own making (which it wasn’t) – and apologizing, KlearGear escalated the problem. The lost $20 sale is now a potential $75,000 liability which pales by comparison to the millions of dollars of negative coverage they’re receiving. As we’ve said before, when you’re doing business the right way, the need to moderate or control customer feedback doesn’t exist. If your product or service is great, so too will be the general commentary about you on the web and social. We’ve also talked about how it’s easier and more profitable to sell to repeat customers than to find new ones. That’s a huge reason why the best retailers go out of their way to minimize (or get rid of!) bad customer experiences.
This is a textbook case on how not to handle customer service or bad reviews. It’s about as bad as it gets and reached new depths of business stupidity. You agree?