Three things credit card companies must do, especially now

Paralyzed by their fear of a deeper credit crisis, credit card companies are missing a huge opportunity. Instead of engaging in ill-considered practices such as increasing rates and reducing credit lines without proper notice, companies like American Express, Citibank, and Capital One must improve their customer service, maximize public relations opportunities, and increase their consumer educational efforts. In doing so, they will lessen the catastrophic damage to their brands caused by a growing number of angry customers.  

What exactly should companies do?  

First, they must quickly and appropriately respond to upset customers.  Once a model for excellent customer service, American Express, for example, has taken a turn for the worse.  Customers cannot get straight answers --if any at all; loyal and longtime customers are treated with little respect; and customer service representatives are increasingly hostile.  By giving an honest, respectful, timely, and empathetic response, companies will maintain some degree of rapport with more customers.  

Second, CEOs must demand that their public relations department be proactive informing customers of new rules and policies prompted by the shrinking economy.  In other words, companies should make official statements via commercials and public relations opportunities, not only via ominous letters in the mail.  For example, imagine a heartfelt campaign that acknowledges the difficult economy and conveys that despite the need to make drastic and abrupt changes, American Express still values its customers.  In short, efforts definitely shouldn’t be reactive to consumer complaints.  If companies adopt a proactive strategy, they will send a clear message that they are allies of their customers, not enemies.   

Third, companies must increase their financial support to organizations or for projects dedicated to educating consumers about how best to use their credit cards during a bad economy.   With the same aggression one may see a Visa representative pushing credit cards on college campuses, companies must fund more educational initiatives to help consumers understand the changing credit rules.

These ideas may seem simple, but they are a good start for companies that want to at least maintain their market share.  What are some of your ideas on how panicked companies can keep customers happy?  

Comments

[Bob Wilson]

Excellant web site, keep up the good work.
Every CUSTOMER discriminated AGAINST by AM/EXP should sue THEM for violations of EQUAL PROTECTION OF THE LAW...which is a Constitutionally protected civil right...becuase they are treating one class of customers different than others by where those customers shop.
Bob

[Toby Dickens]

Frankly, I'm pretty disgusted with the increase in rates. These banks are borrowing at near 0% now, LIBOR, the old standard by which rates are adjusted seems to be non-operative as the Clinton's might say.

Yet in a near 0% rate environment, the consumer's rate shoots up beyond the reality extant. They screwed the pooch with their poor business decisions and we get to pay for it with TARP AND higher rates.

Why do I feel used AND abused?

[beeker]

About two weeks ago my husband and I noticed that our American Express Blue interest rate had jumped from 9.9 to 12.9% interest. They buried this notice on page 10 of our November statement. We used the card mainly because of the rewards program. We have never been late on a payment, never gone over the balance and we had been paying off the balance each month. Both of us have credit ratings in the 800's. We called to find out why, we got the run around. They could not explain why our interest rate was increased other than a vague statement about the current state of the economy. Even when we pointed out that Bank of America had lowered our interest rate on our VISA to 7.9%, we were told that the type of card we had could only get a 12.9%. Apparently having a Blue card is enough for them to question your judgement or ability to repay? I was shocked over the poor customer service. I paid off the card and told them we would not be using their card until they adjusted our interest rate.

[amanda]

My AMEX credit line was reduced by $7,000 to be just $400 more than my balance. They were required to give me 10 days advance notice, but I received notice 10 days AFTER I called them about it (because I saw it when I was paying bills). They have refused to reinstate my credit line despite my outstanding credit history and white collar income. I am DONE with AMEX forever.

[Tameka W]

These are some good points, but as you stated, if they took a proactive approach and created a marketing campaign to their customers, we would not be having these conversations.

When I joined American Express, I believed they were the best company to have a credit card with. I even found my financial planner through them. Now, I have such a sour taste in my mouth by how they have treated me and others like me, I have no interest in utilizing their services like I use to. Like others, their current practices of abruptly decreasing credit limits dramatically, increasing interest rates and demanding payments be made 3 weeks before the due date, it frustrates me to no end about how I've felt the past few months. They would need to do some serious and sincere damage control to regain the trust of the consumers they have offended and mistreated.

[Justin]

Kevin, there are some good points here. One of the big problems with Credit America is the horrible customer service and even worst "because we can" practices.

American Express is probably the most disappointing as I know they spend enormous amounts of energy, and money, on relationship management. They emphasize the desire to have long standing relationships (see latest Tina Turner AMEX commercial) with their members. They do this so well that it appears as though AMEX is/was a part of your "family" and there through it all. Well if my family treated me the way they have been treating me then I would be a lonely person. Though they legally can do these things, it's just unfair an morally unsound to treat people this way. Especially since they don't exist without our business. Yes, I understand that there is a mutual dependency but we have to draw a line somewhere. It just frustrates me to no end. I could go on and on, but the point is they just need to do better, and showing appreciate would be a great start. Thanks for sharing.