AOL Watch: Integrity

David Cassel (
Sat, 21 Mar 1998 12:48:59 -0800 (PST)

			    I n t e g r i t y


They asked AOL to cancel their account.  AOL ignored them. 
Two subscribers
Two more subscribers
Two MORE subscribers
A family
A re-subscriber
A deaf subscriber
Dozens of AOL customers tell the same story -- and the blame may lie with AOL's corps of "retention agents". Cancelling customers are routed to special company representatives -- who get paid if the caller is dissuaded from cancelling! "The 'saves' bonuses are $4-6, depending on how many accounts are still active after 90 days," one retention agent told AOL Watch. But there's also a quota they're required to meet. "No quota -- no job." Could this explain the ignored requests? According to one staffer, AOL recently issued a memo addressing that possibility, reminding agents who would mis-characterize calls that "Your integrity is worth more than $6." But integrity varies -- and AOL urged their staffers to resist peer pressure. "You must make the choice to play by the rules -- and this choice should not waver regardless of what any other representative chooses for him or herself." But one credit card company -- after being deluged with customers trying to cancel AOL charges -- complained to the San Francisco Chronicle last year that "We're ready to shoot AOL." ( ) With quotas in place for retention agents, temptation exists to "game the system". " 'Gaming' might slip by undiscovered temporarily," the memo concedes, "or it might be discovered on the first occurrence." AOL's advice to staffers: "Why take the risk?" It goes on with warnings to any employees "tempted to think 'but I'm not gonna' get caught'," that AOL sometimes monitors calls, and checks for high deviations from historical trends. (They add that the practice "threatens the future" of the incentive program...) But AOL still urges the phone reps to pursue $6 bounties. Some managers "hang signs on desks talking about the 'big bucks' we're gonna make..." one staffer groused. "They claim we can make $40,000 a year -- but if you do the math it is quite impossible. I would say that most will make $20,000 -- and that includes a 7.00 per hour base!" Why make cancelling customers run the gauntlet? "In many cases, 20% of the people decided not to cancel after talking to us," Steve Case admitted in a conference call in 1996. After addressing thousands of workers that September, AOL's Ted Leonsis had told the crowd "It's mortifying to me that every day, many times [the number of people in] this room, that many people, cancel AOL," the Washington Post reported (9/16/96). In fact, a one-year study by Mercer Management Corporation had described 25% of AOL's membership as "On the Fence," according to another in-house memo. Their characteristics? "Extremely skeptical about the value of online services..." They'd use AOL less than any other group, according to the study...and "they are the least likely group to stick around." But the next-largest group -- "Game Boys" (17%) -- also "had low loyalty to AOL under hourly pricing." And the next 15% -- described as the "Online Elite" -- also registered a "relatively low loyalty to AOL" These groups constituted 57% of AOL's membership -- and their lack of loyalty showed in AOL's retention rates... The Post reported AOL lost 1.7 million members that quarter -- more than 25% of their membership -- but concealed the massive wave of defections by adding 2.1 million new members (spending nearly $60 for every new subscriber!) The next month AOL slashed their prices. And they had already disabled the ability to cancel accounts on-line -- forcing cancelling customers to speak to AOL's "retention agents"... But loyalty problems continue to this day. One staffer says AOL's recent survey of their customer service facility placed the number of callers "likely to continue their membership" at just 65%. And a related figure giving the "overall satisfaction" level was even lower at other AOL customer service centers! How many surveyed callers were satisfied with the knowledgeability of the staff? Just 56%. How many were satisfied with their accuracy? Just 55%! (And how many were satisfied with the speed of the answers? Just 57%...) This facility's staff did score higher in the "friendliness" category... but that apparently didn't assuage customers' concerns. In fact, it's not only difficult to leave the service -- it's also difficult to sign-off! Many cancelling subscribers complain annoying software updates seize their system when they're trying to exit AOL. One service rep says there's a dirty secret behind the downloads. Though the updates are mandatory, "some of the 'downloads' from AOL are artwork for pop-up ads." These non-consensual "upgrades" prevent users from leaving the system until AOL has downloaded ads to their hard drive... The staffer says AOL has already established a procedure for customers cancelling over the ads. "Retention agents are now instructed that if anyone calls in to cancel their AOL account over pop-up ads or any marketing issues, they are to apologize and offer the member a free month's membership for their concerns." Though subscribers can use keyword "Marketing Preferences" to stop the ads, customer service agents will activate the block themselves to discourage the customer from unsubscribing -- and if they insist on cancelling, they'll be offered up to two months of free service. But if the pop-up ads are so annoying, why hasn't AOL publicized the ability to disable them at keyword "Marketing Preferences"? Ziff-Davis News cites Steve Case's predictions that AOL will make $100 million from on-line advertising -- and adds that "AOL insiders say most of the ad money comes from the pop-up screens that appear when you sign on." And even after blocking the pop-up ads, subscribers have no way to stop AOL from sending junk-mail urging them to switch long-distance carriers. ( ) "I used AOL's Keyword: Marketing Preferences to remove my name from any and all solicitations -- be it online, by telephone, or through the U.S. Postal Service," one subscriber complained. "I guess this is just another case of AOL doing as they please in spite of subscribers' requests." In fact, resentment is building over AOL's advertising. "AOL points out the ten most-wanted spammers," another disgruntled subscriber observed. "But why aren't they on the list? They spam me all the time!" AOL's on-line ads are even affecting the service's performance, according to other users. "With AOL advertisements appearing on essentially EVERY screen we do, the service has slowed, many times to an absolute crawl... Most of the windows will start to open, then wait, and wait, and WAIT...until the &#^@ advertisement loads..." But Fortune magazine summarized the philosophy of AOL's chief executive. "For a decade Steve Case...has focused on building that audience... Now he's ready to milk his creation for every dollar he can." ( ) AOL aborted an even more aggressive plan to sell subscriber home phone numbers to telemarketers -- but there's a forgotten epilogue. Now when customers phone for support, at the end of the conversation AOL attempts to transfer their call to those same telemarketers! AOL Watch readers expressed outrage. "When I call up tech support to get them to fix yet another problem in their buggy software, I do not want to be sold GASOLINE!!!!!!!" That's not AOL's only money-making scheme. Former CompuServe users may remember magazines CompuServe sent subscribers about their offerings. AOL's planning a similar publication -- but with a difference: CompuServe's magazines were free. AOL's latest project may involve charging subscribers between $1.24 and $1.65 each month to receive one of two new magazines -- "My AOL" or "Inside AOL" -- to get information about AOL (the service that's already "so easy to use, no wonder it's number one.") "It's pathetic that an AOL member would need to pay money for a newsletter about a service he's already paying a monthly fee for!" says Dr. Ill. He runs a web site which is also titled "Inside AOL", dispensing real insider information about topics like breaches of AOL's billing system and cover-ups of on-line nudity. ( ) But AOL holds high hopes for their latest product. "We expect nearly all of our 10 million U.S. members to see a promotion of some kind," an AOL memo gushed. That's not the only difference between AOL and CompuServe. Earlier this month a memo circulated warning staffers that, now that AOL has acquired the rights to CompuServe's content, AOL will eliminate several CompuServe destinations -- including risque "Go Words" like the Strippers Forum (Go-word "STRIPPERS"), the Exotic Dancer Forum (XDANCER), and even the Consumer Reports Drug Reference (DRUGS). Citing the need to "revitalize" CompuServe, the memo states that "our goal is to make these changes while still maintaining the same high level of content and features CompuServe members have historically enjoyed. "As part of this effort, we are eliminating services, forums and products," it continues, "that have drawn limited member interest or duplicate content and features already being offered by CompuServe." The memo even offers customer service representatives the text for a suggested response. "We have removed that [forum, service or product] because it drew little interest from our members or duplicated another [forum, service or product] which is much more popular with our members." But CompuServe subscribers have another reason to worry about AOL management. After AOL's two-and-a-half hour nationwide outage last month ( ), some of AOL's subscribers found the electrical problem had affected their billing records! "I downloaded the file on 3/10 and it only has bill detail for the period 2/16 to 2/23," one subscriber told AOL Watch. A customer service staffer acknowledges AOL sent a memo advising them that "sporadic problems have caused some account credits, resubmits and session records to not be posted to a members' accounts." AOL's customer records system (CRIS) had been affected -- and the memo tells the customer service reps that reporting instances of missing information "is crucial to the process of completely resolving CRIS problems created by the power outage on February 24." With ongoing service problems, how will AOL keep growing? Fortune magazine's article points out AOL now spends $90 for every new subscriber they add. But the magazine also reports that though AOL marketer Jan Brandt has a framed floppy disk on her wall captioned "Resistance is futile," a financial analyst predicted AOL will soon start losing market share. ( ) In fact, questions linger as to whether AOL is even profitable. "Gross margins are on the wane, falling to 34.8 percent from 38.1 percent a year ago -- and from 37.3 percent last quarter," one finance columnist noted. In addition, a Merrill Lynch analyst tells him, AOL's gross margins would've dropped to 32% if they hadn't shifted $17 million earmarked for network costs -- a move which nearly doubled their reported earnings! Though AOL argues their future is rosy, Steve Case recently sold at least 15 percent of his AOL stock, along with other AOL executives who also unloaded shares. ( ) But AOL wants to climb to profitability on the backs of their subscribers. They've decided subscribers will pay $22 per month -- even though AOL's cost-per-subscriber is just $10 per month, according to figures from Tech Investor. ( ) A backlash may be building. "Why pay more for AOL when MindSpring can offer you a better service for less money?" a competitor's ad asks. ( ) "Internet service providers have had great success marketing to AOL graduates," an industry analyst told C|Net. "And now the ISPs can say, 'Not only are we better, but we're cheaper'." (,4,19599,00.html ) One survey has already reported local internet services averaged 100 percent growth last year, while AOL grew just 30%, according to Ziff-Davis News. ( ) The outcome of AOL's price-hike may ultimately lie with their subscribers. "My Grandma is signing off AOL," wrote one AOL Watch reader. "$22 is too much for her, and she doesn't think AOL has any special content to offer her." "It's tough to justify a $2 increase a month if the level of service keeps dropping," another subscriber agreed. One angry AOL user even created a web page. "This price increase is a wake up call to re-evaluate if AOL's already poor service is worth an extra $2," they wrote. "This price increase is not to improve the performance of the service you already have, it is merely to continue accessing the service with the same level of performance you now experience." But even if subscribers defect in hoards, they still have to make their way past one last hurdle -- AOL's retention agents. On St. Patrick's day, an in-house memo encouraged those on-commission agents to "show their money-making spirit" by coming to work wearing " $ GREEN $ ". ["Please contain outfits to a 'G-rating'," a disclaimer warned.] Unfortunately, morale is low. One customer service rep sighed sardonically as Steve Case was nominated for a seat on the New York Stock Exchange. "Great...." they complained. "Maybe we'll get paid $7.50 an hour now...." THE LAST LAUGH In January of 1997, the Wall Street Journal asked AOL's Vice President of Member Services why AOL had stopped letting customers cancel accounts on-line. His answer? Because AOL "found that our cancellation rate was going up considerably!" David Cassel More Information - ~++~++~++~++~++~++~++~++~++~++~++~++~++~++~++~++~++~++~++~++~++~++~++~++~++~ Please forward with subscription information. 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