Penalized for Proper Behavior? A Marketing Don’t.

Got my car insurance invoice in the mail the other day. If I pay the bill in full right now, I’ll receive a 10 percent discount. So far, so good. I like being rewarded for good behavior.

The invoice goes on to explain that if I’m late with a payment, I’ll be charged a $25 late fee. That’s fair and makes sense. No problem there.

The invoice finally explains that if I make my monthly minimum payment on time — they call it an installment plan — a $6 “installment charge” will be added to each invoice.

Here’s my question: should customers be penalized for making payments on time? (I imagine you know what my answer is.) I’m sure, if asked, the insurance company would make an argument as to why the installment charge is necessary. I don’t need to hear it to offer my counterargument, which is this: think of your customers first. How does penalizing them for proper behavior help them? It doesn’t help them, and despite what you think, it doesn’t help your company in the long run.

Think about your own business and ask yourself if you’re penalizing your customers somewhere along the way for simply doing what they’re supposed to do. If you are, rethink that strategy.

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