When marketing optimization feels like extortion

Forgive me for this rant, but I hope this will be helpful as an example of how short-sighted, overly aggressive marketing optimization techniques can backfire with long-term brand damage.

I've been a register.com customer for about 10 years now. I know, some of you will instantly point out that they're one of the most expensive domain registrars out there. I've known that in the back of my head for a while. But I don't register many domains, the ones I have at register.com run fine, and — I admit it — I've fallen into relatively price-elastic inertia. It was just always easier to keep renewing domains there, and occasionally register new ones, for the convenience of having them all in one place.

That's not exactly a ringing endorsement of register.com, but as far as them getting my money was concerned, I fit the profile of a loyal customer.

Until today.

I had a few domains that I registered last year for a one-year term each, just to kick around a few ideas. I wasn't planning on using them anytime soon, but the option of being able to use them someday was worth a small investment. I promptly forgot about them, until I received an email from register.com today informing me that they had expired:

Okay, I figured, I'd probably be willing to re-register them for another year. So I logged into my register.com account, clicked the "renew" check box for the four domains I wanted, passed through a harmless, intermediate screen offering me web sites and email accounts, and ended up in this shopping cart:

It took a moment, but the exclamation popped out of my mouth, "$432.00?! Are you kidding me?!" (I may have used a different word than "kidding.") Expensive is one thing, but for basic domain registration this seemed like blatant gouging. So instead of going through the checkout on auto-pilot — what I was originally intending to do, and clearly what register.com was counting on — I stopped to take a good, hard look at how they came to that outrageous sum.

First, they defaulted all renewals for 2 years. That would have been fine, but when I switched the drop-down to 1 year, the price was exactly one half of the 2 year price: $35 vs. $70. Since register.com really pushes you to sign up for automatic renewal — more on that in a moment — why shouldn't customers just do one year at a time? What was the rationale to have people pay for 2 years instead of 1? Other than they were hoping I wouldn't notice?

Second, they turned their "auto renew" service on for all the domains — even though though I had it turned off for them before. While I might have appreciated the offer, having it turned on by default felt like they were sneaking in the right to ding my credit card at will without my express agreement. The button to turn it off is actually located separate from the rest of the charges, up in the right corner of the screen, so it's not obvious that it's part of your purchase. The only reason I noticed it was because I was trying to figure out the justification for the 2-year default.

Third, they added "private domain registration" to all of my domains — even though three of the four didn't originally have it. It's one thing to offer it to me, but to default to adding it into my cart for the domains that it wasn't on before seems like it crosses a line. (I never wanted it on any of my domains, so the one that had it must have been a case where their sly shopping cart practices successfully picked my pocket before.)

Fourth — and this is what pushed me over the edge — they included a $25 "reinstatement fee" on each domain because it had expired. These were not popular domains. Had they just expired and been returned to the pool, I would have been fine re-registering them from scratch, with some tiny risk that someone else might have got them. But now register.com took them over, making them theirs instead of mine (or releasing them to the world), and was holding them hostage for $100.

Fifth, they flaunted a "enter a promotion code" at the bottom, near the exorbitant $432 total, which added insult to injury. Other customers weren't being forced to pay these sky-high fees was what it said to me.

If it smells like extortion...

I certainly wasn't going to renew with register.com now and decided that I'd let them play their game until they gave up — in 30 days? 60 days? — and released them. I'd then pick them up with a different registrar.

But then I took a closer look at the email they had sent. The phrase "if you do not renew at this time... it will be made available for sale or auction to third parties." Was this implying that register.com would not simply release the domain, but instead try to sell it or auction it to some domainer?

Before I registered these names, register.com had no idea that they would be valuable to anyone. I trusted them implicitly by choosing them as my registrar, saying privately to them with my action that this domain might have value someday. And now they seem to be leveraging that private information I shared with them against me. Because I trusted them — and paid a premium with that trust in mind — they were now in a position to extort money from me. $100 today, some threateningly unknown amount tomorrow?

Take the domains, register.com. But I'm pretty sure whatever money you can squeeze out of them on whatever black market you have in mind is going to pale in comparison to the yearly recurring revenue you've lost by losing my business. We can quantify that, and my LTV to you was easily thousands of dollars. What is less quantifiable, but probably more damaging, is the bad word-of-mouth I'll spread about this experience whenever someone asks me about domain registration. (We won't count this post, as I'm writing it primarily so other companies can avoid ticking off their customers this way.)

Marketing optimization lessons to learn

There's a possibility that register.com is genuinely evil. But there's also the possibility that this outcome was the inadvertent result of a series of marketing optimization initiatives that, collectively, lacked governance on behalf of the brand and overall customer relationships.

It's all too easy to fall into what conversion-oriented usability guru Sandra Niehaus calls evil conversion optimization.

Most conversion optimization projects are short-term sprints to increase the conversion rate and the average order value. So you A/B test different versions of emails — one with a more ominous set of consequences if the customer doesn't act now — and if the more threatening one pulls a high conversion rate, it wins adoption. You A/B test defaulting more stuff into the shopping cart to measure the trade-off between average order value and cart abandonment. Mathematically, you can calculate the optimum.

But it's a dangerous, short-term optimum.

What you can miss in such short-sighted optimization is how the people who abandon feel. Did they abandon because they were unqualified or not ready to purchase? Or did they abandon because they were livid, seething about your practices that they felt were unconscionable? Those two outcomes can appear identical as far as short-term conversion metrics are concerned, but the larger impact on your brand in those two cases is night and day.

Even for people who do convert, it makes a big difference if they're converting because they are happy with the purchase, or if they're converting because they feel they're being mugged at gunpoint. Such resentment builds up over time, and by the time someone reaches the breaking point — swearing off your service and loudly denouncing you to other prospects and customers — it can be hard for the company, in aggregate, to attribute the failure to a specific sequence of conversion optimization tests.

Now, I'm all for marketing optimization — as long as the means are watched as closely as the ends. I think in every conversion optimization project, at least one person should play the role of the customer advocate — or, if you prefer, the brand advocate — to make sure the methods being used to increase your conversion metrics don't accidentally fall to the dark side.

It's hard for marketing optimization projects to directly measure lifetime value (LTV), because often they iterate on such a short cycle. But common sense, brand wisdom, and good governance can balance that objective with short-term tactics.

For businesses that hope to be around a while, LTV and ongoing customer goodwill are the real goals. Don't do to your customers what register.com just did to me.

Comments

[JIm Murphy]

Scott,

I am also a register.com customer and fell into the same inertia you did. They hit me with the same BS last year, but honestly, it didn't phase me. I am so used to being skeptical of marketers that I automatically assume the cart is going to need correction. How sad is that? Is it evil or is it the outcome of short-sighted marketing optimization? Not sure, and as a customer, I really don't care- the end result is that I feel cheated, which does not foster great feelings toward the company (or LTV as you point out). Funny how these "errors" never work in our favor.

Even more sad are the facts that 1) I'd be just as skeptical of a new registrar and would expect to pay crazy transfer fees to move the domains (and they know this). 2) I simply don't have the time or energy to allocate to baby sitting these charlatans.

Where I start to worry is when this stuff becomes automatic and very difficult to track down customer service (no numbers on the site and when you do find one it's an IVR maze? Right about this time is when I ask, "Do I need the domains to begin with?". It is any wonder why we become apathetic when faced with things like this?

How great it would be to find a company that really valued their customers and the need they could fill. Instead, all too often we simply represent short-term profit.

Let me know if you find a better registrar.

Jim

[Issamar Ginzberg]

Scott,

What a horror.... Good job- letting them have it! not everyone can afford that experiment- good that these are not important domains for your business that you can play with it.

Same thing takes place by other registrars as well.

and to add to that, when you are given a discount code to buy a domain, and then the registrar raises you to "rack rate" when you renew... and people being scared of losing their domains when they expire (since domains tend to expire at different months and days of the year...) they tend to select automatic renewal, and then get zapped again and again....

I have personally spend several hundred dollars in domains I don't want or need, simple because they automatically renewed them without having realized it... because every time you select an additional domain or change nameservers or what not, you need to be extra careful that you were not defaulted back to auto renew....

did I mention that they try to always have multiple form of payment for you? say, your paypal authorization for rebill agreement, plus a credit card, plus a bank account checking account number...?

I'd gladly switch my domains I own which are spread across multiple domains if i was guaranteed low rates, a simple interface without a million upsells, and the promise to treat me like a mentch....

[Mark Tisdale]

As a 'marketing technologist' you should have known register.com has been pulling this crap for years. Avoid them like the plague as you certainly now will.

As healing salve, check out Bluehost.com. They have real people to talk to (not just text) and your first renewal is free.

[Michael Werneburg]

Appalling! I've never seen such blatant strong-arming in the English-speaking net (curiously, in super-service Japan I've encountered this kind of antic in real life on a few occasions). Thanks for the write-up, I really get what you're saying about a brand advocate.

For what it's worth, I went through a similar flight from an unreasonable registrar years ago and wound up with easyDNS. The practically go out of their way not to up-sell, and when a domain expires that's it--no nonsense. I also think I get the private registration for free: I certainly don't see my name in the WHOIS record, but can't recall having paid for it.

[Hollisthomases]

GREAT post, Scott. Sadly, I only found it AFTER I just went through the very same thing with GoDaddy who "only" wanted a mere $80.00 for holding my expired domain hostage. I told them what they were doing amounted to extortion and their comeback was, "Well, at least we're not as expensive as Register.com or Network Solutions."

So after anteing up (but sayanara GoDaddy!), I Googled, "domain renewal extortion" and found your post. I have to say, I'm glad I'm not the only one and I feel badly for others who'll fall prey to the same type of victimization. I'm looking into a bunch of other low-cost, ethical and reliable registrars. Maybe I'll post a list once I'm done.