Ryan Carson wrote an extremely angry blog post yesterday where he called out WebEx for charging an early termination fee to get out of an automatic subscription renewal after the renewal date. He states up front that it’s “going to be a bit of a rant” and he delivers on his promise.
I am fascinated by the fact that in only about 24 hours or so, he has already collected almost 100 comments. And even more surprising is that they seem to be fairly evenly split between supporting him and supporting WebEx’s position. I figured it would be much more heavily slanted against the “big bad corporate entity.”
I’m of two minds about the situation. Ryan does not include dates in his sample correspondence snippets, nor does he say how long after his automatic renewal he tried to cancel. In reading one of the WebEx emails, they say he has to pay for two more months of service as an early termination penalty (with continued usage access during that time). It says “This scenario releases you from the contract a full 6 months early.” Doesn’t that mean he contacted them four months after his renewal? That seems a little late for “Oops, I didn’t realize that my automatic renewal just went through… Do you think you could make a little exception for my forgetfulness?”
Cisco does not publish “rack rates” for their higher-end services such as Event Center and Training Center. Contracts are worked out between the customer and the salesperson. Most webinar companies give the customer a choice between paying a per-person/minute actual use charge, a monthly open-ended charge, or an annual prepaid charge which includes a discounted rate over an equivalent month-by-month contract. IF (and again, I don’t know the sales process Ryan went through) WebEx gave Ryan those options, then he is benefitting from lower costs on an annual prepayment arrangement. It makes sense that there would be an extra charge when asking for money back four months into the usage period.
But WebEx probably could have saved themselves some grief and negative publicity if they just consciously chose to waive that small extra amount of revenue in the face of an obviously dissatisfied customer. IF the fact of the automatic subscription renewal was not made clear and explicit at the time of signing, and IF there was no notification at renewal time (preferably before the automatic renewal took place), and IF the charge was not made clear through an invoice or payment confirmation, then WebEx is not doing business as clearly and openly as it could or should. I’m sure they are within their legal rights, it’s just a question of whether they are consciously trying to exploit those rights to the detriment of their customers. Honestly, I kind of doubt it from my own personal bias, but I don’t have a WebEx contract and I can’t give you a first-hand comparison with my own sales experiences.
Anyway, it’s a nice lesson for both vendors and customers in the SaaS or subscription services marketplace. Where money is concerned, vendors need to make it clear what the ongoing financial obligations are going to be, and don’t surprise the customer. Customers need to read through their agreement, and react quickly to any errors or changes in their status down the road.
PS: As I was in the middle of writing this, my account manager at Brainshark called to let me know that my annual subscription renewal was coming up and that he would be sending me an invoice. We had a chance to talk about features and pricing and to adjust my account as necessary to suit my business needs. Coincidental timing, and a nice illustration of how to make an ongoing customer feel respected.
