If you've ever been a consumer (who hasn't), you've been hit with a service charge that you felt was unreasonable. Perhaps the most notorious is the banking industry's "overdraft fee," especially when it tags an additional $35.00 onto the cost of a $2.50 cup of coffee that you paid for with your debit card.
While the institution that charges the fees often says they're intended to "cover the cost" of a customer action, the bottom line is that today, most of these administrative costs are invisible or non-existent to the institution. No human being at the bank administers anything in these situations; the process is entirely automated.
So why do these institutions keep charging these fees? Because it's become a valuable revenue stream for them. Their lack of innovation prevents them from generating new revenues through services that customers actually value. Therefore, they have to keep charging these evil fees in order to achieve their revenue goals.
A business that profits from a customer's mistake or misfortune is not worth patronizing.
So, where does Enterprise enter into the equation?
I rented from them recently, as I often do. I drove through a $1.00 toll without stopping to pay. Enterprise was billed the dollar from by the Maine Turnpike Authority. This week, I received a letter from Enterprise, passing along the $1 charge, along with a $13 "administrative fee."
When I called Enterprise to object to the 1,300% penalty fee, the agent waived the fee before I could even request that she do it. That's right, my entire conversation was less than 30 seconds. To be honest, I was ready to spend a lot more time pleading my case. But Enterprise wasn't.
Reason #1: Eliminating or waiving administrative fees saves time and labor costs.
And when the agent voluntarily waived the fee, my admiration for the company only got better. It's clear to me that Enterprise is driven to be fair and reasonable, and profit by delivering services that customers ask for, and benefit from. The experience increased Enterprise's reputation in my mind.
Reason #2: Eliminating or waiving administrative fees improves a company's reputation in the mind of the customer. And ultimately, that's the only mind that matters.
That act of customer-focus by Enterprise, and their increased standing in my mind, will cause me to rent from them again. Which brings us to...
Reason #3: Waiving or eliminating fees creates customer loyalty.
For further proof that customers like companies more when those companies stop charging for things that are outside the core value proposition, look no further than LL Bean, or Amazon. Since LL Bean has stopped charging for shipping (customers also don't like to pay for shipping), and Amazon offered the "Prime" service, they've both seen customer loyalty (and revenue) grow.