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TurboTax tries to recover from price-hike stumble

Sally Herships Jan 30, 2015
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TurboTax tries to recover from price-hike stumble

Sally Herships Jan 30, 2015
HTML EMBED:
COPY

As if paying your taxes isn’t penance enough.

TurboTax seems to have made a stumble – a big one. The tax preparation and filing software company raised its prices, but users didn’t realize it until they tried to file their taxes. TurboTax deluxe users weren’t able to file forms like schedules C,D and E unless they paid more for an upgrade. They’re making their displeasure known, and the company is scrambling to redeem itself.

“We feel like they’re almost taking us for a ride, by saying ‘We have your information. We’re not going to give it to you unless you pay us more money,'” says Jonah Berger, a marketing professor at the Wharton School and author of “Contagious: Why Things Catch On.” 

For some TurboTax customers, it’s as if the Sopranos were preparing their 1040-EZs. 

But Berger notes the problem isn’t just about the money.

“This is an issue of expectations. Consumers expected one thing. They thought they were getting a full product, with paying a certain price ,and they were actually only getting a piece of it,” he says.

Luckily for TurboTax, the company has a strong reputation, says Brannon Cashion, global president of Addison Whitney, a brand strategy consulting firm.

“A lot of times people reference online tax preparation or electronic tax preparation as TurboTax,” he says. “They’ve got a really strong brand.” 

Scott Galloway, a marketing professor at NYU’s Stern School of Business, says what TurboTax does now is more important than the mistake it just made.

“The biggest PR crises in history haven’t been a function of what happened but how the company reacted,” he says.

When a company messes up, three things need to happen, Galloway says.

“The first is to acknowledge the issue, to basically admit that you made a mistake,” he says. “The second is to have the top guy or gal make that admission – so to get the CEO front and center. And the third is to overcorrect. To offer consumers a better deal than they originally had. Those are the only three things you need to remember, and they are consistently ignored.”

TurboTax didn’t respond to a request for a comment. But Galloway says the company is on track to a full recovery. Its CEO has posted an apology on his LinkedIn page and on YouTube, and the company is offering a $25 refund to consumers who paid to upgrade.

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