Corporations of course are out to make money, but surely one of the first things you should learn when you study for an MBA is not to antagonize your loyal and profitable customers. TurboTax is by far the largest selling income tax software out there, in part because it was the first to market. I remember you could buy TurboTax for MS-DOS back in the 1980s. TurboTax apparently decided to screw the pooch this tax season by deprecating a lot of features in its TurboTax Basic and Deluxe versions that have always came with the price.
It sure was a shock for me when I got down to the part of our form 1040 where I report self-employment income and it politely informed me to pony up an extra $40. It also wanted me to pony up $35 to create a Schedule D. (I wasn’t sure I needed to, but we did convert some stocks to cash last year.) My reaction was unprintable but I can give its acronym: WTF???
I sat in my chair kind of dumfounded. Basically, the $39.99 TurboTax Deluxe software I bought was unusable to me. Even if I downloaded the self-employment income forms from the IRS and filled them out myself, there was no way to integrate the numbers into TurboTax Deluxe to calculate the correct refund. I either had to give them $40 more or buy some other tax software. This was after having invested a few hours already putting in much of our income into it.
Okay, caveat emptor. I could have read the box carefully before buying it. But after twenty years or more of using tax software and with the features of each version never changing, I just picked up the box at my local Costco and threw it into my shopping cart assuming nothing had changed. (That was the first mistake. I bought a CD and my new iMac doesn’t have a CD drive. So I had to call TurboTax and download a version of it. Curiously, they never asked me to prove I had bought it. I guess this is one way to get a copy of it free, if you are unscrupulous.) My mistake though was completely understandable because it never occurred to me that a company with a reputation like Intuit would do such a brain-dead thing. Maybe they could have named it TurboTax Deluxe Lite or something, to clue us in. You don’t often see a company screwing the pooch, and this was more than just screwing one pooch. It was screwing a whole kennel full of them!
The firestorm on social media has been unforgiving. However, when one company chooses folly, smarter and more agile companies try to move in for the kill. H&R Block quickly figured out this was the way for them to earn some new loyal customers and market share, at TurboTax’s expense. H&R Block has always been Pepsi to TurboTax’s Coke. I suspect a lot of TurboTax customers had no idea H&R Block even sold tax software, so automatic is it for them to reach for the TurboTax box. They do, although until a few years ago their software was simply known as TaxCut. Most of the time I used H&R Block tax software, but I like to vary the software I use, as the price tends to be the same. Last year I tried an online solution, taxslayer.com. It was okay, but I noticed it missed a few things, so I decided to give it a pass this year, even though overall it cut my tax software costs in half. For those of you with simpler needs, you might want to give it a try.
H&R Block at least knows how to be agile. All you have to do is prove that you purchased TurboTax Basic or Deluxe and you can download a copy of their version for free. (It takes a couple of days to get the link to the software.) Accept their generous offer and guess whose tax software you are likely to buy next year, especially when TurboTax filers discover there is no big difference between the two, but H&R Block doesn’t screw its customers? I’m sure one of the first things they will do (after giving you the software for free) is collect your email address and remind you next year to buy their software.
Anyhow, Intuit CEO Brad Smith (Intuit also makes Quicken, which I use) finally figured out that he made a catastrophically stupid mistake. He is promising that customers with these versions won’t have to pay to upgrade, although Intuit is not agile enough to figure out how to do this quickly. Meanwhile, those customers that did pay extra for features that used to come with the product can apply for a $25 rebate, which is $15 less than the cost of the upgrade. Presumably the rest of it will come in time. You can see an amusing and self-deprecating 3:28 video of Mr. Smith saying he’s sorry here.
CEOs of course are responsible to shareholders, and doubtless he was trying to meet their expectations for increased profits. It all made sense on paper; it just failed the common sense test. What’s amazing is that he did not figure this out until after his mistake. I have a hard time believing his underlings did not question his decision.
For voyeurs of business mistakes, this is a whopper. For me, it not only pissed me off but eventually amused me too. There has been a dearth of philandering politicians to criticize lately. In the annals of bad business mistakes there have certainly been worse things, like the Deepwater Horizon oil spill which soiled British Petroleum’s reputation and much of the Gulf of Mexico not to mention it also killed millions of animals. There was also Dow Chemical’s 1984 Bhopal Disaster, which killed 3,787 people in Bhopal, India and exposed more than half a million Indians to methyl isocyanate. Both of these incidents were preventable too, but not as obviously preventable as this public relations disaster by Intuit. All it required was to put customers first.
I got to say, Intuit had it coming.
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