How to Lose Customers and Alienate People: A lesson from Norway

Something I really like about Australian companies is the provocative and memorable brand names they create. A typical example being Start Ya Bastard, an “Instant Engine Starter”. In the accounting software space there is the brilliantly named Mind Your Own Business – or MYOB.

I’m told that in Australia the MYOB brand is almost as well recognised as Coca-Cola. That’s quite an enviable achievement.

MYOB was one of the products I tried before deciding to create KashFlow as an easy-to-use and less clunky alternative.  We had a bit of a fracas with them early last year when their top man in the UK personally emailed our support desk to threaten legal action. A couple of months later they withdrew from the UK market.

A big chunk of MYOB was sold to Wolters Kluwer/CCH. Shortly afterwards it was announced that the “leftovers” were sold to Mamut of £1.7m. Mamut are a Norwegian company that, until recently, I’d only ever heard good things about – both in terms of their products and the company itself.

At the time of the purchase, Mamut’s chief executive officer Eilert Hanoa said

Customers will be able to use existing and versions and new version of MYOB for 2008-09, but we will look to give them dual licences so they get a free migration to the equivalent Mamut products, or can continue to use existing products as is best for their business.

Working with both MYOB and our UK partners, we need to make it as convenient as possible for MYOB users – but we hope they will be attracted by the better opportunity Mamut presents with its integrated ecommerce and CRM features

This made a lot of sense to me and I thought Mamut had made a really good move.

Fast forward to this month and it all starts to go horribly wrong for Mamut.

We offered our web-based software for free to anyone that could send us their old boxed software for our bonfire. I was surprised at the number of MYOB  boxes we were receiving. Tom McClelland at 12Pay said he was also getting a lot of sales enquiries from users of MYOB payroll software.

It turns out that Mamut are now trying to squeeze money out of the MYOB clients. Kate from Karate Kid posted on UKBF and said

[Mamut] have today offered to upgrade us [from MYOB]  to their E5 version so that they can ‘better support us in the future’ – the upgrade cost – FREE! Ah, but their OBLIGATORY service agreement is £348+VAT per year – we purchased 2 user licences from MYOB, so assumed that these would remain intact – NO.

We are told that each additional user licence costs £590+VAT, PLUS for every user an additional service agreement at £348+VAT per year!

Kate took advantage of our offer and is now happily using KashFlow for free.

In a bid to clear up the confusion, Bryan Richter from Mamut posted on the forum to say they are sole distributors in the UK for MYOB products but now that MYOB have discontinued the products they are:

 offering a migration path to the equivalent Mamut product and offering very attractive commercial terms to do so

Not quite the situation Kate and other MYOB users were led to expect last year. And I guess ‘attractiveness’ is a very subjective matter.

So now they’ve managed to lose some customers, all that’s left to do is alienate people. Bryan posted (twice!) the following statement:

Naturally, many of our competitors see this as an opportunity to convert the MYOB customers to their own products, as they are very entitled to do. As a result they are happy to spread fear, uncertainty and doubt on these message boards without necessarily declaring their vested interest in the issue.

I’m not arguing about taking the opportunity to convert some customers – it’d be silly not to. But I do resent the implication that myself or anyone else on UKBF (where I’m a  moderator) is spreading fear, uncertainty or doubt – especially without declaring their interest.

At first I thought Mamut had got themselves a good deal, but as more details emerge it doesn’t look so great. If they continue to cock up the migration to their own software then it’ll be a lot of money down the drain and a stain on an otherwise flawless reputation.

As an interesting footnote to this whole saga, MYOB founder Craig Winkler invested £7m of the money he made from the MYOB sale into a company that provides web-based accounting software, like KashFlow,  using the SaaS business model.