Lessons Learned From a Failed Ivy League Entrepreneur

A "Case Story" By Chris Cononico
 

Chapter Thirty-Eight

The office had a buzz of excitement about it, which lasted for about a day before an unexpected call came. The agitated person on the line was from a university and our operator didn’t know how to handle the situation, so she knocked on my office door. I had trained our staff to answer product questions from students and parents, not from angry schools. Therefore, I immediately offered to come out and speak to the caller.

I knew from my experience with QuakerCard that angering a few Business Services people was inevitable with our marketing strategy. Therefore, I was more concerned the call would weird out our staff and less worried about the complaining voice on the phone. I did my best to assure our people that we had to “break a few eggs to make an omelet.” A bad reaction from a few schools was perfectly normal, because we effectively were competing with the on-campus services of the universities.

As I picked up the phone and identified myself, the administrator asked me to explain our program to him. In as friendly of a manner as I could muster, I described the Campus Card program and why it was such an important collection of services for students. The voice on the other end became indignant and demanded, “HOW COULD ANYONE OTHER THAN THE SCHOOL ISSUE A STUDENT ID CARD?!”

Apparently, the university administrator was calling because a student called the school inquiring about the Campus Card program and got transferred to the campus ID card office. Unfortunately, our mailer was unclear about our affiliation with the schools, so this type of mix up occurred. The call was then directed to the same Business Services department, which facilitated meal plan and bookstore purchases for students.

The business people at the schools must have flipped out when they heard about our Campus Card program. Clearly, we were treading on their turf. The administrator on the phone had asked the student to fax him a copy of the mailer. After reading it, he called our office in an outrage and chewed out our frazzled customer service representative before directing his frustrations at me.

Immediately, I cited the International College ID Card as an example of a private company that provided a student ID card. Unfortunately, he was no longer interested in anything I had to say. “WHAT THE HELL ARE YOU GUYS TRYING TO PULL HERE? THESE ARE OUR STUDENTS! YOU CAN’T OFF THESE SERVICES TO THEM WITHOUT US! WE’RE THE ONLY ONE’S WHO CAN OFFER A MEAL PLAN, ISSUE ID CARDS, OR HAVE A BOOKSTORE!!!”

And that’s how it all started. The first real influx of calls wasn’t from students, but from angry Business Services officers. Word of our program was spreading among the Business Services community through the trade organizations. Apparently, there was a list serve of e-mail addresses that someone had compiled to warn other schools about our program. We were a hot topic that week.

After everything we learned about the value of references and word-of-mouth, we never acknowledged how our marketing mistakes could turn the whole market against us. We had previously estimated that less than 2.5% of colleges and universities would oppose our program. Ironically, it was closer to 1%, but the impact of those 41 naysayers was exceptionally damaging to us. In fact, those 41 Business Services departments poisoned the broader market against us. Nonetheless, it was our marketing mistakes that allowed them to do so.

The phone calls we received from Business Services people began to flush out our marketing mistakes. Although some objected to our entire NCRB brand, most people had specific issues regarding the wording of our cover letter. George, Mark, and I decided we needed to clarify some marketing points publicly. We planned to offer optional refunds to students, which we hoped would generate positive press for us, while also taking away the risk for people to try us out. Despite our problems, we remained confident that once students had the Campus Card, they would appreciate it.

George also got forwarded a few e-mails about our company that were circulating among members of the various trade organizations. Angry school officers were conversing about ways to go about “combating” us. Undoubtedly, many of them wanted to put us out of business.

On April 24, 1998, the Columbus Dispatch reported, “Internet message systems that serve college officials have been flooded the past few days with concerns…” Just three days later, on April 27, 1998, Academe Today reported that, “The card has prompted a flurry of exchanges on Internet discussion groups for college administrators, and two associations -- the National Association of Campus Card Users (NACCU) and the Association of Collegiate Licensing Administrators…”
 
One of the messages forwarded to us was sent by a school administrator to a group of card managers at other schools. The message was entitled “Method to Combat” and it encouraged others to contact high school guidance counselors to “combat” our company. We had also been forwarded another e-mail dated April 24, 1998 that was distributed to all NACCU and NACAS members about an upcoming article headlined “They’re Coming After You.” It went on to issue the following warning:

“We don’t presume to say that these programs are illegal… However, it seems that now they’re trying to beat you [Business Services people] at your own game…What’s the most effective manner in which to deal with this type of competition, which is more serious than it used to be? …make your own facilities more attractive to customers…”

In other words, it was a warning to Business Services people that their businesses were coming under pressure from private companies like ours.

Another e-mail was sent and distributed to the members of NACCU, NACAS, and NACUBO by the Executive Director of NACCU. It clarified to members that NCRB was in fact the same company as University Student Services, and that NACCU was “investigating” our product offering. It was dated Friday, April 24, 1998, which was less than two weeks after our mailer was sent to students. Since we sent the mailer at bulk rate, many parts of the country had not even received our envelopes yet.

We hoped one of the nice things about having everyone talking about us was it might be easier to clarify information about our company. We hoped to fix our mistakes and move on. Above all, we wanted to emphasize that our company offered real products and services that benefited students. Since we already agreed to offer refunds to any cardholder, we felt that we were acting in a very proactive manner.

George, Mark, and I drafted a letter addressing some misconceptions about our program and distributed it to the schools through the various university trade organizations. In the letter, we clarified our services, our affiliation with the schools, our full refund offer, and our plan to clear up potential confusion with students. We also offered to send correspondences to customers clarifying the nature of the Campus Card, along with a full description of the Campus Card debit account and discount program.

Maybe we were naïve, but we were hoping once we clarified the facts with the schools, they would drop the matter and allow us to fix the problems. Instead, our program began to be referred publicly by certain Business Services managers as a “scam,” a “hoax,” and “useless.” As I have already said, there were probably 41 schools out of 4,100 that made most of the noise about us and George knew a lot of these people personally. We caught some of them calling our offices, posing as students, trying to get us to say the wrong thing on the phone. We even spotted Larry Cotter from Penn e-mailing us, pretending to be a student.

As Ralph Gossard, Associate Vice Chancellor for Business Affairs at LSU, would later be quoted as saying in the Baton Rouge Advocate on April 30, 1998, “It [Campus Card] has created about the same furor as kicking an anthill.” We had similar push back from Penn when we launched QuakerCard, but it remained local news in the school newspaper. Now, the school complaints were being printed in broader circulation served by the popular press.

In an article printed on April 25, 1998 in the Des Moines Register, Lyn White, executive director of NACCU, said, “I think that they had an excellent idea. I don’t think they went about it the right way.” Unfortunately, this was the closest thing to a professional compliment we received.

A chain reaction had already been set in motion. The <1-% of the schools that objected to our program made enough noise that it seemed as if the entire world was against us. The Business Services officers at these schools sent letters to their incoming students advising them not to join our program. However, we didn’t expect these schools also to warn students and parents that we were a “fraud” and a “scam.” Evidently, the clarification letter that we wrote and distributed to school administrators had no effect.  It seemed to be payback time against us.

These notices from the schools only aggravated parents and students. Now, they hated us, because we were alleged “scam artists.” Our office then started to get angry calls from parents and students. Families were accusing us of not having any products or services to offer. They had called their schools, and that’s what they had been told. There was nothing we could do about it.

Word began to spread about us, and soon people began hearing from their friends about the Campus Card scam. Some Business Services officers had gone ahead and contacted high school guidance counselors, who were now informing entire high schools across the country to beware of the “Campus Card Scam.” Our customer service people were scared to pick up the phones when they rang, because they didn’t want to get yelled at.

The headlines in the popular press were awful. They read “Campus Card Scam” and went on to warn all parents and students from buying the fraudulent card. The Public Affairs offices of the University of Oklahoma and Southwestern Oklahoma State University in Weatherford were reported by an article in the Tulsa World on May 15, 1998 to have referred to our program as a “scam of national scope.”

Suddenly, we were deemed newsworthy, but for the wrong reasons. School Business Services people no longer had to send out warnings in the mail, because the newspapers were more than happy to oblige. On April 28, 1998, the story got picked up by USA Today, and was featured on the bottom right corner of the Life section.

Unfortunately for us, newspapers know a good story when they see one. Controversy and dramatization sell newspapers. Headlines like the following appeared all over the country:

“Colleges: $25 scam” – The Post-Bulletin.

”College Students Duped by Card Scam” – Boston Herald

“Officials Issue Warning About Campus Card” – The Hartford Courant

“Colleges on Offense Against Debit Card” – The Grand Rapids Press

Newspaper articles were filled with quotes like the one from Pat Woods, Executive Director of Enrollment and Student Financial Services at Southern Methodist University. In the Dallas Morning News on May 2, 1998, he was quoted as warning readers, “It’s a hoax.” In the same article, Deborah Leliaert, Associate VP of Marketing and Communication at the University of Northern Texas, stated that the assertions that “students benefit from guaranteed acceptance of the card at every campus… are simply untrue.”

“Throw it away,” was the advice from Husson College Dean, John Rubino, who said, “the card would have no value at the Bangor College campus,” as reported in the Bangor Daily News on April 23, 1998. Even State Attorneys General were being quoted in the press, referring to our program as a “useless campus card,” as reported in the Times-Picayune in New Orleans on May 1, 1998.

These comments were symptoms of the larger problem swallowing us. People were talking to the press without knowing any specifics about our program. Somehow, people had come to a consensus that we were a scam. For many of them, that was all they knew about us.
 

Copyright  2005 by Chris Cononico
All rights reserved. No part of this manuscript may be reproduced in any form or by any electronic or mechanical means, including information storage and retrieval systems, without permission in writing from the author, except by a reviewer who may quote brief passages in a review.