Register.com renewal strategy responsible for loss

26/09/2002 

Register.com Inc may have shot itself in the foot to an extent when it introduced a controversial customer retention system in January 2001, writes Kevin Murphy. The company reported yesterday that it will make a loss for the first time in over a year, and its SafeRenew system seems at least partly to blame. 

The New York-based domain name registrar yesterday told analysts it now expects third-quarter revenue of $23m $25m, compared to a previous estimate of $27m. While not breaking out expected earnings per share, CEO Richard Forman said it would be negative, rather than the $0.01 to $0.02 profit it had expected. 

The company blamed a number of factors, including the general slowness of the domain name industry and a goodwill write-off on its Afternic site, which will be closed. The company also blamed, and has warned about in recent regulatory filings, increased credit card chargeback penalties, which are forcing it to rethink its SafeRenew system. 

When the term of a domain name registration expires, Register.com automatically attempts to bill the credit card of the registrant for renewing the domain for another year. The company implemented this SafeRenew system to reduce its customer churn, which became a significant problem with the entrance of budget registrars in the market. 

The system is believed to be unique to Register.com, and is partly responsible for its very respectable renewal rates, but many customers dislike being billed without their explicit authorization, and choose to tell their credit card companies or banks that the charge was unauthorized. 

Details at: http://www.theregister.co.uk/content/6/27297.html