Dreamhost: How to piss your customers by giving them money

This is a bit long, but a good example of how to lose customers for nothing.

After many years squatting on friends servers to host some of my pages and backups, I decided it was time to give them a break and pay a professional hosting company. I took some advice, read some reviews and decided to go with Dreamhost. Their employee-owned model, feature set and overall coolness made them very appealing to me.

I signed up and was really happy with Dreamhost. So happy in fact, that I decided to recommend their services to a friend. He signed up and called me saying “Hey, you just made $97!”. Puzzled, I asked why and he explained that Dreamhost had this referral program that would pay me $97 for bringing a new customer in! Already planning on a second year of hosting, I logged in and discovered that I had made $11.94, and not $97 as promised in the signup page. How strange…

A bit of investigation revealed that Dreamhost has, in fact, two “rewards” plans: Plan number one, where they pay you $97 for each person you refer, and plan number two, where they pay you 10% of everything your referral spends with Dreamhost. The “Earn $97” plan is promimently displayed on their webpage banners, and when you click on the link for further explanations, you’re directed to the “affiliate program” page that shows two options: “Option 1”, One time payments and “Option 2”. Recurring payments (the “10%” plan). Note that even here, the “Earn $97” plan is the first option shown in the page.

But still, what happened? It does not take a lot of math to realize than earning $97 now is better than earning 10% of what your friends spend with them, unless you prefer to wait eight years to make the same amount of money you could make now, or have friends who tend to go on a hosting service shopping spree. Dreamhost knows that too, and so, they silently opt you in for the 10% plan. There’s no warning when people put you as the referrer and you do not have a chance to fix it afterwards! Yes, I changed my “preference” to “Earn $97”, but that will only affect future referrals. Somewhere, deep in the jungle, a sales monkey was laughing and calling me a sucker.

Still believing that this could have been an easy to correct oversight on their part, I posted a message to “Customer Relations”. The answer was something along the lines of “Hello Marco, I’m really sorry that you feel this is unfair (bla…) If you want to make a suggestion, click on this URL (bla…) But we have one of the best referral programs out there (bla…) I’m sure others will prefer the 10% plan (bla…)”. Translation: We’re not going to do anything for you. I replied to that message and got another message from the “Dreamhost Sales Team” saying that they were “very sorry” that I feel that way about a “free service they offer” (ha, what about the customer who would not have signed up if I had not referred him?), that they do not think they’re being “unfair”, and that I’d have to use their “suggestion system” to get anything changed (oh, the nerve!)

Hello Dreamhost, wake up!!! Referral bonuses are not a freebie. You got yourself a new paying customer because I pointed that customer your way. Also, “Customer Relations” is there to do something! If they had said “OK, we’ll revert the situation if you apply this to one extra year of hosting”, I’d gladly call it a closed case. Unfortunately, this never crossed the Customer Rep’s mind, in a demonstration of complete pettiness and disregard for the satisfaction of your customers.

Conclusion: Dreamhost just lost a customer and supporter. My friend was shocked with the whole sleaziness of the situation and is considering cancelling service with them. Two unhappy customers going out the door, for less than $100 (that would have gone straight into paying for an extra year of hosting).

My congratulations to the Dreamhost Sales Team for a job well done.

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