Is Your Small Business Being Held Hostage?

By: Dave Kramer Wednesday December 9, 2015 comments Tags: small business

I want to call out a trend that I see from more and more software companies and web developers lately, especially in the small businesses market. It’s the trend of holding users hostage, to ensure they will stay with that one software solution or developer rather than shop around for something better.

This frustrates me to no end, and it frustrates web developers who are doing the right thing. In particular, we talked to Gordon Seirup, founder of Copper Leaf Creative, a Loveland, CO web development company serving entrepreneurs and business owners.

Gordon takes a strong stance against people in the tech industry holding their clients’ information hostage.

“It’s not only unethical,” Gordon said. “It’s frustrating because it reflects poorly on the entire industry. A handful of people who take that route end up giving all the rest of us a bad name.”

These days, business software and a strong online presence are critical for the operation of a profitable small business. The decision as to what software and which developer to use must be based on what’s truly best for the business.

AllProWebTools and Copper Leaf Creative are far from being the only companies out there committed to giving our clients the freedom of choice, but we think it’s important to bring it to your attention that there are companies out there using these kinds of practices. We want you to make the best choices for your business, which will lead to your continued growth, rather than stagnation.

How Are Small Businesses Held Hostage?

There are all kinds of ways that software companies and developers can hold you hostage, mostly involving your business information. A “hostage situation” happens when a company claims ownership over your information, which truly belongs to you.

A ''hostage situation'' happens when a company claims ownership over your information.
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You had to enter that information in or give you developer permission to use that information — it wasn’t anything you did wrong. The problem comes about when that software or developer won’t let you extract that information and use it somewhere else.

In the small business software arena, there are two primary cases where this happens:

Providers Hold Data Hostage

This is the most common way your information may be held hostage by a software company. If you enter a lot of data into software, you may or may not be able to extract it easily.

The company may deliberately make it impossible, expensive, or extremely difficult to extract, hoping that it won’t be worth the inconvenience to you to start over with a new solution.

This happens frequently with email providers and contact management solutions. They may make it extremely difficult for you to recover your email list or your contact information. As those lists may be among your business’s most valuable assets, the “hostage situation” is likely to work out in their favor.

Providers Hold Your Website Hostage

Your domain name is probably the most important part of your online branded presence. If you chose a great domain name to start with, it’s specific to your business (and probably contains your business name), descriptive, and optimized to be searchable by your target audience.

But some web developers will try to hold your domain hostage if you try to leave them to work with another developer.

“When a client is trying to leave a developer and work with someone else, either the old developer won’t release their domain name, or they try to charge a ton of money specifically for the release of the domain,” Gordon explained.

They do this because they know how important your domain name is to your business, and they assume you’ll just stay with them or pay their high price.

Here’s the thing: that’s actually illegal.

“At the end of the day, the client owns the domain,” Gordon says. “There’s case law that supports that.”

He knows this from going toe-to-toe with developers who refused to play by the rules. Gordon remembered one incident when he actually looked up the case law and emailed it to a developer who was holding a domain hostage.

How Can I Avoid a Hostage Situation?

The only way you can really avoid getting into a bad situation like this is to do your research before you settle on a solution. Don’t be afraid to get assertive and make sure your information will be retrievable if you ever change your mind.

Get assertive & make sure your information will be retrievable if you ever change your mind.
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“We strongly encourage our clients to allow us to manage domain registration,” Gordon explained. If you trust your developer, it’s no problem for them to manage that information, but “if you don’t have a trusting relationship, just make sure you own your own registration.”

Check the Contract

The best way to protect yourself is to get a written contract, written in clear language you can understand.

“Two sentences in our contract say unequivocally that you own your domain, and we are stewards of it,” he said. “Make sure you can read the language of the contract and understand it. You own the domain. Period. End of story.”

In particular, ask about the specifics of how you’ll be able to retrieve information. For example, at AllProWebTools, users are never prevented from accessing or transferring their domain name away from us. You can also extract any information you enter in about your contacts in CSV format.

Watch for Obscuring Tactics

If you encounter evasiveness, or if it becomes clear that your information won’t be accessible to you, it might be in your best interest to consider a different solution or developer.

“Nerds of any variety,” Gordon says, including developers and software companies, “have a talent for speaking with a tone of authority.”

What Software Companies Should Do Instead

Of course, you should do your due diligence to ensure your business information is secure. That’s important anytime you’re considering working with a new developer, software provider, or any other B2B business you work with.

But I believe software companies and developers themselves should behave more responsibly than they currently are. It’s a pretty cheap trick to hold a business owner’s information hostage, just to keep an account. Ultimately, it creates more ill-will and doesn’t serve their clients or the industry.

“Once someone has a bad experience, it puts them on the defensive for everyone they work with,” Gordon said. “From time to time, it’s frustrating when we’re working with new clients, and we want access to those things and they’re reluctant because of a prior experience.”

Holding information hostage isn’t even a sound strategy for the software companies that use it.

“Who wants a client who wants to leave? It’s very short-sighted,” as Gordon pointed out.

Focus on Retention, Not Captivity

Rather than using those kinds of methods, we’d prefer to see software companies offering better incentives for retention. In particular, focusing on customer service and quality of tools is a way to positively incentivize business owners to stay loyal. So is competitive pricing.

“Start by calling your clients back, doing what you said you were going to do, actually following through,” said Gordon. “Provide great service and great value. The detail there is: Communicate that value. Don’t just do the development, but explain why it was valuable.”

That’s the attitude we have at AllProWebTools — if you can find a better solution with better pricing, we don’t make it a pain for you to switch. But we keep our retention rate high because we focus on great service, great quality, and a price point that actually makes sense for the small business owners we serve.

Our number one priority is to help your business succeed. We believe that our solution is right for most small businesses, and we will do everything in our power to help you have a successful experience with our solution. But if ultimately you want to move on, we consider it our responsibility to make the transition as smooth as possible.

Do your research before you trust your business data to a software provider or web developer. Ensure that it’s crystal clear who owns the data — and it had better be you! You shouldn’t be charged to access, control, or extract your data, so don’t stand for a company who tries to tell you otherwise!

Has you or a friend’s data been held hostage? Let us know what happened!