Early last year, DreamHost made a mistake that cost them both financially during the refund process and from the loss of customers. Other web hosting companies would do well to learn from their mistake.

In January 2008, the genius in charge of DreamHost’s billing made a typo. This typo would lead to millions of dollars in extra charges. And while perhaps this could of not been foreseen, DreamHost would make some easily preventable blunders in the coming 24 hours for which they would have to apologize moreso than for the incident itself.

Perhaps it all stemmed from DreamHost’s mantra, which was to emulate a “casual” and personable work atmosphere and relate that to the customers to make them seem more friendly and accessible. As a part of this image, DreamHost would make jokes and have a more laid back attitude.

After the billing mistake, thousands of customers suffered hundreds of dollars in extra charges. When talking about the issue on their blog, DreamHost used a big picture of Homer Simpson with the words “Do’h”, and generally poking a bit of fun at the whole experience.

For thousands of DreamHost customers, this was no laughing matter. DreamHost management failed to foresee the barrage of negative comments that would ensue. Enraged customers often demanded apologies and had experienced problems related to the billing charges that a simple refund could not remedy.

Hundreds of customers did not have the money in their bank for an unpredicted billing charge. This would lead to overdraft charges that were not covered with the refund. Also, many customers who had their web hosting billed to credit cards would suffer the extra hundreds in charges, which would incur new debt, possibly at higher interest rates, which the refunds always cover the lowest interest rates first. Both of those situations lead to extra losses for thousands of their customers.

A simple brainstorming session after the event could of lead DreamHost management to foresee these types of immediate repercussions from the debacle to their customers. DreamHost’s “insensitive” response as some percieved it would have been avoided, and a more professional apology given, as was seen days later after the customer fury had fireballed. Competitor LunarPages even made overtures to DreamHost customers with a special discount for “DreamHost Refugees”. The whole event was a disaster, and a lesson that a laid back and personable environment in business should never lose touch with professional business planning or concerned customer service.