How Not To Treat Customers
Have you noticed how many companies will have special deals and promotions, with the small caveat, “*Only for new customers”?
It makes sense; you are willing to expend some effort, reduce some initial payment, or give something away, in order to acquire a new customer. Presumably, if this customer stays with you, reordering your product or paying you a subscription or monthly service charge, you will recoup that initial investment some time in the near future.
The problem is when you do the insane opposite: Your customer is going to renew a commitment to you, and you charge them a new fee. For that customer, this new fee is a signal, or a wake up call, and to “shop round since you really aren’t appreciated here”.
Specifically, today, I am referring to AT&T Wireless’s new phone upgrade charge. You’ve purchased a new phone and want to replace a phone on your account with this new one. You’re not asking for AT&T to subsidize your phone, nor to give you anything extra. Just to let them use this new phone instead of the old one, on the same account, with the same terms. AT&T sees this as an opportunity to charge you an extra fee, and they probably hope that you won’t really notice it.
This is idiotic, as the cost of acquiring a new cell customer is far greater than that fee. It used to be that cellular companies would subsidize your phone to the tune of hundreds of dollars in order to gain your business, and that would be just a part of the acquisition fee – add in the marketing and advertising dollars, and any “new account” discounts and promotions. Yet, when it comes time for you to replace your own phone, they are willing to risk losing you, instead of rewarding you for being a loyal customer.
For me, this issue really is a reminder to check and see what other cellular companies are offering. Who has the best plans, the most data caps, the most flexibility in offerings, etc. Am I gaining anything by staying with AT&T or is this a good time to switch to Verizon or Google Fi?
While I am sure someone at AT&T is shaking their head, thinking, “We know that this is a stupid charge, but we can’t do away with it since we’ve grown accustomed to it; any change would have a large immediate reduction in revenue.” They probably don’t even have a correlation between that charge and customers leaving them regularly, so they can’t compare the two losses to see that maybe the upgrade revenue doesn’t even cover the loss from leaving subscribers.
I’ll discuss this further in another post. This is a common problem with established businesses; the inability to fix something broken or undesirable, as it would entail taking a hit before knowing if the eventual outcome would mitigate that loss or create even more revenue.
This sort of customer treatment isn’t restricted to AT&T or its industry. Have you ever noticed that after you deplete your airline frequent flyer miles for a reward, that you no longer have any real reason to continue flying on that airline? That you are somewhat of a free agent, able to sample other airlines and decide just who you want to start banking your next thousands of frequent flyer miles with next? This is another stupidly designed system that doesn’t take into account that despite your now depleted frequent flyer miles, that you still should be treated like the valuable customer you have been and that there should be some offerings to continue to court your loyalty to that airline.
CriticalMusings 