Shocking Idea: Give Discounts To Long Term Customers

from the what-will-they-think-of-next? dept

It’s a common refrain that too many companies focus solely on new sales, to the point that they ignore existing customers and treat them badly when it comes to customer service. The old trick for measuring this is to see how long it takes to get a human on the phone if you call for sales vs. calling for customer support. This is, of course, incredibly short-sighted in a world where ongoing customer relationships and reputation are important. It’s even odder to see it in a competitive subscription-based business where catering to the customers you already have seems to make so much more sense. They’re already giving you money after all. However, the mobile phone business is a perfect example of this happening. All the various cheap deals on new fancy mobile phones are usually only offered to new customers. The old customers have to pay much higher rates. It appears that Virgin Mobile is looking to change this around a bit. The company that really built up the MVNO concept of building a mobile phone operator without owning the actual network, is starting a new program where customers who stay on for more than twelve months get the option to cut their fees or get a new phone. They’re realizing that customers who stay with them over the long term pay off the extra subsidy on the handset within the first twelve months — so there’s no reason to keep charging that after those twelve months are up. While other carriers will scoff and some will wonder if Virgin is leaving money on the table, if customers buy into this program of rewarding loyalty, it could change how other operators price some of their offerings.

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Comments on “Shocking Idea: Give Discounts To Long Term Customers”

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SB says:

New Phones

I’ve been with the same carrier (AT&T now Cingular) now for over 10 years (gasp). Mostly because I wanted to keep my number, but they also provide a new phone every 1 to 2 years. They don’t advertise it, but it’s readily available. Yes, I have to “Sign a New Contract” each time, but my service has been good, so I don’t mind.

TJ says:

Good for them

Good for Virgin Mobile! The idea that existing customers should be rewarded rather than punished does seem rare for corporations.

Magazines in particular are horrible about this. They routinely offer new subscribers a much better offer, often 25 to 50% less. I’ve learned to either wait until about the fourth renewal notice, by which time the price has finally dropped to what new subscribers are getting; or I throw a “blow in” subscribe card with the price circled in with my renewal notice and a check for the new subscriber price. That has worked. Thankfully the magazine companies are dumb enough to blow the cheaper offer cards into subscriber magazines so that we know what the best price really is.

Jojo says:

Discounts to long term customers

SBC and most (all?) DSL & Cable providers do the same thing. It pisses me off to no end that I pay $50 a month for DSL to SBC but new people pay $25-30. I looked into dropping the SBC service and signing up as a new customer but was told that I could only do this if I moved to another address. And then there is the 12 to 24 month committment required to get the lowest prices. We need more competition in net access!

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