Echoes of Comcast ... the NYT is constantly promoting 50% off the posted rates for new subscribers, without ever offering such terms to existing customers. But if you're a "frustrated" long-time customer who's on the verge of canceling, then suddenly the 50% discount is rolled out.
In most other industries, loyal customers get better treatment. Or it's the same deal for everyone. These sorts of inverted pricing structures may squeeze more revenue out of a few long-term, inattentive customers, but the hidden cost in churn, irritation and haggling is considerable.
This is true of literally everything in the new economy.
Internet? Wait until the moment your "promo" cost ends and your bill goes from $80 to $150, threaten to quit, oh wow magically you can have $80 again and a free mobile phone line.
Any subscription service is like this. I sometimes grab a Blue Apron when it's 65+% off which is anytime I want. My ex used to do this with clothing subscriptions, up to 80% off.
There are laws against things being "always on sale". But now they're just being used to punish lazy customers who don't keep up on their promos. Only lazy or ignorant people pay the "real" price.
Oh hey would you look at that, another billion dollar IPO with no plan for profitability went bankrupt. Weird.
This sort of practice is very common. That's why companies dont automatically convert old customers to new plans/services when they introduce a new service. They can (and do) keep charging existing customers the old rate.
This exact thing happened to me yesterday. Was trying to get Verizon to reverse a recent $20 rate increase due to a "customer loyalty discount" that automatically got removed.
I spent 47 minutes going around in circles with the rep, politely explaining that I did not wish to change my plan, or even get my bill lowered to the current promo rates which are about $30 less than what I'm paying for the exact same service. She would not budge, and offered me all kinds of crappy options such as entering into a new 2-year lock in contract, or removing ALL HD channels from my TV lineup.
Finally I threw in the towel and said, "I guess I just have to cancel this, I'm sorry". She immediately said, "Wait, let me see... hmm, Ok yes there does seem to be an offer here where I can extend your loyalty discount for another year. I'll go ahead and do that." Magic. Just like that.
I asked her why we had to play an hour long cat-and-mouse game to get this done. She had no explanation.
On the flip side, this process can be abused by people who don't actually intend on leaving to get better rates/prices. I've done it a few times over the years to deal with rising costs of an ISP when I don't have any good competitor to actually switch to.
In your example, yes. I was envisioning an actual discount from current pricing for all customers, so that low-usage customers would actually come out ahead compared to their previous pricing.
In your example, there's no way for any customer to come out ahead, so it is just a different way of framing Comcast's existing plan.
That seems to be the way modern business works. Entice new customers with great offers and then neglect existing customers while milking them for money. Cable is like that. Cell phone plans are like that. With my car insurance it was the same. They raised rates every year so after 15 years I switched companies and now I am paying half the premiums. Even companies are like that with employees. New people are getting big raises for joining and people already there are getting 1% raises per year.
It seems loyalty is for suckers these days. It used to be that long time customers and employees got rewarded. Now they are being punished and exploited.
This is common because there is a cost (usually non-monetary: effort, risk, having to evaluate offers etc.) to changing the status quo.
You're always to some extent buying a cat in a bag, once you know what's in the bag, and the payments are set up etc., it makes sense that the service is worth more to you.
The same goes the other way too, however: Acquiring a new customer is costly (see above - you usually have to give them an extra incentive, you need to find/advertise to customers, etc.), so keeping a customer is worth a lot.
Which often means that there are great deals either for new customers or to retain ones that are plausibly threatening to leave (ever called your ISP to end your contract? wondering why many try to force you to talk to them before ending a contract?) and the rest that doesn't have the energy to play the game gets screwed. So you will get the "loyalty deal" but only if you put work into it.
I agree that it really sucks, but I think that's just how incentives are aligned, and incentives tend to lead to outcomes.
If the writer of this blog post got his way and stirred the masses to complain over not getting the new 'customer deals', then the service providers would simply take away the new customer deals. That'd be 'fair', right?
He was a new customer once. He got one of those deals himself. Now he's pissed that someone, somewhere else in the world is paying less than him for cable.
The only other outcome would be contracts - like with cell phone providers, you'd sign a 3-year contract or somesuch for cable, and they'd offer you another 'new customer promotion' if you resign a new contract when your existing one is up.
Attempting to make things 'fair' just makes things worse for everyone.
It's the company equivalent of calling your cable company annually and "threatening" to leave. Some small performative effort to keep getting the standard discount.
With Comcast and all the other gimmicks out there I've come to prefer consistent pricing. Other than that all I sometimes want is a free trial, which I will more often than not cancel.
Internet providers only have to allow this $50 discount toward plans of their choice. I have read that in many cases, to get the discount, the customer has to upgrade to a higher-cost plan. Then once the discount is no longer available, the customer is stuck on the higher-cost plan, especially in the case where the customer was grandfathered-in on a lower-cost plan that is no longer available.
The FCC should have just given consumers the $50/mo instead of making it a credit to providers. Internet providers are snakes, and if there is a way they can bite you, they will.
The cost is the users money. If the company got a customer at 53 dollars for 10 months that they would never have acquired at the higher $80 monthly rate and the user cancels they didn't lose the 270 they would have hypothetically received in the imaginary world where the user subscribed because maybe money isn't real. They profited the $530 they received less the cost of providing the service to the customer which is liable to be slight.
You can't lose other people's money you never received.
I wanted to get the communities opinion on what is a good balance between screwing your existing customers by offering insane discounts/incentives to new ones.
What do I mean? Example:
Pingdom is currently offering 70% discounts for new customers. You pay for a year, you get a 70% discount.
Normally I would be OK with this. But with Pingdom, your not only screwed by the discount if you choose to remain with them but your screwed upon your renewal that you do NOT get the text messaging bundle.
With Pingdom, if you have an outage you can tell it to send you an SMS message as well as an email.
When you sign up for Pingdom you get 250 of these included with your signup. If you RENEW though, which happens automatically after your year is up. You DO NOT get these text messages.
You have to buy them separate, and the cost is an additional ~$40 I believe.
So not only do you NOT get the 70% discount. You do NOT get your text message allocation refilled.
You are literally getting screwed every time you renew. So what do you do? Delete the account, sign up as new, and re-enter all of your hosts, settings, checks, etc. It's a pain in the ass.
Is this acceptable and reasonable?
To me, it is not. I voted with my dollar. I went to a competitor and I've been very happy. I went to nodeping.
I emailed Pingdom about it and while I think they run a good service -- they don't know crap about building loyalty. In the email, they essentially said they have no plans to change it... and I'm guessing they never will until more customers switch.
Every year when the previous year's promotions expire, I cancel my TV and lower my internet down to something cheaper. Every time, within 10 business days I'll get a call for a better offer.
Here's an example... If I call AT&T right now, or my cable company and say that I want to cancel service to switch to a cheaper company, all of a sudden they will offer me a lower price to keep me from leaving. The ol' a customer is cheaper to keep than to acquire mantra I suppose...
What these people (and you) don't understand is that if you (or AT&T) called me out of the blue and said, hello sir, we've noticed that today makes your 5th year as an AT&T customer, we'd like to take $50 off your bill every month from now on(which is the offer they give me when I threaten to leave) I would be ecstatic.
- As a satisfied customer I would be shouting your name from the mountain top.
This is so true. You can be a customer for over a decade but you still need to continually phone and threaten to change providers in order to get the same deal they offer people who switch every 6 months.
I used to work at shaw on the data team, so I'm aware the problem is perverse incentives for selling to new clients over existing, but the cost of win-backs is so high (re-signing a previous subscriber) that you can usually streamline the affair by just asking for customer retention right at the start. The generally offer you the best deal they can right away because the goal now is to keep the subscriber in any form.
Yeah, I mean it only makes sense. It's about price discrimination - they don't want to give you a discount if you're willing to pay full price, same reason companies send out coupons or mobile app offers. They want to offer discounts only to bargain hunters and those who otherwise wouldn't be able to afford the service because that's where it's worth spending the money for them.
If you're not already, find yourself a local deals site - it can really help you avoid getting screwed over by stuff like this. You can also wind up staying if you're willing to call your current provider back and say "here's what they're offering, beat it or I'm leaving".
In most other industries, loyal customers get better treatment. Or it's the same deal for everyone. These sorts of inverted pricing structures may squeeze more revenue out of a few long-term, inattentive customers, but the hidden cost in churn, irritation and haggling is considerable.
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