Many businesses are too focused on gaining new customers at the expense of alienating existing ones. They make notably better offers to new customers than to existing customers. Existing customers are forced to pay more for the same product. And they do this at the point of sale, no less, just when customers are making the decision to buy or stay.
The resulting customer churn creates a huge amount waste – in the form of loss of time, effort, and resources spent on the resulting administrative tasks. All so that a few sales directors can say “Look at my figures, see how well my new customer drive is working!”
I have had 2 recent experiences with a telco (customer since 1995) and an antivirus vendor (customer since 2015).
The telco offered a $40 per month plan to new customers, but charges existing customers $60 for the same plan. When I asked about getting onto the better plan, their cheerful response was “Yes of course, let me cancel your existing number and sign up up with a new number!”
Of course, their competitors all offer similar $40 per month plans, which I would qualify for if I were to move across. And I would keep my number. Idiotic much?
As my antivirus subscription drew close to renewal, the antivirus vendor sent out 50% off renewal offers/ Great! But before I could get to it, the auto renewal kicked in and charged me full price. To rub it home, the app itself then began to tout the same 50%-off offer.
What these vendors don’t get, or don’t care, is that phone plans and antivirus subscriptions are commodity products. Most vendors offer mostly similar offerings. And all of them make switching really easy.
Whatever happened to “A bird in the hand is worth two in the bush”? Or have we're current crop of celebrity management gurus not invented that innovation yet?
These sort of (deliberately or stupidly) mismatched marketing and operational behaviours erode trust in and cheapens the brand. They actively disrespects, and pisses off, existing customers. If I stay with a vendor that punishes my loyalty and charges me more, then I am a schmuck.
Is this a case of the left hand not knowing what the right hand is doing? Of slow death by a thousand silos? Or measuring one micro aspect at the expense of another?
Or is it myopic strategies? Cutting off existing customers to gain new ones, and not caring or realising now idiotic this is in the medium-longer term?
Where are the shareholders in this? I would’ve thought they would care about sustainable long-term returns?
If sales executives are rewarded on short term measures, is it any surprise that they cannibalise their organisation’s existing customer base to pad their short term spreadsheets?
