

You're our customer. We Hate You - cschanck
http://designbygravity.wordpress.com/2009/09/28/youre-our-customer-we-hate-you/

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patio11
The point of offering a discount is to increase conversion rates or decrease
churn.

The churn among 9 year customers is miniscule and, to the extent it happens,
is largely out of your control.

(They've successfully resisted all temptation to quit for NINE YEARS. Crikey,
your commercial relationship is already more stable than many _marriages_ .
Typical events precipitating a cancellation sound less like "Found a better
deal" and more like "I'm moving outside your service area" or "Dear Comcast:
Dad died, please cancel his subscription.")

Thus, offering 100% of 9-year customers a discount to influence a fraction of
a sliver of those customers (the number who are seriously considering
cancellation who could be motivated to not cancel if they were offered a
better price) is just throwing money away.

~~~
dionidium
I have previously argued with people who couldn't figure out why car insurance
companies would ever raise someone's rates for being in an accident that was
not their fault. Clearly, if it's not my fault, then I don't _deserve_ to be
_punished_!

Is there a word for this? Is it simply an inability to empathize (i.e., to see
the world from the company's point-of-view) or is there a larger fallacy at
work (e.g., a belief that the world operates according to some standard of
fairness)?

~~~
sp332
The company doesn't care about _punishing_ you, it's statistics. The insurance
company is taking a gamble, and the odds of being in another accident, given
that you've already been in an accident, are much higher than they were
before. The odds have tipped against the insurance company, so they charge you
more to keep it worth their while.

~~~
jacquesm
If you are not at fault, you are not at fault. If they could get away with
pinning the blame on the other guy they surely would. So they have 0
legitimate reason to assume that your chances of being in another accident are
higher than before, let alone 'much' higher.

~~~
Poiesis
The legal--or even common--definition of "fault" isn't at stake here. The fact
of the matter is that they've got mountains of data that say that if some
"random crazy fluke thing" happened to you, then you're more likely to have it
happen again. Because that's what the data tells them. Heck, it could be that
you just live in an area where people drive like crap.

Look at it this way: let's pretend an accident (regardless of fault) actually
_lowered_ the chances of a subsequent accident (maybe you're scared into good
driving), and the longer you drove without an accident, the more likely you
are to have one (maybe you become complacent or something). In this situation,
your rates would go _down_ when you got in an accident. Because it's not that
they're trying to punish you, but rather they're trying to just charge based
on the X% chance you're going to be in an accident, plus Y% overhead/profit.

------
jrockway
This is how frequent-flyer programs work. Once you are invested in one
carrier, you are stuck with them. Am I going to give up pre-boarding, special
security lines, free upgrades to first class, lounge access, and double
mileage earning just to save $50 by flying the competitor? No.

When you give loyal customers free stuff, they stay loyal. It's too bad other
industries don't get this.

~~~
gdee
Without all those advantages you listed, the price to pick a competitor for
your next flight would likely be close to zero though. So they have to provide
those _running incentives_. The cost of switching the phone provider for my
next call... way higher.

~~~
jrockway
Even without frequent flyer programs, airlines still control markets. Most
people prefer non-stop to connecting flights, and not every airline flies
between every possible city pair. So people are locked in to the carrier that
happens to fly to the destination of their choice. Taking a connecting flight
to save money might be as inconvenient as switching phone companies to save
money.

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mbreese
Funny thing. I have had DirecTV for about 6 years. Over the years, I've gotten
a few upgrades in equipment (HD), but didn't really take advantage of an
initial deal. Overall, I've been pretty happy with them.

All of the sudden, this summer, out of the blue, they give me Showtime for
free for 3 months. They just sent me a letter to let me know. They even sent
me an email, just to make sure I knew. I don't know how many people got this
bonus, or how I was chosen, but it worked out great for me, since the 5th
season of "Weeds" had just started :)

Then while I'm setting up an older TV, I need to redo some setup. I found I
could do it on their website, and sent customer service an email to thank
their devs for making it ridiculously simple to do. Boom... Starz/Encore free
for 3 months.

Now, DirecTV tends to run at a bit of a premium to some other providers, but I
like their HD a lot. I've looked at switching to cable or AT&T's Uverse, but
ultimately just stuck with DirecTV. I suspect that a lot of people these days
have been re-evaluating if that premium was worth it.

These little bonuses this summer made me like my decision more. Sure, it was a
pretty cheap thing for them to do, and free premium channels is a common lure
for new subscribers, and I really appreciated it.

~~~
vaksel
apples and oranges. The 3 months of Showtime is just an incentive, they'll get
you hooked on a show, at which point many people will get the actual
subscription when the free trial runs out

~~~
mbreese
Well, true... but it's still an incentive that is normally reserved for new
customers. My point being that customer retention is something that companies
take seriously.

It worked out well for me, since I had watched 4 seasons of a show via Netflix
over the summer, and season 5 had just started (and is now over) on Showtime.
When it expires, I won't miss it, but I thought it was a nice gesture.

------
run4yourlives
Companies aren't concerned about churn, they're concerned about next quarter's
posted results. (Churn is just one of many things that can be tweaked to
produce better results).

Once you realize that the issue with pretty much every larger - public -
corporation is that it is subject to the demands of short term results, you
can see that the way they act is entirely rational and expected.

------
chadaustin
On the other hand... I recently called Speakeasy for some reason or another
and they gave me a $25/mo discount on my service. I've been a Speakeasy fanboy
as long as I've been a customer, but WOW.

Yeah, Speakeasy costs more than most DSL and the setup process blows, but
their customer service easily makes the cost worth it. Internet should be like
water and air: guaranteed and zero hassle.

------
anticitizen
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.

------
tptacek
The simple answer to this post is that while services companies are concerned
about churn, they aren't _that_ concerned.

~~~
cwan
That's not quite how I read it. Agree with it or not, this guy seems to be a
fan of Comcast. The complaint is that these companies often treat new
customers better than loyal customers... which is a huge and short sighted
mistake - but also one a lot of companies make.

~~~
trafficlight
He isn't real. Nobody is a fan of Comcast.

~~~
blasdel
I'm a fan of Comcast -- namely their total lack of countermeasures aimed at
cable modem modification.

Unlike some of the Cable ISPs in Europe, they don't:

    
    
      * Make any attempt to fingerprint / forcibly upgrade your firmware
      * Restrict routing to unauthenticated modem MAC addresses
        * All they do is give you a walledgarden config
        * The MAC address database is global and lock-free
          * The only real authentication is locally in Layer 2
      * Ever change the locations/names of their config files

