Within days of receiving my PC Magazine renewal invoice, I saw an insert in the actual magazine with a better, lower rate. I called up PC Magazine and told them I wanted to renew my subscription at the lower rate. No problem. The customer service representative asked for the little code on the postcard insert and processed my renewal order.
Lowest Price
If you’ve put an offer out there for customers, you need to honor that even if you subsequently raise prices. Naturally, some prices are “limited time offers” but those need to be clearly stated as such.
I was happy I wasn’t hassled over a few pennies but my renewal experience left me wondering why I even had to request the lower rate in the first place.
Reward Existing Customers
Why didn’t PC Magazine just invoice me at the lower rate from the start? Probably because they wanted more of my money. Your company may assume that customers will automatically fork over the amount you’re asking because they are existing customers. However, if you’re caught in the act of trying to squeeze more out of a faithful customer, they may just lose that faith in you.
New Versus Existing Customers
I see too many offers these days for “new customers” or “new subscribers only.” What about your existing customer base? Incentives are nice to turn prospects into clients. However, don’t let those same incentives alienate your current customers.
For example, look at SBC, now merged with AT&T, the provider of my home DSL Internet service. If I was a new customer, I’d get a greatly reduced rate. As an existing customer, when I renew my annual service, I get to pay a higher rate. Situations like this could lead customers to leave and take advantage of a competitor’s introductory rate.
Use Incentives for Current Customers
Remember, it is cheaper to retain your current customer than it is to gain a new one. Nurture your current customers and treat them as valued individuals. Offer existing customers their own incentives and benefits for which “new customers” aren’t eligible. This will build up a special “member’s club” atmosphere that perpetually encourages customers to stay faithful to your company.
Strangely, PC Magazine just started sending me their magazine for free. I don’t know how it happened.
New Versus Existing Customers:
Cell phone companies are infamous for NOT taking care of their existing companies. I have Verizon and bought the Treo 700 PLUS changed my calling plan to include more minutes and unlimited data. If I was a new customer, I could have gotten the phone for about $150-$200 CHEAPER. Instead, they made me pay the full price for the phone.
At the end of my contract, I am cancelling and going elsewhere.
Great article.
Great Article. Had the same experience with my Nokia N90 and mobile providor that Demetrius had except the phone was billed at $242.00 for renewal plus contract for 2 years vs. new contract with no money on the counter.
The new user/new customer drive is sometimes more important than keeping the old customers. Look especially at big corps where 4 or 5 control the industry. There are only so many customers in a market and by driving new sales over keeping old sales they canibalise their market stealing each others old customers.
Demetrius & Deon – You’re right. Cell phone companies are notorious for extorting customers with inflated prices and overage charges.
Deon – If the big companies could retain current customers and steal from the competition, there wouldn’t be 4 or 5 companies for long. The best company would be left standing. In reality, will this ever happen? Probably not. However, if a company started to take excellent care of both customers and new prospects, they’d start to gain rapid market share.
You should always think about short-term guaranteed sales.
They DO want new customers because then they’ll guarantee them to stay for, at the very least, one year.
Chief Officers want to see quick results, and a base of new customers, growing every day, and guaranteed to be with you for one or two years, pays off… even if it means losing existing customers.