Comments

Steve,
What an interesting story. Reminds me of an expression I learned in the Army many years ago: "Nothing's too good for our soldiers, so that's just what they'll get -- nothing!"

In the context of your post, it would go like this: "Nothing's too good for our EXISTING CUSTOMERS, so that's just what they'll get -- nothing!"

Too often, businesses, especially retail businesses like cable and cellular, create future churnover by granting benefits to non-customers that they so willingly deny to EXISTING CUSTOMERS.

So much for loyalty to EXISTING CUSTOMERS, and so much for customer loyalty. Happy hunting for your next service!

Posted by Chris Mercer at May 16, 2005 11:15 PM

The Comcast telemarketer may have been the worst targeted marketing I experienced today, but here was a close second: My 19 year old daughter - a studious, scholarship-toting, English/Theater major who has never spontaneously had the words "gun," "enemy combatant," or "mess tent" appear in her brain - received a fancy direct mail piece from the Army today, encouraging her to enlist. If you knew Nurit, you'd be laughing.

Posted by Steve Yastrow at May 16, 2005 11:43 PM

I find these types of situations fascinating (except when they happen to me of course!). Having worked in IT consultancy (and having seen inside many different companies – what a privilege!) one thing that always comes to mind is the huge mismatch between the public’s perception of information system integration and the reality! The reality is that these databases don’t talk to each other. If a marketing list database is purchased (i.e. for cold calling) the chances are that it contains a proportion of existing customers. It is very difficult to match and exclude with existing databases (by hand is often the only accurate way!). Even the existing customer systems are a mismatch of duplicate entries, miss spellings, errors and a few correct entries!

The public perception of IT systems is that there are dozens of people working hard to ensure data accuracy. The reality - you probably have a couple of people desperately trying to pull any kind of list together to meet the marketing department’s deadline.

If you want better you have to pay for it (some companies invest more than others)– it’s that simple.

If you want true personal service you need to talk to a company with very few customers!

Posted by PaulH at May 17, 2005 3:59 AM

Essentially the same thing has happened to me. I wanted to upgrade my website with Yahoo! because I saw that they were offering a much better deal for less money for new customers.

The customer service rep wanted to help, but told me the only way I could get the deal they offered new customers was to cancel my existing service, lose all of my website and email files and reapply for my domain name two hours after they'd taken my site down.

I felt this was unreasonable since I had been a loyal customer for years and if they were able to upgrade me from one package to another (a much more expensive package with less capacity than new customers get) through my console without interrupting my service, they must have the technological capability to transfer my account from their old server to their new server, which was the reason they gave for not offering existing customers these new deals.

Now they didn't contact me, but it seems to me that you'd want to reward loyalty. Even if you take a dip in revenue from existing customers, or have to offer them a larger capacity for the same revenue, isn't that preferable than losing the business altogether, which is exactly what happens when existing customers realize they're being takenn advantage of and go to the competitors who are offering equally attractive sign-up deals.

Posted by Noel Guinane at May 17, 2005 4:23 AM

Most sales organisations are not rewarded for loyalty - only for new sales. This culture pervades all business. On public numbers announcements to shareholders the number of new accounts is taken as an important indicator.

The truth is it actually take quite a lot to persuade people to go elsewhere (especially if they would have to start from scratch) so most effort goes into getting new business.

Quility of service is very hard to define to new customers (price or features are not) so for most companies grabbing new customers (often at the expense of existing customer service) is deemed a valid business model. Note I am not making any judgement here - personally I think poor customer service is a bad idea.

Posted by PaulH at May 17, 2005 5:28 AM

Fascinating topic.

Five years ago I was offered by a Building Society a cash back 5% if I re-mortgaged with them as a new customer.

I went to my (then) existing lender who I have been with over 20 years and explained ‘up front’ that I did not really want to leave them as I had been with them as man and boy. I asked could they match the offer of their competitor if I re-mortgaged with them.

Sadly they did not want to play ball. They simply said ‘rules did not allow it’ as I was an existing customer.

I could have had a cash back offer if I was a new customer!!!!! ... This seemed crazy at the time and still does.

Whatever happened to respecting your customers’ loyalty?

It felt to me like I was only important to them if I was a new customer. The fact that I had been with them 20 years did not give me any priority - crazy!!

So obviously I went to the competitor who gave me £4500 cash in my hand simply for joining them and re-mortgaging.

My (then) existing Building society had lost a customer of more than 20 years loyalty who still talks about the absolute stupidity of it five years later!!!

I think it is simple - when organisations are too big they lose touch with the intimacy of customer relations.

Their staff at the front line can see the absolute craziness of such situations but the institution just does not allow any flexibility whatsoever.

So the smart customer shops around to find someone who will listen and respect them – frankly someone who cares.

Posted by Trevor Gay at May 17, 2005 5:39 AM

That’s right. The focus is on maximizing the stock price, not on the good running of the business. That takes real work.

Speaking of which ... see you tonight.

Posted by Noel Guinane at May 17, 2005 5:56 AM

That's great, really... way to keep up the posts on tompeters.com

Posted by Dau at May 17, 2005 8:07 AM

Steve/Trevor/Noel, et. al. - if you want unconditional CUSTOMER LOVE and respect - get a puppy [as they say in Washington, D.C.].

I'm still loyal to Nordstrom - but I ordered some shirts from them online - then got an e-mail that they'd be sent out 2 months later - how can that possibly be - they could grow cotton in that time and make it by hand - ARE WE NOT in the 21st Century?

Anyway Brooks Brothers sent me the shirts [discounted] I liked in 3 days on a free shipping offer.

The reverse scene with corporate business fascinates me - most business moves slow enough that the customer can take PROFITABLE ADVANTAGE of the corporation. Wal*Mart is an example - they can be extremely customer friendly - try thier big plasma screen HDTV for 90 days - then take it back if you like - try others until you get it right.

Posted by Sean at May 17, 2005 9:01 AM

The same thing happened down here with Verizon. We've been a DSL customer since when it was first available. Now they're touting "Double Speed DSL". When we called to inquire, we were told that it's only for new customers. In order to obtain it, we've have to cancel our current DSL service, then re-apply... with a minimum 2-week outage in-between. The Harvard MBA mentality strikes again...

Posted by Steven J. Ackerman at May 17, 2005 11:50 AM

Yep, another example of what I call "smash and grab" marketing. Just went through similar with Comcast. And, they continue to send me "just a $1 a month!" promos (of course, if you read the teeny-tiny fine print - that's only for the first month..."standard rates apply" after that...and oh, gee, there's other fees too!) Suffice to say, I'm revisiting other alternatives (this after I already placed an order for high-speed) Net-net, in trying to drain every dollar out of my wallet - they lost ALL my business.

Posted by Mary Schmidt at May 17, 2005 1:20 PM

Ok here is the question about the ugly truth!

Companies do this stuff because it works - there is no other reason. Mistakes do get made in business - but I can't believe that every marketing dept that does mailshotting has got it wrong - there must be a positive ROI (on average)

Posted by PaulH at May 18, 2005 3:32 AM

Paul, you're right. It must work ... in the short-term. But what works isn't necessarily a good business practice. Yahoo! used to have an excellent reputation. By adopting these practices, they're going to fall to the level of all those cheap shysters out there who try to bring in fast bucks, and inevitably, someone else is going to come along and do it right. And the cycle will begin again, but the fundamental won't have changed, that fundamental being you don't shaft your customers, not only because it's unethical, but because it's commercially stupid ... over the long-term.

Posted by Noel Guinane at May 18, 2005 3:57 AM

We moved out into the country last year. We were told the cable company could set us up, but when they showed up they realized there wasn't any cable in our area--nothing to hook us up to. No problem, we went with satellite (actually better and cheaper anyway). Now, there still is no cable service but we get offers in the mail every week for specials, rebates, discounts, and you-name-it if we will become cable customers! UNBELIEVABLE.....

Posted by Mike at May 20, 2005 10:41 PM

How fun!I am glad that Steve brought this topic here. The largest telephone company in Spain is doing just the same: it's called Telefonica. They give a digital camera to all the new customers and an especial discount for subscribing to ADSL with them, I received regular promotional letters from this company offering me the camera and the discount, which I will not get because I am already premiun ADSL customer.

Would like another one? if you call to their customer support number and it is not one of the two standard problems, then you need to call to another telephone number that it is not free... then you better pray for talking to somebody who has an idea on how PCs work, because if not instead of sorting out the issue you will waist money and time while the person on the telephone is not only not helping but blaming you for having created the problem. And these remember were supposed to be the especialists...

Now, focussing on solutions. Wouldn't it be better if these companies treat the customers they already have and they get new ones from mouth-to-mouth advertising? Was it KISS?...

Posted by Omara at May 22, 2005 11:19 AM

What's sad is the best and the brightest have not figured this out yet. As Paul has pointed out this must generate new customers or they would have quit. It must generate more new customers than it costs in existing customers. But why not have both? Company A knows that when it offers a great deal as a "come-on" that some of their existing base will ask for the come-ons. Why not build an alternative for those that ask? It won't be everybody. "I'm sorry sir I can't give you the complete deal we're offering in our new customer drive but I certainly can a) upgrade your service for free; b) give you a special one month discount; c) look to see if there is some way for us to maximize the services we are providing you for a lower fee; or d) insert company creative idea here". For crying out loud someone thinks of these promotionals, take a day and think of a bone to toss to disgruntled customers that show you have some sympathy. Even if you don't!

Posted by Bruce McCurtain at May 22, 2005 10:35 PM