Why is it that some businesses don’t treat their longtime customers like the valuable assets that they are and others do. Two recent personal experiences made me think about this. Both ADT and AT&T raised my rates. I am a long time customer of both companies; I don’t cost them much in terms of support:
- The infrastructure is in place and pretty reliable, i.e. relatively speaking maintaining the network for existing customers isn’t that big; and
- There are not acquisition costs (advertising, inducements or installation) or installation.
In other words, I am (should be) an annuity for both of them. I am one of their lowest cost assets. So, why did both of them increase my rates? And they both did this: 1) while they are offering new customers incentives; and 2) in the face of intense competition that is offering me (arguably) equal service and significantly lower costs. Are they overestimating the strength of switching costs? Are they taking me for a granted or, worst of all, are they taking me for a fool. Maybe all three, but it shows that they really don’t value me as a customer, because they are literally pushing me out the door with their actions.
That said, and not surprisingly, “churn” is a problem for both AT&T and ADT. And, they haven’t figured it out. They are breaking a cardinal rule of business which is TAKE CARE OF YOUR CUSTOMERS and they will take care of you. And, they are doing it in a most egregious way one that is obvious to everyone and one that just begs their customers to go somewhere else.
A little investment in current customers means that the investment in growing your business will be significantly smaller because you won’t have to replace lost customers in addition to acquiring the new ones.
So remember, taking care of your customers (and as these cases show that can be as little as showing them a bit of respect by making good business decisions instead of bad ones) is one of the best things that you can do for your business!