Why Do Offers Apply to New Customers Only?

LArcher12 on 09/08/2020 - 20:24
Last edited 10/08/2020 - 10:48 by 1 other user

What's with all the companies just pushing for new customers - telcos, food delivery, streaming etc pushing for new sign ups only.

I get it, they're in tight markets and want any edge, wouldn't it make some more sense to give recurring offers to existing members?

Offer plan changes to existing subscribers, do free delivery or % off for existing diners, give a month upgrade to existing lower tier streaming viewers.. Etc

I would more likely stay with one of the above services if they actually gave a shit about their customer.

General Discussion

Comments

  • strongzero on 09/08/2020 - 20:27
    +8

    Streaming services - It is their business model. You get the free trial, forget about it or are too lazy to cancel. Then they've got you.

    • Archer12 on 09/08/2020 - 20:37

      Fair point, guess they're on the gym model

      • strongzero on 09/08/2020 - 20:39
        +3

        Definitely. Granted, more people will actively use their Netflix subscription.

  • Hybroid on 09/08/2020 - 20:32
    +2

    They already have you as a customer, what's the incentive in offering you a discount?

    New customer offers are to attract new customers which in many cases is more valuable than a returning customer.

    • Archer12 on 09/08/2020 - 20:37

      For example, I'm a telstra customer, they don't allow me to sign up to one of those jb plans for a new note 20 (for arguments sake), they'd rather lose me than allow me to sign on to another 12-24 months?

      Edit:clarity

      • Hybroid on 09/08/2020 - 20:39

        They would rather you signed up at a higher price point as a returning customer which most people do and thus it doesn't matter if a few choose to go elsewhere. It's just how it works.

        It's like Netflix raising prices. Yes, sure, there's a few disgruntled people that will unsubscribe but the vast majority will just pay the higher price and keep going…

      • lubos on 09/08/2020 - 20:49

        Yes - they'd rather lose you. It's cheaper for them to gain new customer to replace you than giving specials to all existing customers.

        • Archer12 on 09/08/2020 - 20:51

          Seems counter intuitive, but makes sense.

          Guess in this subscription culture, the old adage of a new customer costing 5x more than retaining is out the window

          • lubos on 09/08/2020 - 21:03
            +1

            @Archer12: That's the downside of service commoditization. It's relatively cheap to gain new customers because they can switch easily - costs less to acquire them. This is why existing customers are not appreciated. Not much effort was involved to get them in the first place.

  • djones145 on 09/08/2020 - 20:32

    get new customer, build a customer base
    sell to competitor
    repeat

  • pegaxs on 09/08/2020 - 20:53
    +2

    Retention means nothing. You need increasing numbers on the books. Most people, once they are members, will stay on as members, but to increase profits, you need to increase member base.

    • Archer12 on 09/08/2020 - 21:00

      Guess if they just want member numbers it's fine, rather have them spending.

      If I was ordering from a delivery service of which I'm a member of all of them, I'm going to be a spending customer on the ones that gives the best value/rewards/promos etc. The membership base is good for show, doesn't help if half of them aren't spending.

  • serpserpserp on 09/08/2020 - 21:33
    +1

    Because lots of companies value the new customer KPI over anything.

    Any listed company, new customers will increase the share price over user base. Because you are selling potential.

  • Donaldhump on 09/08/2020 - 23:05

    simple, just rotate everything if its cheaper elsewhere and get sign on bonuses. There exists no loyalty, new customers is far sexier than retaining customers, on the hope most are lazy to leave. Beat them at their own game.

    health insurance
    car insurance
    credit card points
    home loans
    electrcity
    wives

    they all have good bonuses when you switch.

  • trustnoone on 10/08/2020 - 00:34
    +1

    I wouldn't be surprised if its just typical company policy thinking. They probably have some division built to create new customers, so they only care about new customers and create things that create new customers.

    Then there's a retention team elsewhere whose main job is to take calls from people trying to leave, and to make it as hard as possible to leave (you can only cancel during a weekday, cancellation team unavailable, provide the minimum possible to keep the person to stay etc).

    Sure they could think about providing great services that would make people want to stay, I know for me when some places provide free things it makes me happy to be part of the service (for example playstation would give me 10 bucks randomly or something) and I honestly think it would be a better way to run companies.

    But I doubt they'll think that way, my guess is they want to have their cake and eat it too (assume all users stay on the service and blame retention team if they don't AND recruit more people so they can roll in the extra money $$$).

    • serpserpserp on 10/08/2020 - 12:46

      Sure they could think about providing great services that would make people want to stay, I know for me when some places provide free things it makes me happy to be part of the service (for example playstation would give me 10 bucks randomly or something) and I honestly think it would be a better way to run companies.

      I think a lot of companies already think they provide top notch service and you are already paying for that.

      Think of it like this, as a new customer, you agreed to pay a price for a service, so basically you should be happy to pay that as this is what you agreed from the outset.

      Giving away from stuff to existing customers doesn't make a lot of business sense. It would be like a landlord rented you a house for $100 a week but the identical house next door gave the first week away free for a new renter. Does that mean the landlord should now give you a free week? If you were the landlord would you do this? No.

      • Archer12 on 11/08/2020 - 12:16

        Not exactly the same imo, if I was offerred a 4k account upgrade on my netflix or added bonus of 10gb on my phone plan for a month (which cost the company not much) I may like the service and then upgrade increasing their ARPU.

      • Archer12 on 11/08/2020 - 12:25

        In your example, if my landlord upgraded my facilities, gave me rent relief during covid etc, I would more likely stay when my lease ends.

        • serpserpserp on 11/08/2020 - 21:03

          I would more likely stay when my lease ends.

          Yes. But like phone plans, if you get to the end and you don't feel particularly put out, you'll probably just stay put. Costs involved with moving rental properties etc.

    • Archer12 on 11/08/2020 - 12:20

      Correct, if my food delivery service threw me a $5 voucher or delivery free etc I'd more than likely keep using them.

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