Recently, Lorraine and I re-evaluated some of our long-term subscriptions – like cable TV, magazines and travel insurance. If you’re like us, once you sign on for something, you tend to renew without thinking much about it. Who on earth would want to deal with a new cable company or shop for insurance every year?
You might expect to be rewarded for this long-term loyalty. Yet it seems just the opposite.
Creating Negative Memories
I called SkyTV, our cable provider in the U.K., and asked them to remove sports from our subscription. But even without the sports, our bill was going to be £50 a month. I asked how I could get the rate down, and they told me about a deal they brought out last year that would cost us only £35 a month.
Why wasn’t I offered this deal last year, or why wasn’t it automatically applied to my account? It’s the cable company, so I didn’t really expect to be treated well. Still, my interaction with them left me feeling as though I’d been swindled into paying a higher fee all these months.
Then the annual bill came for RAC – a car breakdown service in the UK, similar to AAA in the U.S. I was curious why the annual fee had gone up from £40 to £49. So I rang them up, and straightaway they offered me a renewal for £35 – with absolutely no explanation! The same thing happened when Lorraine called our travel insurance company. They immediately took £100 off the rate.
Offering a lower rate only after you complain is just one tactic I’m seeing more of these days. The other involves charging higher rates up-front to people who choose to be loyal, long-term. For example, at RAC, they offered me a longer-term renewal. It sounded good on first impression, but when we broke the charges down by month, a multi-year deal would have cost more than just signing on for one year. Same thing with my renewal for The Economist magazine. The one or two-year subscription was actually cheaper, by month, than a three-year subscription! This is a marketing decoy – a deal that sounds better, but isn’t.
Loyalty and trust are more than just a transaction
In one of our recent The Intuitive Customer podcast episodes, we talked about the nature of customer loyalty. It is more than repeated transactions, or inertia (who wants to bother with changing cable companies?). It is a relationship between you and a brand. When you create relationships with your customers, they are more likely to stay loyal to you throughout changes in their lives – just as you’re likely to be loyal to your friends and family members.
But in order to build a relationship with customers, they’ve got to have positive memories of their experiences with you. And that’s where penalizing your good customers becomes a relationship and loyalty killer. I’ve had an RAC membership for years. But now I have this negative memory of the way they tried to soak me for an extra £14 a year in membership fees, and then trick me into paying even more by signing up for multiple years.
Compare this to one of our team members’ recent experience with switching cell phone carriers. She went to her old carrier’s shop with a question about the changeover procedure. The employee answered her questions and even wrote down her account number to make the process go more smoothly with the new carrier. He didn’t offer her any discounts to stay, or pester her about her decision. Yes, they lost her business but as a result of this interaction, she has more positive feelings about her old carrier than she did before.
Businesses that rely on inertia or marketing tricks as a substitute for true loyalty will pay a price sooner or later. Their ‘best’ customers are apt to leave whenever a better deal comes along. Truly loyal customers, on the other hand, will continue to buy from you, even if there is a better or cheaper option.
Have you threatened to quit a service and then been offered a better deal? How did it make you feel? Share your thoughts in the comments box below.
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Colin Shaw is the founder and CEO of Beyond Philosophy, one of the world’s leading Customer experience consultancy & training organizations. Colin is an international author of six bestselling books and an engaging keynote speaker.
Follow Colin Shaw on Twitter @ColinShaw_CX