A few days ago my wife got an email informing her that it was time to renew her subscription to a magazine that she’s subscribed to for at least ten years. The renewal price was $12 a year (Just $1 an issue! You save 83% off the newsstand price!).
That very same day, I received an email from the same magazine, offering me a New Subscriber Discount Rate of $8 for a year, plus a Free Subscription to another magazine.
Naturally, once we compared notes on the matter, she cancelled her subscription and I bought a new one. It’s a perfect Win/Lose. We saved $4 on a magazine we would’ve happily renewed at full price and we got a free subscription to another magazine. The magazine nets zero new subscribers and loses $4, plus whatever it costs to send us that free magazine every month.
Now, I’m not so naïve as to think the magazine publishers are actually losing anything in this deal. They’ve got roomfuls of people with spreadsheets working the numbers on these transactions sixty-three different ways. They’re golden. Besides, most of their subscribers are probably not as sagacious as my wife. They’ll happily click the Renew button year after year because that’s the easiest thing to do. That’s what most marketers count on.
I’m much more interested in what this says about the magazine’s attitude toward its subscriber customers. Obviously, a new one is worth more to them than one who’s been a brand loyal customer for ten years.
Going to great lengths to get new customers while neglecting or even gouging existing ones is certainly not limited to the publishing business. Cable companies are notorious for offering extravagant introductory offers to new customers while slowly creeping rates up and up on long-term ones. After all, the cable business is essentially an oligopoly, so most people don’t have lots of options when it comes to where they can buy TV and Internet service. It’s like Meg Tilly’s iconic line in the 1993 version of Body Snatchers. “Where ya gonna go? Where ya gonna hide?”
This Just In: Cable Providers Frequently Less-Than-Equitable Toward Customers.
To be fair, I’ve learned recently that our cable company will happily make all kinds of terrific deals with an existing customer, if you call a secret phone number (which can eventually be obtained by calling their published customer service number), navigate through a moderately dense bunch of prompts and ask, straight out, “what will you do to make my monthly bill lower?”
But, just like clicking that renew button on the magazine’s email, most customers won’t ever do this. They’ll just grumble their way through life in a state of hostile dependence on their cable company (it’s what I would’ve done if I hadn’t been encouraged to seek out a lower rate by my sagacious wife).
It’s interesting to note that, once I’d “negotiated” a new, lower rate from the cable folks, I felt really good about myself, and about the cable company. But that’s a topic for another post.*
If You’ve Already Bought One Of Our Cars, You’re A Clueless Bumpkin. And Probably Fat.
The auto industry is another sector that treats existing customers like second-class organisms. It seems every commercial for “attractive lease rates” ends with something like “…available only to non-GM (or Ford or Nissan or whomever) lessees…” buried in that mandatory salvo of legal verbiflage. In other words, if we’re winning you over from another car brand, welcome, friend. If you’re already leasing one of our cars, well, not so fast.
Dissing previous customers seems to be the core communications strategy behind the new Buick ad campaign. In the commercials, people gush over the great-looking new cars being driven by friends and neighbors. But, once being told that the cars are Buicks, the people become incredulous. They say things like “That can’t be a Buick!” Of course, what’s (barely) unsaid is “Because this car looks pretty cool, and Buicks have always been the very automotive manifestation of utter un-coolness.”
I would have loved to have been in the meeting where the Buick brand manager told the ad agency, “Look, the cars we used to make were wallowing, corpulent, sauropods. And so were the people who bought them. But now, thanks to our ability to bring European GM models over and stick a Buick grille badge on them, they’re pretty darned good. Here’s a few million bucks. Go tell everybody.”
“If You Are Short Of Friends, I’ll Tell You What To Do. Make An Examination. You’ll Find The Fault’s In You.”
Mayme White Miller wrote those lines in 1943 (I’m sure I’m not the only person my age who had the poem they’re taken from read aloud by Mom and Dad on multiple occasions) and they’re absolutely applicable in this case. Let’s be clear. I’m in the marketing business. It’s my job, and, frankly, my joy, to help companies figure out ways to sell more stuff to more people for as much money as possible. One way that some companies do that is by offering more favorable terms or, in the case of Buick, more favorable messages, to new customers, while shunning, scorning or even outright soaking previous customers. But those companies do it for two reasons. 1) It works and 2) People let them.
People persist in doing the equivalent of blindly clicking that “renew” button because it’s easy to do. And the cable companies, the car lessors and the airlines (I’m looking at you, Delta in Atlanta) know exactly how much bitching and moaning people will do without actually doing anything to rectify the pain.
People ask, “But, Bill is this right?” And I’ll smile and answer, “Lord, but I do love capitalism.”
*There are numerous studies around that prove that companies that solve a problem for a customer are rated more highly in customer satisfaction than companies that never had a problem to begin with. This deserves its own article. Maybe I’ll tackle this subject soon. But probably not.