What you done for me lately?

A friend of mine needs to update his cell phone. You see time has slipped by since he bought his phone and as you probably know, everything has changed. It’s gone from getting email to 3G networks, apps and tweeting and fanning right there on your handheld. Whew!

He’s looking to make a job change and he’s watching his dollars. So he went to his supplier in that no man’s land...not a new customer and not with a plan that is in the free upgrade period. Uh-oh...he’s just a regular customer. So after viewing new phones he realizes that it would be a whole lot easier to pay the buyout fee and walk across the street to another supplier than to pay for a new phone. Even with an extended contract, no discount on the phones, $500 for the fruit and $400 for i.

Now if this guy was historically a bad customer, meaning not paying bills and/or sucking up lots of customer service and tech help time, then I could understand the choice to not make a deal. However, this customer has been with the same supplier for 18 years! (Did they have cell phones 18 years ago? Wow!)

Imagine this scenario: you have a long time customer who wants to stay with your service. To keep the customer you have to discount your product upfront, but the customer is willing to pay more in monthly subscription fees. How is that not a good deal for your company?

This is the problem with getting too focused on customer acquisition and not having the proper processes (and probably not the right training). It sometimes seems companies act like “Crash” Davis talking to the young pitcher in the movie Bull Durham. “Don’t think, it can only hurt the ballclub.”

Too bad the company wasn’t more proactive in their strategy. It is a time of recession...imagine if the cell phone company trained its people to interview the customers a bit more. Why they are coming in when their contract isn’t up? Why the interest in new technology?

If the customer fits the criteria (pays on time, hasn’t switched carriers, using the phone job-related, etc.) then they extend different offers to soften the cost of the purchase - maybe you pay for the new phone in installments...and the first installment equals your contract cancellation fee. That sort of offer would make people think twice about paying the fee outright and going across the street.

Ironically, I heard a eerily similar story about the same provider at my son’s baseball practice from a dad of one of the other players.

Perhaps there is a grand strategy behind how these guys were treated. Perhaps they aren’t good customers based on the models of profitability the provider uses. Yeah, maybe.... More likely the company has telescoped itself into practices that leaves money on the table and unwittingly are trading a small exit fee for years of customer value.

Let me know what you think... Email me. Or ask a question about marketing and I’ll reply in this space...

SLE