Are all customers worth it?

[YoHo]

I must be special, because I actually se my rates dropping when I upgrade phone service. It used to be with verizon that once your contract period ended, you were just billed at regular rates which resulted in significantly higher bills. That seemed far less disengenuous to me.

Further, what you're really talking about is additional services new phones provide. Additional services that largely still cost more money. So it's more of an opportunity cost for them to tack on additional services.


The $5 will be thwarted by those that just buy the minimum phone (which the typically don't pay for) and not buying or using any of the enhanced services. Or perhaps reducing their plan to a lower level. Which ultimatly Does nothing for Cingular's bottom line, because the cost to have that customer in the system is about the same.


Now, if we're talking seriously old phones, like Analog, or Early digital, then I can see the surcharge. That's a major problem for the network to handle.

 

[SplshMtn99]

At the insurance agency I worked at, we were glad to see some customers leave. Anyone that was "high maintenance" would cost us money because you spend so much time helping them with the same stuff again & again. Also anyone with alot of auto claims would hurt our loss ratio, thus hurting any much needed bonus the agency might get from the insurance co at year end.

If one of those customers EVER said they were going to go elsewhere, we never tried to stop them. Or if they said they were unhappy, we would encourage them to shop around.

 

[Cannot_Wait_4Disney]

Originally Posted by ead79
I think there is something to be said for a company that treats you well whether or not you're the biggest revenue generator they have.

Sure is. Just ask AOL how their surcharges and bad customer service are working out.

 

[Lisa loves Pooh]

That is a stupid policy. I hang on to my phones until they break (like when I wash them. OOPS!)

Penalizing a customer due to old technology is just rediculous. They'd get "penalized" with a new contract if they get a new phone....and some of those free phones (MOST actually) are getting so complicated with the gadgetry. I want a phone that makes phone calls and that is it.

Glad they don't care. I'm sure competitors would love to see a 4% increase in revenue. Even 1% if 4 of them split the customer base.

 

[Lisa loves Pooh]

I think we'll see more and more of this as companies get more and more information about the link between specialized demographics and revenue contribution -- call it "commerical profiling". I suspect we'll see Disney doing this more and more, since they are collecting up massive volumes of data about us. I could see them using the data to pick-and-choose which guests to provide discounts to even more strategically than they have up-to-now, or perhaps could be the basis on which FastPass priority privileges would be given.

I think their is a BIG difference between marketing with discounts & added benefits and charging penalties as cingular does.

One tries to INCREASE the customer base...while the other punishes and forces custies to make a decision they don't want to make.

 

[Lisa loves Pooh]

But wouldn't the returning customer go anyway? Wouldn't it be wise to lure those who have never been in an attempt to get them "hooked" too?

Believe me, I'd prefer for the regular consumer to get the discounts but I'm just mulling over who the better target might be.

I don't think the "free dining" was offered only to returning guests.

They do have programs across the board and many people finding codes and what not that they can use.

A customer who books a trip without checking all their options--deserves the price they pay.

I don't think WDW will cease either practice.

 

[Lisa loves Pooh]

The point is, yes there is. The science is becoming advanced and developed enough to be able to start making very accurate predictions about which customers warrant special priority and which don't.

While that may be true..

no company can ever predict when *I* will spend money.

A car dealership and a realtor tried that. Well--since they didn't think we wouldn't spend money (or spend it soon enough to make it worth there effort)....the money was spent elsewhere and very quickly.

 

[bicker]

Glad they don't care. I'm sure competitors would love to see a 4% increase in revenue. Even 1% if 4 of them split the customer base.

A 1% increase in revenue along with a 3% increase in expense? I'm sure that the competitors are repulsed by the idea of capturing this companies worst customers.

no company can ever predict when *I* will spend money.

And no mass-market product or service provider can afford to try, nor do they need to. They need only to come to understand what customers will do as a group, and then find the sweet spot(s) in the market. The amount of business lost to customers who behave outside the general parameters is insignficant.

 

[Lisa loves Pooh]

A 1% increase in revenue along with a 3% increase in expense? I'm sure that the competitors are repulsed by the idea of capturing this companies worst customers.

And no mass-market product or service provider can afford to try, nor do they need to. They need only to come to understand what customers will do as a group, and then find the sweet spot(s) in the market. The amount of business lost to customers who behave outside the general parameters is insignficant.

Custy would have to get a new phone with competitor most likely anyway--the custy would switch b/c they are no longer loyal to a company that doesn't give a rats behind.

And I'm sure my realtor appreciated her 6% commisison from the home sale fora house listed for just a week...and the realtor I was referred to lost LOTS of business b/c we complained to whom referred us....USAA. So that prompted them getting dumped for referrals. So his loss for his inaduquate customer service...was more than just me.

Technology only gets you so far--if you still suck with c/s despite the technology...it just won't matter, now will it?

 

[bicker]

Customers have a hard time understanding what customer loyalty is to a business: A loyal customer is one willing to pay a premium for a product or service, not a customer who is willing to pay the least amount possible for the least amount possible.

In the end, what's most frustrating for us customers is that we don't have access to the vast amounts of intelligence about us that the suppliers have. They actually know what we will do, what's worth it to them versus what isn't worth it to them. They actually know whether a customer is worth keeping or worth chasing away, even when those customers don't understand that themeselves.

 

[Lisa loves Pooh]

HOw is paying a penalty paying the least amount possible?

How is stereotyping your buyers based on how they look--assuming they will spend the least amount possible?

ETA: We were going to cancel our security system to save money...they cut our rate and cancelling would have only saved us $1 a month....since our insurance premium would have gone up. I don't think EVERY business is interested in losing customers that pay the least amount. Much easier to retain what you have.

 

[bicker]

Paying a penalty is NOT "paying the least amount possible". That's precisely what the penalty does: It moves the customer out of the "not worth keeping" category into a category where the customer is worth keeping. Any customer willing to pay the penalty remains a customer.

There is no "sereotyping" going on, and surely nothing is based on how customers "look". (What the heck are you talking about? This company is segmenting its customers based on what technology they use, not how they "look".)

Rather, market research leads to market segmentation. This is the only effective means for a mass-market product or service provider to know their customers.

Rest assured that every corporation wants to do whatever it can to maximize its return to its owners. They had better, or they'd be violating their fiduciary responsibility. That's a felony. And if that means putting in place policies where some customers pay more and some customers leave, that's what they have to do, by law, as long as the long-term additional revenue from the customers that pay more more-than-makes-up for the long-term lost revenue from the customers that leave.

 

[DancingBear]

Whenever the issue comes up, where a customer says something like, "But I'm a customer," we should remember that not all customers are equal, nor should they be. Customers who wish to be valuable to a company (i.e., customers who feel that they are "loyal") need to recognize that business measures that in terms of how much of a premium they're willing to pay for the company's products and services, not in terms of how often or how long someone has been a customer.

"Customers who wish to be valuable to a company"? What's that about? I don't wish to be valuable to a company, I wish to get goods and services at a fair price.

"...business measures that in terms of how much of a premium they're willing to pay for the company's products and services, not in terms of how often or how long someone has been a customer." Not exactly. Businesses want to keep the customers they make the most profit off of. Those may be the ones paying a "premium," or the ones who consume regularly at a "regular" price. And there are other considerations; in an economic downturn, the long-time customers might be likely to stay with you, while the premium payers might disappear. Or, to use a WDW example, those folks who come every year in the offseason at a discount (and who would never pay rack) are helping keep your occupancy rates more steady in a seasonal business; while they pay less, the income they generate helps cover your fixed costs, retain good trained personnel, etc.

 

[Lisa loves Pooh]

There is no "sereotyping" going on, and surely nothing is based on how customers "look". (What the heck are you talking about? This company is segmenting its customers based on what technology they use, not how they "look".)

Sorry--went to a car dealership and didn't look like I had money and it required getting a manager to get any assistance.

 

[Lisa loves Pooh]

Rest assured that every corporation wants to do whatever it can to maximize its return to its owners. They had better, or they'd be violating their fiduciary responsibility. That's a felony. And if that means putting in place policies where some customers pay more and some customers leave, that's what they have to do, by law, as long as the long-term additional revenue from the customers that pay more more-than-makes-up for the long-term lost revenue from the customers that leave.

How is putting a penalty in place to make people spend more money following their fiduciary responsibility making them compliant with the law.

Missed that part in Consumer Law 101...care to enlighten?

 

[DancingBear]

Rest assured that every corporation wants to do whatever it can to maximize its return to its owners. They had better, or they'd be violating their fiduciary responsibility. That's a felony. And if that means putting in place policies where some customers pay more and some customers leave, that's what they have to do, by law, as long as the long-term additional revenue from the customers that pay more more-than-makes-up for the long-term lost revenue from the customers that leave.

Of course there can be real differences of opinion as to what is in the long-term best interests of the company and its shareholders. Hence the business judgment rule. Nobody's gonna lose a civil case for breach of fiduciary duty for pursuing a different business plan in good faith. And nobody's getting prosecuted for any criminal offense unless they're getting bribed or have a severe conflict of interest. (Not to mention that Delaware courts have recognized that directors can take into account the interests of other constituencies than shareholders, at least to some extent).

The more prevalent problem recently has been management taking actions which bolster stock prices in the short term (to respond to the short-sighted demands of Wall Street) but which are not in the long-term interests of shareholders.

 

[DisneyKidds]

There is nothing good about a company that ignores what's best for its owners

.......especially when what might be in that best long term interest is providing great customer service/entertainment to each and every customer/guest, even if doing so means a lower bottom line number in the current quarter.

 

[offwegotoneverland]

The reality is business are focusing more and more on which customers are driving more of their profitability.

And they are also focusing on which customers may "cost them money" to service. In any service business (banking, insurance etc) there will always be some customers who cost money to service...it doesn't make sense to that company to retain that business at the resource expense of serving the clients who make them money better.

As the ability to figure out which ones are which (money makers and money costers) gets better and better you will see companies pricing the money costers at a higher rate to either make it profitable or encourge them to leave.

I look at this monthly with my client base!

 

[JimB.]

In my DW's profession, it is generally accepted that over 80% of her time is spent on less than 20% of her clients, & that those 20% generate less than 5% of her revenue. And they are always *****ing about "discount here, discount there, that's too much, etc., etc..

She will try to retain any client, but when they become too much of a PITA, she gives them a copy of their records, points them to the door & tells them they are free to seek services elsewhere.

This enables her to free up her otherwise wasted time & provide a better level of service to her other 80%.

Also, one of her business journals recently had an article where another practice like hers allows their receptionists to "fire" 3 customers evey years for Christmas. She may give that a try this year................

 

[bicker]

"Customers who wish to be valuable to a company"? What's that about? I don't wish to be valuable to a company, I wish to get goods and services at a fair price.

Fair based on who's estimation? Yours, of course. And they want to offer goods and services at a fair price: Fair based on their estimate, of course. So when these different perspectives of "fairness" come into contact, you have the complexities of a commercial transaction. In the case we're talking about here, customers who weren't "valueable" to this company were assessed a fee if they want to continue being a customer. That bridged the gap between what they had considered to be a fair price for what they were getting and the price that the company has now determined to be a fair price. As with all commercial transactions, the power is shared: The supplier sets the price for what is being offered, and the customer gets to determine whether to make the purchase or not.

"...business measures that in terms of how much of a premium they're willing to pay for the company's products and services, not in terms of how often or how long someone has been a customer." Not exactly. Businesses want to keep the customers they make the most profit off of.

Yes, I agree: That is a much more succinct way to state what I was trying to say in my message. I think, though, that some folks might object to it being stated that way, which is why I stated it the way I did.

Those may be the ones paying a "premium," or the ones who consume regularly at a "regular" price.

I don't think we're using these words in the same manner. The word "premium" is often used to describe the amount a customer is willing to pay to patronize a specific vendor, as opposed to an alternative, non-specific vendor. Generally, people are willing to pay a premium for name-brands, for companies that have a aura of reliability and quality, etc. By comparison, no-name companies, economy-grade suppliers, etc., people aren't willing to pay a premium for their products and services.

And there are other considerations; in an economic downturn, the long-time customers might be likely to stay with you, while the premium payers might disappear.

Unfortunately, that's no longer the case in most commodity industries. The duration of patronage appears to have no significant correlation to loyalty any longer.

Or, to use a WDW example, those folks who come every year in the offseason at a discount (and who would never pay rack) are helping keep your occupancy rates more steady in a seasonal business; while they pay less, the income they generate helps cover your fixed costs, retain good trained personnel, etc.

There is no question that there are other considerations. They have to factor all these things into the decision. However, sticking with the WDW example: Disney charges over $70 for guests using a one-day pass, while folks using a 10 day expiring pass pay less than half that. Disney is "penalizing" the short-term guest just like Cingular is penalizing their old-technology customers.