New Customers v Customer Loyalty

[thally29]

Why is it that large companies offer exceptionally good deals to attract new customers, and yet these deals are never available to long standing customers. Have they forgotten about Paretto's rule and word of mouth attracting new customers by happy long term customers?
It is most annoying when you see these deals being offered and you have been with a company long term that when you call to re-new your contracts your tarriffs have increased and you are never offered reductions. It is usually at this point that you don't feel valued as a customer and look to move elsewhere. Surely this is not good business sense. What has happened to retaining customer loyalty? I find this really annoying, does anyone else agree that customer loyalty for larger companies has become a thing of the past?

Thanks
Tracy

 

[CLK]

Hi Tracy,

Funnily enough I recently had my car insurance renewal quote through the post which was much higher than expected. I went through the same company's website only to find it was much cheaper! When I rang and challenged them they mentioned that through purchasing online I was entitled to an extra 10% discount which wasn't provided through renewals that were sent through the post. I was told that I would have to cancel my policy and purchase again online as they couldn't transfer the discount, which seemed like such a hassle given that I'd been with them for 5 years and gave the impression that they were more interested in finding new customers rather than looking after the current ones.

There is a lot more focus placed on acquiring new customers rather than focusing on achieving long term loyalty, which funnily enough is much more profitable in the long term. There are a number of benefits to retaining customers including an increased customer purchasing behaviour, decreased operating costs, customer referrals and the willingness of customers to pay price premiums. Although it is always important to find new customers and expand into new markets this should still be secondary to enhancing relationships with your current customers. As many authors on the subject of customer retention point out, that just by improving retention rates by 5% can result in an increase in profits by 60%.

Just my 2p worth while I take a lunch break…

Craig

 

[KidsBeeHappy]

Sky TV?

 

[thally29]

Hi Craig
You have proved my point exactly - many thanks for that

Regards
Tracy

 

[thally29]

Yes Sky Tv is one followed by mobile phone contracts.

Why do they do it?. It is such a pet hate of mine.

Tracy

 

[My Owl 1]

I couldn't agree more that is why it is good to know that there are some companies still out there that value their customers,look after them well and dont put the prices up.

best wishes

Avril

 

[Bobbybaggio]

It is good business to retain all customers but it is not always possible to meet their demands. Take mobile networks as an example. They have to give new connections attractive promotions in the hope that the customer will generate revenue for the network. Revenue is generated by out of bundle usage or calls received from other networks. Each customer is assigned a value accordingly. A network can afford to offer high value customers large discounts and expensive handsets as they know they will get a return from them. If you stay within your bundled allowances and don't receive a lot of calls then you are not generating much revenue. Thus the renewal offer is not going to be overly attractive.

Would you give an existing customer a free Nokia N96 and £10 line rental discount if they were a low end user?

 

[Gillie]

Oh mobile networks, or mine in particular jumps through hoops for me, offering me excellent service with brass knobs on!

If you feel you are not getting a good deal as an existing client, as to stop the service etc and you will soon find that if your business is worth them keeping, they will help and sort you out!

 

[Renate]

Even though it is of importance to keep your customers and make them loyal to your company/brand, a company always has a customer loss, maybe due to the fact that they are not able to retain customers, but other factors also play a central role. Therefore the need to attract new cusomers arises and a company needs to come up with an offer that interests the potential new customers. Often these offers aren't really that beneficial for the customers when they have read all the small writings of the offer. This is more or less done to attract and get new customers fast, which they in return can turn into loyal customers.

I am not saying that to retain loyal cusomers is not the right approach, but sometimes the actuall cost to retain some of these customers are not woth the effort, compared to the cost of getting new customers and turn them into loay customers. This does of course highly depend upon what product/service that is at stake, and how easy/difficult it is to get new customers. Some companys are just ineterested in existing for a couple of years milk the cow and then leave the market after having made a certain profit. So this are is a lot more colpex than what the eye sees the first time around.