I can’t believe how some companies treat their customers. They damage their brands and customer loyalty at every turn. The scenario…. A customer stays with them and renews their service subscription or repeat purchases, then the company charges them more than the first year. Using huge discounts to lure them in and then only to send their customer churn rate through the roof by hiking the prices in year two and beyond!
What’s prompted this post topic, is I’ve just got off the phone from Tesco Insurance and I can’t believe how much they have hiked my home insurance this year (our 2nd year with them). So we stay with them, are loyal and how do they repay us – they hike the price by 47%. I have to confess, I forgot to shop around as we were on holiday at the time of renewal and I completely forgot. I won’t make that mistake again!
But it’s so frustrating as I want to be loyal to a company that provides a good service or product and a value for money price (and not always the cheapest, as not all insurance is the same!) but they have a business model that means I am forced to shop around or get riped off.
It’s been estimated that it costs the average company 10 times more to get each new customer and yet many businesses, large and small, seem hell bent on forcing all the existing ones away with their treatment of them.
Do they rely on our apathy? Assuming we won’t shop around? Probably but it is so much easier today with the lovely Google and price comparison sites to do so. A foolish marketing tactic I believe. I personally think (and research proves it is more profitable in the longer term) that you should reward your loyal customers with loyalty discounts, not lure in the wrong customers with a cheap introductory offer or slashing your prices. You need to consider the lifetime value of your customer, the cost of acquiring them and then the financial benefit of retaining them in subsequent years over the ‘lifetime’ that they transact with you.
How do you reward your loyal customers?