Punishing Loyalty

Conventional wisdom holds that it’s more expensive to acquire a new customer than it is to retain an existing customer. So why do some companies continue to punish their most loyal customers?

Every day, companies chase new customers with special offers and discounts, while taking advantage of the folks who have been with them the longest.

Case in point:

I discovered an unwelcome surprise in my last credit card statement: a $248 charge from my hometown newspaper, the News & Observer. I didn’t remember authorizing the charge and honestly wondered if there had been some sort of mistake, since it was more than double what I’d paid for my annual subscription last year ($104).

After a call with a member of the News & Observer’s customer service team — who was very kind and helpful — I learned three things:

1) When customers opt to auto-renew their subscriptions, they lose any special discounts in year 2, thereby reverting to the “regular” price.

2) The N&O expects customers like me to call and renegotiate the terms if we’re dissatisfied with the regular price.

3) No matter what I did or said, I would not be able to get the same deal that is featured on the N&O website ($96.60 for one-year print & digital subscription).

TheN&O website has some great deals, as long as you aren’t a longtime subscriber. 

I completely understand the role of a special offer that’s only available for first-time customers. But when a customer is willing to make a multi-year commitment to your product or service, he should not be expected to pay 150% more than the guy walking in off the street.

Further, while the newspaper was willing to work to keep my business (we settled on $119 for the year after 10 minutes of negotiation), the fact that they did not notify me by mail or email of the pending charge indicates that they’ve got their fingers crossed hoping that customers like me don’t notice or call.

Unfortunately, it appears these practices are quite common in the newspaper industry. Diane Rose had a nearly identical interaction and response from her hometown newspaper, the Tampa Bay Times.

This problem is not limited to newspapers. A quick search online turned up dozens of reports of cable television companies like Comcast and hotel chains punishing longtime customers.

Alex Goldfayn warns that companies like these run the risk of turning their most loyal customers into “anti-evangelists.”

That’s sage advice. In an age when it’s easier than ever to find out what deal my neighbor is getting, companies must stop taking longtime customers for granted.