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4 Actions for the Customer - 9/10/24


One way to look at the difference between proactive and reactive is that proactive is something that’s often done before it absolutely has to be done.  Maybe it’s something done that really doesn’t have to occur, but your professionalism takes over, and some action or communication that you know Read more

Don’t Kick the Problem Down the Road - 9/3/24


The error was obvious.  Shania is a clerk at a local government office, and she could tell that something was wrong with the permit request.  She was about to reject the request because the address was invalid. If this would have been handled like the normal process, Shania would have Read more

Reflect the Best of Your Customers - 8/27/24


When Alice walks into a business, whether it’s a restaurant or government building, whether it’s a Goodwill or a grocery store, she has a certain way about her.  She’s the customer, and it’s not unusual to hear her say to the employee:  Thanks for being here today! It’s not unusual Read more

Create Your Personal Motto - 8/20/24


Take a look at these mottos: It’s the real thing. Just Do It. Have it your way. Betcha can’t eat just one. Breakfast of champions. Do you know the companies?  The answers are at the bottom of this tip. So why am I asking you about mottos?  And why do almost all of them make me Read more

Create MAGIC with Your Customers - 8/13/24


Years ago, we worked with the Orlando Magic in the NBA, and they needed more consistency in their customer service – they needed a standard of engagement with the fans and their account holders.  They were trying to identify the “Orlando Magic Way” – their desired customer experience with Read more

Build Strong Customer Connections - 8/6/24


We’ve worked in health care, education, local government, finance, pro sports, and many other industries.  And while our clients’ customers are often different, their specific scenarios for engaging those customers are different, and policies and procedures are different - there’s one thing that is pretty similar.  And that is Read more

Running Late in the Rainstorm - 7/30/24


The mom was a little panicked.  She had just left work and had run into an unexpected popup rainstorm, and traffic had come to a halt.  She was on her way to pick up her 4-year old at childcare.  The facility had a policy of charging a fee for Read more

Use AI to Improve Your Performance - 7/23/24


Many companies are integrating Artificial Intelligence (AI) into some aspect of their business.  This could greatly change how they operate, how they communicate with customers. This AI wave reminds me of a story from 20+ years ago when a stock brokerage firm launched a new website that greatly enhanced the Read more

The New Burger Experience - 7/16/24


Floyd loves a good hamburger. Any chance he gets to try a new spin on an old standby, he takes it. Recently, a burger joint opened near his house, and Floyd was very excited! It was owned by and named for a world-renowned chef, so it had to be Read more

Boost Customer Happiness - 7/9/24


There’s a cooking show that a friend of mine watches, and the premise is all about reverse engineering food.  They may take a Reese’s Peanut Butter Cup, analyze it, and determine the ingredients just by tasting it.  Then they figure out a recipe.  The cook will try to make Read more

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To Improve Customer Retention, Make Products Free?

Posted on April 5, 2012 in Business Advice, World of Customer Service Please leave a comment

To increase its customer retention, Sprint announced that it’s discounting fees on their pay-as-you-go service. In the Fox Business article Sprint Looks to Boost Customer Retention With Lower repaid Bills, it’s noted how Sprint’s new Boost service “is $5 less than the starting price of the brand’s current lowest-priced plans.”

According to the article, “Sprint has had some success drawing customers to its Boost brand through a program that lets users lower their bills by $5 per month following every six on-time payments. Sprint’s prepaid customer rolls grew by 20% last year to 14.8 million, while its contract business shrunk.” In business school, that’s referred to as cannibalizing yourself. But I digress…

The interesting point here is that the company is trying to increase retention with a price drop (and also by pulling customers away from its other products).

Companies who truly understand customer retention strategies understand that a price drop is the absolute LAST thing you should ever have to do. This price drop retention strategy is for companies who have allowed customers to view them as a commodity, and some companies are thereby viewing themselves as commodities.

In virtually any industry, customers will stick with companies for many reasons, not just price. And those other reasons (product quality, wait times, customer service, responsiveness, relationships with the employees, affinity for the company, making customers’ lives easier/better/more hassle free, and on and on and on) provide the value piece that plays into decision-making far more in many customers’ eyes than price.

Before you do your next price drop to increase retention…before you start heading in the direction of free products…before you willingly cut your own profits in an effort to become more prosperous (if that even remotely makes sense), find out the specific factors that drive loyalty for specific customers, and do the best job possible of incorporating those into a 1-to-1 retention strategy.

Avoid the easy and (for the long-term) ineffective path to customer retention – avoid the price drop.

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