Pricing Fences, Promotions & 8 Deadly Sins of Customer Care

I recently got of the phone with AT&T “customer care”. It was an unusually frustrating experience, even by the standard of dealing with a multi-billion dollar corporation which has roots as a regulated utility. I had been transferred among 6 different departments over the period of a couple of days. As I write this, I’ve finally had enough.

The original purpose of my call was to reduce my combined AT&T/DirecTV bill. As most readers probably know, these companies recently merged. I’m a very long term customer of both companies and between the two bills we have been paying close to $250/month combined for telephone, Satellite TV and Internet service. This doesn’t even include another $90 in cell service charges that goes to another provider. It’s not quite as bad as it sounds; I have two phone lines and some premium TV services in that roughly $250 cost. But it’s still a whopping monthly expense that goes up significantly every year, like clockwork. I’m sure many of you have the same concerns. Other than the cost of medical care, for many households this is the most inflationary expense they are facing.

So I see advertisements from AT&T for a $99 bundle of phone, Internet and DirecTV – for new customers. I also regularly receive similar or lower priced bundle offers from AT&T competitors – I even received one this week from a competitor for $29 for these three services combined!

So I’m thinking, I’ve been a DirecTV customer for 19 years and an AT&T customer for over 10 -surely they’d like to retain me. Surely they don’t believe that the new customers they’d like to add are more valuable than the “annuity” payments of thousands of dollars/year, with NO marketing costs expended.

Apparently I was wrong.

Here’s a very condensed, paraphrased summary of how those 6 conversations went – feel free to read ahead if the details bore you:

Call #1 To DirecTV. Me: “Hi, I’d like to take advantage of the bundle offer that I’m seeing advertised for the services I already get from you”. Rep1: “Thanks for calling DirecTV customer care”. First asks for the usual ton of account and contact information, then says “We can certainly get that for you, but you’ll have to call AT&T to take advantage of that bundle, we can’t do it in my department. Here’s the number to call”.

Call #2 to ATT: Me: “Hi, I’m a current customer and I’d like to take advantage of your $99 bundle offer”. “Rep2: Welcome to ATT customer care”. First asks for the usual ton of account and contact information then says “Sorry, but I can’t give bundles, that’s done in another department”. Let me transfer you to them. (I wait to be transferred, then Rep2 comes back: “Sorry, but they informed me that they don’t do the the bundles anymore, which is news to me. I can offer you a small discount on your Internet, but it will add a year contract obligation”. I ask if this will impact my ability to get a bundle deal–Rep2 says it will not.

So I then go online looking for the bundle offer. I find it, and it appears that I can take advantage of it online by putting in my ATT and DirecTV account information. But when I do so, I get the message “Since you are already both and ATT and DirecTV customer, we need to speak with you directly so we can offer you the VERY BEST deal. Please call us at XXX-XXX-XXXX”.

A couple of days later, I call the special ATT “Bundle” phone number. I get someone with a heavy accent, obviously in a foreign call center:

Call #3 to ATT: Me: “I’m a current ATT and DirecTV customer and I’d like to get the phone/DirecTV/Internet bundle”.  Rep3: I can help you with that”, then proceeds to ask for the usual ton of account and contact information. She looks up my account information and realizes that I’m back on a “contract” (due to Rep2 providing the small Internet discount). At this point she apparently no longer is interested in talking to me. Because these bundles are just for “new” customers. If they’ve already handcuffed you with contract, why treat you fairly? So Rep3 offers to forward me back to “Customer Care” who she is SURE can offer me some good pricing.

Conversation with Rep#4: I’m forwarded to this rep, who of course first proceeds to ask for the usual ton of account and contact information. Then we go through the usual song and dance, as I once again repeat my story: I’m a long time ATT/DirecTV customer, bill almost $250, would like the $99 bundle deal, etc, etc. This rep informs me that the only thing he can offer is the same discounts that Rep2 had to offer. BUT, since I was such a long term customer, he could transfer me to the “Loyalty department”, which he was SURE could offer me some great pricing deals. So he transfers me to the Loyalty department, but first asked for my ATT account number so he could inform the Loyalty department of who I was. And I’m put on hold again.

Conversation with the Rep5 of the “Loyalty Department”: Rep5: “Hello, how can I help you?” Me: “Did the last rep tell you anything about me?” Rep5: “No”. Me: “Are you with the loyalty department?” Rep5: “Yes”. Proceed to tell my story once again. He proceeds to ask for the usual ton of account and contact information. I tell him then that I am interested in EXACTLY the same services I currently have at a lower price, or I am reluctantly going to have to consider competitive offers. He proceeds to ask me questions about HOW I use my phone service, my Internet service, etc. – which of course doesn’t make sense based upon what I’m asking for. He is trying to figure out how to lower the price by providing and inferior set of services.  I tell him it doesn’t matter how I use the services – I am interested in obtaining the exact same services at a lower price – can you do this? We went round and round this way four of five times, him never answering my question. Even though I’ve been a customer of the two companies for a nearly a combined three decads, he would say things like “Let me explain to you, these are two different services”. Talking down, somehow thinking he could confuse me into believing what I was asking for was unreasonable or not possible. After what in total was approximately 2 hours on the phone and speaking with these reps or on hold waiting for them, I’d finally had enough. I told him he’d had an opportunity to keep me as an ATT customer, but evidently he didn’t care and hung up.

So they will indeed now lose me as a customer. Inertia has kept me with them and had they just treated me anywhere close to the way they treat a new customer–and with a little respect – that would have continued to be the case. But now, piece by piece they will lose my business as I unbundle these products and find the optimal and most cost-efficient ways of buying them from other customers. The first step will be eliminate the ridiculous $50 I’m paying for two ATT VoIP landlines, which I believe I can reduce to essentially nothing with almost comparable quality. I’m working on ditching those landlines as we speak. But make no mistake, this is just a first step. AT&T/DirecTV will eventually lose all of my business – and I won’t be coming back.

So why am I laboriously recounting the details of this encounter to you? Because there are a number of lessons for tech company marketers and support executives:

Don’t erect pricing fences that offend current customers

The biggest of these offenses is all of the special “teaser” deals intended to attract new customers. In terms of cable/satellite/telephone business, this manifests itself as very low cost bundles of multiple services offered for a year or two. Nothing wrong with this marketing strategy if it’s working for you (and isn’t just leading to a lot of churn). The problem comes in when you try to artificially exclude current customers from these offers with “fine print”. We call this a “pricing fence” in marketing; there is nothing inherently wrong with pricing fences if used properly. What I describe here isn’t a proper use.  This is a transparent attempt to shackle your existing customers which makes you look worse than greedy. That makes people mad and they will flee to your competitors. It did with me.

Obtaining New Customers Costs WAY More than retaining current ones

The reason treating your current customers well is important isn’t just an issue of basic fairness. This is business, after all! No, the reason to do it is that it’s good business. Obtaining new customers in ANY market segment is far more expensive than keeping your existing ones happy. Even if you have to discount to KEEP current customers happy. The accountants running the businesses that are erecting offensive pricing fences should understand this if they just look at the data. But they are too greedy (or pushed to do it to meet quarterly numbers – a story for another day) to understand it.

When a current customer asks for a new promotion – give it to them

So what do you do when a current, long-term customer asks for a deal that you are offering to “new” prospects? You give it to them, no questions asked. And don’t try to hold them hostage by tying them into another 2 year contract as a result! Build customer loyalty by offering great products and services at fair, market-competitive prices as well as responding to needs and complaints as quickly and efficiently as possible.

Customer care lessons are universal – they apply to B2B as well as B2C

Some might say that this is a case study of a B2C company which doesn’t apply to a B2B software or hardware company. That would be wrong! You are selling to PEOPLE – it doesn’t matter if it’s B2B or B2C. Treat current customers like second-class citizens and they will not like it. Do this long enough and they will leave in droves, leaving you to just REPLACE them at a high marketing costs – let alone what it will do to your growth rate.

The 8 deadly sins of poor customer care

 Finally, to summarize, here are some fairly obvious “don’ts” of current customer care:

1. “Virtual” agents that keep you from speaking with a real agent
2. Multiple phone transfers – This is common when calling the customer care departments of large tech corporations. I can’t figure out whether this is just incompetence or actually orchestrated to frustrate a customer until they give up. The same thing occurs with insurance companies when someone is trying to contest a claim statement. I’ve come to the conclusion that it’s probably a bit of both intentional and incompetence.
3. Every customer care rep you speak with asking for contact information, under the guise of getting back to you if you are disconnected. I’ve never had one call me back.
4. Every customer care rep you talk to repetitively asking the same questions – have these companies ever heard of a common database?
5. “Silos” – see #4 above give all customer reps the power to make a current customer happy rather than endless transfers among departments. It’s 2016 – connect your database systems and make customer satisfaction a priority for everyone!
6. Tying long term customers into further long-term contracts every time you throw them a bone. The way you keep long term customers with you is by offering good value for a fair price. Handcuffs (long-term contracts) just make people mad.
7. Don’t make people call to cancel a service – but allow them to sign up for anything they want online! This speaks suspiciously to #2 above being intentional.
8. Lecturing long-time customers on elementary topics that they already know. Nothing upsets an unhappy, long-term customer more. Treat them with sensitivity and respect.

So there’s my bit of a rant on how software and hardware companies should treat CURRENT customers? Am I wrong? This all seems obvious to me, but I see folks going against these tenets all the time.  Let me know what you think. Leave a comment below with you own opinion and business experiences.

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