Extorting Customers – Don’t do it.

Within days of receiving my Wired renewal invoice, I saw an insert in the actual magazine with a better, lower rate. I called up Wired and told them I wanted to renew my subscription at the lower rate. No problem. The customer service representative asked for the little code on the postcard insert and processed my renewal order.

Lowest Price
If you’ve put an offer out there for customers, you need to honor that even if you subsequently raise prices. Naturally, some prices are “limited time offers” but those need to be clearly stated as such. I was happy I wasn’t hassled over a few pennies but my renewal experience left me wondering why I even had to request the lower rate in the first place.

Reward Existing Customers
Why didn’t Wired just invoice me at the lower rate from the start? Probably because they wanted more of my money. Your company may assume that customers will automatically fork over the amount you’re asking because they are existing customers. However, if you’re caught in the act of trying to squeeze more out of a faithful customer, they may just lose that faith in you.

New Versus Existing Customers
I see too many offers these days for “new customers” or “new subscribers only.” What about your existing customer base? Incentives are nice to turn prospects into clients. However, don’t let those same incentives alienate your current customers. For example, look at Adelphia, the provider of my home Cable and Internet service. If I was a new customer, I’d get a greatly reduced rate. As an existing customer, when I renew my annual service, I get to pay a higher rate. Situations like this could lead customers to leave and take advantage of a competitor’s introductory rate.

Use Incentives for Current Customers
Remember, it is cheaper to retain your current customer than it is to gain a new one. Nurture your current customers and treat them as valued individuals. Offer existing customers their own incentives and benefits for which “new customers” aren’t eligible. This will build up a special “member’s club” atmosphere that perpetually encourages customers to stay faithful to your company.

Customers never enjoy being ripped off, whether your selling a $25 CD or a $1500 chair customers know when they are being taken advantage of, sometimes they might still buy knowning they are being extorted but they are also developing negative feelings toward your company and future sales from this customer are unlikely. In the long run this best for your customers which in turn is best for your profits. There are a few self-evident truths about value – while it is now impossible to make someone feel like they are getting a value with words, you can still gain these feelings by offering a very high quality product at a fair price. Do this and you will have gained a custom for life, or at least until you extort them.