Why People Hate the Cable Companies (and How Not to Be Like Them)

Everyone loves the introductory rates when you sign up for a new contract with a cable company. You generally get your cable for about half the price…even cheaper if you bundle it with internet and/or phone.

Everyone loves it…until a year goes by and their rates double.

It’s a terrible, terrible business model.

The worst.

This is the basic outline of their strategy:

1. Get new customers with incredibly low rates (great for keeping subscriber rates high)
2. Once they are a customer, treat them poorly by raising their rates
3. When they leave, keep investing large amounts of money into customer acquisition campaigns that have low introductory rates
4. Rinse and repeat

This is completely the reverse of how companies should treat their most loyal customers and it is very bad for the bottom line since the cost of acquiring new customers is substantially higher than the cost of retaining a current one.

Here is a similar process that I think would be much more effective:

1. Get new customers by giving them their first three (or six) months free
2. After the free months, their rates would switch to the normal monthly rate
3. When their one year anniversary comes around, do nothing
4. When it is time for a rate increase, don’t increase the rates for current customers, only new ones. Grandfather in the old ones
5. At the one year mark, offer them a new contract, with discounted rates
6. If they break their contract, don’t charge them fees. Make it easy for them to leave.

Treat current customers like gold and they will never become former customers that are you are trying to get back.

If they do choose to leave, treat them kindly so that they don’t say terrible things about you all over twitter.

The lesson to be learned here is this: value your current customers more than your potential customers. If current customers are happy, they will tell their friends and your business will grow.

Respect your customers….and they will respect you…and tell their friends.

Photo by Dennis Brekke on Unsplash