• Élévation Partenaires

Not All Customers are Created Equal?

Have you ever seen a very attractive promotional offer for a service to which you already subscribe but need to renew soon? Such as a subscription that expires at the end of the year?

Since I live in Africa I rent a storage unit in Virginia where we keep various family items that are not important enough to ship across the Atlantic but too important to give / throw away or sell. My renewal for the unit is coming up and while researching the process I came across an attractive promotion from the storage company. However, it wasn't until I was 3 steps in to the purchase that they finally told me the promotion was "for new customers only." It was at this moment that the storage company transformed from my reliable service provider in to a company I wanted absolutely nothing to do with. Unfortunately, the switching costs are high with a storage unit: rental truck, labor to move the items, time devoted to the move etc. And since I'm in Africa it won't be until some time next year that I would even have the opportunity to communicate my displeasure by changing service providers. However, the day will come.

High switching costs is not the same for many software as a service (SAAS) companies. The same subscription issue is happening this month but for a SAAS app I use in my business. Once again, while researching the renewal process I came across an attractive promotion, and again, was not informed that the promotion was "for new customers only" until several steps in to the renewal process. Needless to say, I was ticked off and immediately starting searching for competitors who might also be offering year end deals to "new customers only." And voilà, I found one in 2 minutes flat: a 3 year subscription for the price my current provider wanted for 1 year of service.

The lesson: because this SAAS company valued new customers more than existing customers, they lost my business. If they had given me the same deal, I'd still be with them and never would have had the motivation to change. I guess I can thank the old SAAS company because without their unequal treatment of their customers, I never would have received 3 years of service for the price of 1.

The bottom line: value your existing customers and do everything you can to keep them, especially when you are in a competitive market with low switching costs. The subscription model business is all about customer retention and minimizing customer churn. Delight your customers and they'll tell their friends so that you don't have to use teaser rates to keep the hamster wheel spinning.