You’re our customer! We hate you!

It is axiomatic in modern American life: the longer you are a customer, the more some of our most common, everyday corporations come to disdain you.


Links: Comcast; Verizon Fios; DirectTV; Churn Rate;

Over the last couple of decades, there has been a steady slide toward monthly contracts for things in American Life. Phone. Cell Phone. Cable. Gym. Daycare. Banking Services. The list goes on and on. Think about how many recurring monthly charges you have. It can be … daunting.

Now, I am not here to make value judgments regarding what you are paying for in your life. Go forth and consume, as you wish. Rather, I want to examine the odd way companies treat their long-term customers.

Now, I’m a bit of a Comcast fan. I live in a pretty rural area with a less-than-ten-year-old Comcast installation. I get great network connectivity (16 down/6 up), lots of HD channels, and the phone works. I freely admit my experience may be atypical; that is not the point.

My wife and I have been a Comcast customer, across two houses, for sixteen years. Cable-modem internet was the first broadband experience I ever had, and it was a game-changer for me. Sixteen years is a long time, a very comfortable, regular time Comcast has been receiving a check from us. Has to make them feel good. They don’t hesitate to cash it, I note.

But everyday, I glimpse Comcast commercials. Commercials for Comcast, touting this deal or that. Triple Play, for $99; free Showtime for six months; etc. Great Deals! For new customers only.

Because those potential new customers are soooo much nicer than us crusty old customers. I guess we current, long-standing, reliable, loyal customers must smell bad; whereas those folks who are paying Comcast’s competitors are exactly the happy, shiny folks Comcast craves. At least that is the impression Comcast’s endless chasing after them gives me.

Cable companies worry endlessly about churn. Churn (attrition) is the amount of customers a cable company (or any contract-based company) loses in a given period. Contract-based companies hate churn, because it costs them money. Churn means people leave after only a year or two. And the real gravy for Comcast is found in the later years of the relationship. An example:

The first year of your triple-play with Comcast costs $99 a month (ignoring the pain of charges, taxes, fees, and bits of your soul unmentioned in the ad). So, $1200 for the year. After that, it jumps to somewhere around $140 a month, so $1680 a year. Check it out: Comcast is willing to pay you almost $500 to be their brand new customer! That is awesome, isn’t it!

Well, it is awesome in your first year.

Stick around awhile, and picture the situation ten years in. After ten years, assuming all the costs stay the same, you get to pay Comcast over $4000 to be their loyal customer! Ten year cost: just over $16,000. Sweet deal. For them. So they hate churn, they want you to stay put. Too bad they don’t make it attractive to stay put.

Every time I see a Comcast ad “For New Customers Only” I have the same thought: why don’t I get a break for being a loyal customer? If they really value my business, how about, oh, a discount based on how long I’ve been with them? Screw new customers, they are likely to leave (churn!) anyway. Golden-handcuff me with a really sweet deal based on my longevity. To counter the above example, say I had started at $125 a month. Starting in year 3 I got a got a 5% discount each year, up to 30%. Not compounded, additive. So after nine years, I am at a capped at a 30% discount, for a monthly bill of $88.

So my cost for 10 years?

  1. 3 years @ $125 ($4500).
  2. Year 4 at $119 ($1428; 5% discount)
  3. Year 5 at $113 ($1356; 10% discount)
  4. Year 6 at $105 ($1260; 15% discount)
  5. Year 7 at $100 ($1200; 20% discount)
  6. Year 8 at $94 ($1128; 25% discount)
  7. Year 9 & 10 at $88 ($2112; 30% discount)

For a total of just under $13,000 for ten years. Oh nos! Comcast loses money!

Please. The difference is that at ten years you’d have to pry my Comcast contract from my cold dead fingers. Doesn’t matter if Verizon FIOS will give me free unicorns and daily rainbows; DirectTV could offer me 100 free TV’s; I’m not giving up my long-term relationship with Comcast. I’m invested. I’m all in. Never leaving. Wouldn’t Comcast love to be able to count on that kind of customer loyalty? To be able to project that kind of future cash flow with such surety?

I left Verizon with nary a twinge to get an iPhone; likewise Comcast, and all the other contract-based service companies, will never build customer loyalty until they treat their current customers as if they are more valuable than prospective customers.

Fat chance of that happening.

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34 Comments on “You’re our customer! We hate you!”

  1. wat Says:

    Maybe if customers like you ACTUALLY started leaving, companies like Comcast would have an incentive to do something about it.

    • Jenn Says:

      Well, Comcast is kind of a bad example because for many people it’s their best choice. There’s not much competition unless you’re in a large city.

      My mom used to play this game with the phone companies though. Every month a company would call and offer her $50 or so to switch, so she’d switch. The next month the other company would offer her $50 to come back, and she would. And so on and so forth. It seems the only metric they care about is how many new customers they got; no attention was paid to how many were lost.

  2. Eric J Says:

    Cable co’s don’t need to worry about customer retention because they effectively monopolize each region that they nest in. The alternatives to cable internet in most regions are simply dismal; and when the alternatives don’t suck, they’re often provided by the same company that does the cable (see Verizon cable vs Verizon FIOS).

    thank the FCC and the deregulatin’ nineties

    • Bean Says:

      Seriously? “FCC and the Deregulatin’ nineties?” you Dont know what you’re talking about. You’re blaming the wrong side and the wring fricking decade entirely.
      1. Monopolies started in the eighties
      2. REGULATION caused the monopolies
      3. The first monopoly was in Denver in 1984 (see supreme court case). Not exactly a bastion of conservative ideology.
      Cable has roots in the sixties. They faced major hurdles up until about 1975, when the tides turned and the cost of development (read: laying cable) was worth the invesment. Then the companies moved in and said we’ll lay all the cable you need. The liberal state legislature of Denver said ‘we don’t want multiple lines dug and don’t think you’ll play nice. Why don’t you bid and we’ll pick the company with the best deal.’ Other companies cried foul saying why not more competition and the state gov’t pushed back because by arguing for a ‘natural monopoly’ they could get huge payoffs from the cable companies. Granted, in return the companes got control of the local markets, but at a huge up front cost that went into the state’s pocket.

      Long story short, we have monopolies because state goverments got greedy (as or more than the cable companies). They got the payoff and left their citizens in the lurch.
      Here’s a great essay on the topic from 1984 (I was 2 years old).

      Thank god technology has advanced to where they have some competition from satellite. As the tech gets better and 3G turns into broadband levels competition will increase. Hopefully the gov’t won’t let companies try and monopolize space.

      • Bean Says:

        doh! Here’s the essay:
        http://www.cato.org/pubs/pas/pa034.html

        Also, loved this blog post and totally agree. It boggles my mind that customer retention is not one-tenth as important as taking customers from your competitor. Churn costs money. If they implemented a 3-5% per year customer loyalty plan, the reduction in churn would more than make up the bill reductions.

  3. andrew korf Says:

    I love when comcast axes my ailing fathers cable bill when he’s a couple days late in paying his bill … reminds me how choice they are, and how much I like them having a monopoly on the cable market in our area (Minneapolis).

  4. Sean Says:

    I understand what you’re saying, but the point of these deals is to attract new customers. Of course they value your business but they want more business, and the way to get that is to offer enticing deals to people who are not currently customers.


  5. You are right, the only way to keep long term customers from leaving for another company that is offering a great deal for new customers is to offer some kind of deal or savings for people who have been with a company for say, more than a year. Insurance companies do it and it works great. The only thing they are betting on is that you are too lazy or just don’t want the hassle of changing companies, or that they must think they are the best deal out there. It is sad that they don’t seem to value their existing customers at all, and the fact that someone would comment on here and say “of course they value your business” makes me wonder if that was posted by someone who does not understand that actions always speak louder than words. Saying that they appreciate you as a customer is just words, giving a savings deal or special offer for you as a long term customer is an action that shows you that they appreciate you. If they just say words then they don’t appreciate you, and only view you as a sure thing that they don’t have to do anything to keep.

  6. lossy Says:

    In france, we have a company called free which always “backport” new offer to regular customer.

    One price for everyone, and if a new promotion with 3rd party (or not) come (regularly, a private channel offer months for free on the company network), then new customer and regular customer share it.

    No so long ago, they also offered free month fee to regular customer who bring a new one to the company (limited of course, because of frauders).

    The company is the second internet provider in the country, has no agencies (all on the web) and don’t propose many offer, only one: 29.90€ for all (tv, phone, internet). It’s the same buisness model since they began and it’s still working.

    Unfortunately this example is totally isolated. Most of other company (notably on mobile phone market) apply the same logic than Comcast.

    It’s not a matter of deregulation or not.

    It only depends on how the company balance greed vs customers services.

    The country can be conservative or liberals, if the company choose to not support old customers, the result will always be the same: Old customers will not be taken into consideration!

  7. schnalle Says:

    to be honest, for free unicorns and daily rainbows i’d leave about anyone.

  8. Ace Gopher Says:

    I have DirecTV and they just sent me a postcard saying that I’ve been a loyal customer for three years, so here are 32 premium sports channels for free from three months. No strings attached, and oh by the way they are already turned on for you. Thanks for being a customer.

    Gotta love that! I’m very pleased with DirecTV’s service.


  9. Dude – you’re too passive (from watching all those cable channels?.)

    Call them up. Tell them you want the new customer deal.

    You may or may not have to threaten to leave.

    I got it for 6 months at least from Comcast (check fatwallet if you want inspirating anecdotes). It’s a pain because you have to keep doing it, but the math says it’s worth it.

  10. Anna Lear Says:

    Cable companies (and wireless companies, for that matter) don’t HAVE to work hard to retain customers because as the first comment here pointed out people don’t actually leave them when they’re unhappy.

    Person X has a TV and a cable package. Without a compelling reason to switch (such as a significantly better deal elsewhere), it’s just way too much effort to go through the switch for its own sake. Person X will imagine how much hassle it’ll be to get his/her current company to process the cancellation, ship back rented equipment, take time off work for installation of the new equipment from a differnt company, etc. And let’s not forget the possibility that the old company will screw up the cancellation and Person X will then be stuck playing phone tag with level 1 customer service agents in some far-away call center.

    So the companies don’t need to worry about retention so much, they can just ride on the inertia. The great new deals for new customers are so significant in part because they are aimed at overcoming that same inertia in other companies’ customers.

  11. David Says:

    Just like Ace Gopher, I’ve also had very positive customer appreciation interactions with DirecTV. You can often get some of the new-customer deals if you call in to customer support. I even got one retroactively when I bought the HD-Tivo unit and the new-subscriber price dropped $200 within a month.

    Last year when they went live with the new Mpeg-4 HD streams they gave free hardware upgrades for HD equipment. But if your existing HD equipment was yours and not a lease you still got a new receiver free and could keep the old one (which still works).

    Last month I got a ‘thank you for being a loyal customer’ email, with a link to click on to confirm my email address and get to $10/mo off for 5 months. Then when I went to that link they offered me a short survey and a comment box where I mentioned that I wished the new HD DVR unit was TiVo based. I got a response email from an actual person confirming that a TiVo based on HD DVR will be available again next year. And then he gave me three months free premium movies just for sending in a comment.

    I’m not saying everything is perfect, there have been issues and frustrations at times, but on the whole I’m a happy and loyal DirecTV customer.

  12. Mankhool Says:

    I agree about the lack of effort to thank or retain long term customers. I want the free PC or free digital camera or free whatever that new customers are offered. There were NO incentives when I signed up for internet service in the mid 90s. Another thing that burns me is when the monthly cost for my internet goes DOWN for new customers and I have to ASK for the same rate. Give me a discount, send me some swag, a Christmas card — anything . . .


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  14. Every time I see new customer deals being offered, I just start downgrading my Comcast service. This means Comcast isn’t making as much money on me. And it seems to get their attention. All of a sudden I get calls and mail about some sweet deals for upgrades. Works for me.

  15. Detreon Roberts Says:

    Hi there,

    We appreciate and respect all of our all our customers. I especially appreciate the sentiment here. My team and I would be happy to help you get a great deal. Please email us at We_can_help@cable.comcast.com.

    Best,

    Detreon Roberts
    Comcast National Customer Operations
    We_can_help@cable.comcast.com

  16. bluebonbon Says:

    I do agree that it really makes me upset when I see an ad for new customers ONLY but I did have a good experience with Sprint recently when I was having some trouble paying my bill. Because I was a long term customer(more then 10 years now) he was able to give me a longer time to make payments. Still, I wish they would be nicer to long term customers.


  17. As the owner of a professional mystery shopping company that monitors customer satisfaction levels for our client firms, we like to encourage our customers to do nice things for their existing customers at various times throughout the year. We see a lot of companies out there who fail to see the value in their existing customers. Profitability lies in the hands of the retained customer so it’s vital that existing customers remain happy. The funny thing is, existing customers don’t ask for much. They just want the recognition and respect of having been loyal for a long time. It’s one of the reason why American Express puts the original year of membership on their cards. Coupons, gifts, a free month of service- all of things can go a long way to show appreciation for loyalty. Thanks for sharing your thoughts on this. It serves as a good reminder to all of us to appreciate our most loyal patrons!

    Angela Megasko, Pres.
    Market Viewpoint, LLC
    http://www.marketviewpoint.com
    http://www.AngelaMegasko.com

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  19. […] You’re our customer! We hate you! It is axiomatic in modern American life: the longer you are a customer, the more some of our most common, everyday […] […]


  20. […] A sensible reason why competition is good One thing I’ve noticed is that often larger corporations, especially those who have a large installed base seem to start hating their customers. Which is an opportune moment to read this. […]


  21. Cable companies are already offering bundled internet and cable tv services at a cheap price ‘


  22. what i like about cable internet is that it is almost immune to electrical noise which always degrades DSL lines ‘*;

  23. Zora Kummer Says:

    cable companies are also offering broadband internet these days and the cost is cheap too :;”

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