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Comment by jodrellblank | Hacker News Reader

I had a phonecall from my broadband provider this week, saying "Since we took over this company, we've been reviewing accounts and you've had this for a long time - we can offer you the same service for less money".

I nosed around their site, and found I can regrade my account with a "just a price cut" button.

I'm mystified by why they would pay someone to seek out and cut their profit from previously happy customers. If they'd told me they had taken over the company and needed to increase the price by that amount, I would have agreed. Is this a sign that the new owners aren't very good?

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> Is this a sign that the new owners aren't very good?

Upvoted you, but the answer is no, this might be a very smart move by them depending on their strategy.

If they want to lock down market share, this is a great play to build loyalty, especially if there's new competitors directly in the space (other broadband) or substitution products (3G, whatever). They might have run some numbers and figured X% of their customers would get poached if they remained at high prices, and it was better to preemptively lower prices and get a lot of goodwill in the process. Market share + loyalty. Max short term cash isn't always the best goal.

Edit: Especially in a business that's high capital intensive with low marginal costs. Furthermore, doing this might dissuade other companies from coming into the space to compete. Strategy can get complex, especially when you've got millions/billions already invested infrastructure.

Turnover is also a metric most service providers pay close attention to.

Simplicity is a sign of a well-run organization. You ever heard the line, "I don't lie because I have a terrible memory"? If you have 15 different price plans, you now need to maintain documentation, train customer service reps, detail tiered specs in a computer system, update all of the information, etc. You get the idea. Complexity leads to higher costs.

If they offer one (or a few) options with consistent service and pricing, they will do them better with higher consistency and quality.

Makes me think of In 'N Out Burger...getting hungry. :)

Churn rates and cost per new customer are two very highly watched metrics in telcos. Keeping you happy keeps up their numbers. That said, I wish they also bought my provider.

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