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Comment by patio11 | Hacker News Reader

The point of offering a discount is to increase conversion rates or decrease churn.

The churn among 9 year customers is miniscule and, to the extent it happens, is largely out of your control.

(They've successfully resisted all temptation to quit for NINE YEARS. Crikey, your commercial relationship is already more stable than many marriages . Typical events precipitating a cancellation sound less like "Found a better deal" and more like "I'm moving outside your service area" or "Dear Comcast: Dad died, please cancel his subscription.")

Thus, offering 100% of 9-year customers a discount to influence a fraction of a sliver of those customers (the number who are seriously considering cancellation who could be motivated to not cancel if they were offered a better price) is just throwing money away.

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Incidentally, the corollary: if you want a better deal, threaten to quit. You'll find Retention has many options for rewarding you for your loyalty.

(Sidenote: you know you have been in Japan too long when you spell it colorrary and wonder why the spellchecker flags it. sigh)

My parents did that for years with The Boston Globe. Every August, they'd quit, and every September, they'd pick up a new 1-year introductory subscription at about 1/3 of the price.

I've been trying to get them to do the same with phone/Internet service - my Comcast is about half as much as their Verizon because I'm on a promotional 1 year subscription. Hell, just quitting FIOS, using dialup for a month, and then buying the exact same subscription they already have would save them $10-15/month.

Similar perverse incentives are at work in the job market (you usually get much better offers by changing jobs) and the housing market (apartments tend to jack up the rents as much as possible on existing tenants while offering move-in specials to new tenants). And people wonder why there's no loyalty in America anymore...

A good tactic when possible, but Comcast requires a 3-month away period to qualify as a new customer. I think the best tactic is threaten to quit, if that doesn't work then phone back another day and try your luck again with the call center lottery.

Though you can do like I did. Call to cancel cable, and they reduce it by half bringing your total package of cable/internet to a more reasonable price. I guess they have a greater fear of showing declining subscribers than sticking to their (outrageous) price.

You're forgetting they'd have a bunch more 9 year customers with this discount structure.

Edit: Sorry for being direct? Let me be more cautious:

It's plausible that, under the proposed pricing regime, the 9 year retention rate for customers would rise more than enough to offset the higher margins enjoyed today at the current retention rate.

Yes but very few public companies care about 9 year perspective.

Precisely. I guarantee you that there is north of a billion dollars worth of research into _precisely_ how to manage customer loyalty. If there was a profit advantage to rewarding customer loyalty, you'd see it. There isn't, so you don't. The parent has it nailed - Why incent people not to leave _when they aren't going to leave anyways_.

Because even if there isn't an incentive, it's the right thing to do.

It's been one of my gripes about business for a long time that they offer more attractive options to people who aren't their customers than they do for people who have been their customers for a while.

So, now that I'm running my first bits of advertising for my consulting/I.T. business, I put a "10% off your next invoice" coupon in the flyer -- for my existing clients.

After all, if it weren't for my existing clients, I couldn't afford to be advertising for new ones.

I've literally just been considering this same question yesterday. I decided against giving a discount - I'm already pretty cheap though. If you keep discounting your clients you end up doing more work for them to make the same amount of money; if you've cut your cost of doing business and you're seeing some clients leaving for other businesses (and not coming back) then it seems right to reduce your costs to incentivise repeat custom.

Remember that [regular business] customers [with opportunity to go elsewhere] who get things cheaper will always want them at that rate though - we paid you £360 last time, why should we pay £400 now?

I agree with you. I don't plan on offering the discounts very often -- my rates are already pretty cheap. It's more of a "thank you" discount, and it's intended to show potential new clients that we treat our existing clients pretty well.

I don't think most of my existing clients will expect me to continue offering a discounted rate. I've had several of them even tell me that I really ought to be charging a lot more.

On the other hand, you're not a publically held company. The telecom can't justify decisions on the basis that they are right. Cooperate law in america is messed up.

I have previously argued with people who couldn't figure out why car insurance companies would ever raise someone's rates for being in an accident that was not their fault. Clearly, if it's not my fault, then I don't deserve to be punished!

Is there a word for this? Is it simply an inability to empathize (i.e., to see the world from the company's point-of-view) or is there a larger fallacy at work (e.g., a belief that the world operates according to some standard of fairness)?

The company doesn't care about punishing you, it's statistics. The insurance company is taking a gamble, and the odds of being in another accident, given that you've already been in an accident, are much higher than they were before. The odds have tipped against the insurance company, so they charge you more to keep it worth their while.

If you are not at fault, you are not at fault. If they could get away with pinning the blame on the other guy they surely would. So they have 0 legitimate reason to assume that your chances of being in another accident are higher than before, let alone 'much' higher.

The legal--or even common--definition of "fault" isn't at stake here. The fact of the matter is that they've got mountains of data that say that if some "random crazy fluke thing" happened to you, then you're more likely to have it happen again. Because that's what the data tells them. Heck, it could be that you just live in an area where people drive like crap.

Look at it this way: let's pretend an accident (regardless of fault) actually lowered the chances of a subsequent accident (maybe you're scared into good driving), and the longer you drove without an accident, the more likely you are to have one (maybe you become complacent or something). In this situation, your rates would go down when you got in an accident. Because it's not that they're trying to punish you, but rather they're trying to just charge based on the X% chance you're going to be in an accident, plus Y% overhead/profit.

Not being at fault legally does not mean your actions (or lack thereof) were not contributory to the accident occurring. There are a heck of a lot of ways you can increase the risk of being involved in an accident while avoiding legal fault; by contrast "defensive driving" exists as a discipline for doing the opposite.

Well if it wasn't their fault, and the company cuts them a break, then they have much more customer loyalty. The trick is how much effort you're willing to devote to figuring out he said she said debates which I'm guessing is not much.

It is properly a mix of the two things, that said it does seem strange to increase the rate since the other guy would have to pay.

If you drive defensively (if you've ever been a motorcyclist you'll know what I mean) then you can avoid accidents which nonetheless would not of been your fault. Thus, any accident is an _indicator_ (but not a perfect one) that you may not be the best of drivers.

An example might be the very common rear-end shunt at a roundabout (or "circle" in South Africa, not sure if you have 'em in the US) - an experienced driver will [usually] pull away confidently without hesitating. A less experienced driver can misjudge more often and set off only to suddenly stop, leaving the car behind to crash into them. Strictly road-lore says the rear driver should have observed better, they are liable as they crashed into a [near] stationary vehicle - but the foremost driver is hardly without blame. Yes, the rear vehicles insurance pays out for all damage; but the insurer of the front vehicle would be right in judging them a greater insurance _risk_.

It doesn't always work (some good drivers will just get unlucky and be hit by cars they can't avoid) but that's a rough version of a rationale.

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