Customer Loyalty Does not Pay off with Pay TV-Providers

Posted by Steph Kaye on Tuesday, May 20th, 2014 at 11:05am.

What Happened to Customer Appreciation?

Every supplier wants to create and retain a loyal customer who engages in continued profitable business with him. Customer Loyalty is the measure of success of the supplier in maintaining a long term relationship with the customer. If you stay at the same hotels chain consistently when you travel you will get rewarded with free hotels stays and if you travel with the same airline you could earn enough points to get free flights. Many industries reward their loyal customers with incentives and goodies, but this doesn't appear to be the case with pay-tv providers.

"You get something for being a loyal customer in most other industries, says David VanAmburg, managing director of the American Customer Satisfaction Index(ACSI) at the Ross School of Business at the University of Michigan, Ann Arbor. "It's the reverse for the cable and satellite-TV industry. The new customers get all the great deals. People feel punished for being a loyal customer." So, what gives for the lack of rewards given to loyal pay-TV customers? 

New Customers are Awarded the Biggest Savings

If you're signing up as a new customer with a pay-TV company, then you can expect to get some really great deals as a new subscriber. VanAmburg says that most cable and satellite companies offer amazing introductory rates to new customers to get them hooked. But after the honeymoon period is over - which is usually a six to 12 month deal - they hike the price up considerably. "The rewards are only given to new customers," he says. "New customer acquisition is important for these companies. Growing their customer portfolio and tantalizing them with new deals has been around for a while. Retailers do that, too, to get people in the store," he says.

So, unless you're a new customer, it's unlikely that you'll be able to receive and benefit from the same discounts. However, if you're a loyal customer who has other providers offering service in your area, then you can use that as leverage, VanAmburg says. If you see a much better deal from another provider, use that information to try and get a lower rate from your provider. Unfortunately, many consumers only have access to one provider - and the lack of competition can be costly.

Having no Choices Allow Pay-TV Providers to Hike Up Prices

"There is a lack of choices in this industry," VanAmburg says. "That makes it even more challenging for customers to get satisfaction because they can't just change companies." For instance, if you aren't satisfied with a Wal-Mart store, you have all kinds of choices of where you can shop, he says.

"But many times with the pay-TV industry, you are stuck with very few choices, and sometimes no choice at all. And they know you are stuck," VanAmburg adds. That's because some areas only have one cable TV company offering service. And while satellite TV could be their other option, some people face restrictions because their apartment complexes don't allow satellite dishes, he says. "If these pay-TV companies had to compete tooth and nail with a myriad of competitors like retailers do, the prices would go down a lot," he says.

How Loyal Customers Can Deal With the High Prices

If you're frustrated about the high price your paying, experts and consumers say you need to either negotiate rates with your provider or simply switch to a new provider and get the benefits of new customer discounts.

Negotiate: John Glynn, a publicist in Scottsdale, Arizona, has been a Cox customer for seven years and has to make these frustrating calls all the time to the company to complain and ask for some reprieve on his ever-increasing bill. "I have all the premium channels and subscribe to MLB Extra Innings. I also bundle my services. I have the highest tier Internet speed and a home phone, which hasn't been used in years," he says. His complaint is that they constantly change his pricing, usually to the company's benefit.

"When I call and complain, it takes 45 minutes for my rate increase to be rescinded and reversed back to what I was paying before," he says. "I say, hey, I've been with you guys for seven years, order all your services and pay on time. Why are you even messing around with me?" It seems to work for him each time even though it takes time out of his day to do it. He says that each time he is warned by a Cox employee on the phone that this pricing is temporary and it will increase next year.

"My reply is 'talk to you in 12 months,' " Glynn says. "I just received my bill with a price increase. I guess 12 months is up. Time to call Cox. Wish me luck." Glynn continues to use cable because he likes sports, keeping up to date with his favorite shows, and having high-speed Internet. "I understand that the cable companies need to make a profit. But I really feel that roughly $3,000 per year is a little excessive," he says.

Switch Providers: One of the biggest negotiating tactics consumers have is threatening to switch providers. "You need to pull out the big stick, threaten to move to a different company. If you threaten to move, then be prepared to move," says Erik Brannon, senior television and media analyst for IHS, a global technology information company. "Pass through the retention office, and get someone else higher up."

If threatening to switch providers doesn't work, then your next move should be to actually change providers. Doing this will definitely get your provider's attention. In fact, a 2013 Consumer Reports survey on the telecom industry found that switching providers yielded big savings for consumers. Specifically, of the surveyed respondents who changed TV providers in the previous six months, 18% were offered new savings of $20 or more a month by their old provider if they didn't switch to a new company, or if they had switched but were open to coming back. 

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 Lang Premier Properties are Birmingham Realtors specializing in Oakland County Real Estate. Stephanie is an agent with Max Broock in Birmingham, Michigan. See what past clients have to say about Stephanie Lang.  Lang Premier Properties looks out for your best interests when you purchase a new custom luxury home. We always recommend working with an experienced luxury real estate agent when buying a new luxury estate.

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