HNT: Value Existing Customers

How Not To Value your Existing Customers

In business, existing customers are very valuable.  These are people or companies that have found your product and like what you have to offer enough to (importantly) actually purchase.  They are the best source of additional purchases (and only source of software upgrades) and may provide referrals and positive word of mouth.  It is easier to sell to an existing customer than to locate and establish new customers.  However, if you want to take it to the extreme, and simply treat your customers as “cash cows” rather than with the proper respect, here is how you can do it.

First, it helps to be a large, unfeeling conglomerate, such as Corel, with a record of collecting brand name products and adding little (if any) real value; it is much harder to disrespect customers as a small company headed by people whose livelihoods depend on them.

Of course, there need to be cash cows, I mean customers, to exploit, so the quickest way to acquire them is to just buy a well-recognized company that already has loads, such as WinZip.  Pay no attention to the fact that their single (excellent) product that created and defined a market has since become a commodity that has numerous competitors, many of them free, and whose primary functions are built in to all major operating systems.  It is even better if the product was widespread due to there being few incentives to purchase the original product (save abiding by the license) and a promise of free upgrades for those of us who did the right thing.

Now you have a product which is unnecessary for the vast majority of computer users, plus a list of customers who paid for the product back when it was necessary, many (if not most) more than a decade earlier, and who would reasonably expect free upgrades (should any be desired).  What can you do now?  I know: Spam.

Validate all of your contact addresses by sending a whole slew of messages selling products completely unrelated to the original product (except by being owned by the same stockholders).  When that fails to do anything but annoy your customers…  wait…  no not your customers, but the customers of the previous company…  it is then time to do a new build of the product, complete with a new version number and no discernible new features.

With the “new” version, send out emails to all previous customers of the product to indicate, above all else, that the days of free upgrades are over and that they are expected not only to upgrade, but to pay the new masters (for what they already have, and probably no longer need).  When that does not work, either, repeat the messages on a regular basis, all with slightly different messages (and increasing version numbers), but never forget the “give us your money” message:

Your WinZip Software – Upgrade Available

Upgrade your single-user WinZip Standard license to WinZip 14 now…

Your WinZip software is out of date. You are currently running an older version of WinZip, and now is the time to upgrade.

Your WinZip software is out of date. You are currently running WinZip 6.3 Standard, and now is the time to upgrade.”  [No, actually I am running WinZip 9.0 SR-1, the last free update; version 6.3 may be the last version I purchased, back in 1997.]

Exclusively for WinZip customers: Upgrade your single-user WinZip 6.3 Standard license to WinZip 14.5 now, and save 50% or more off the new license list price.

Your WinZip software is out of date. You are currently running WinZip 6.3 Standard, and now is the time to upgrade.”  [OK, let’s be clear: “running” is not really the case; I cannot remember the last time I actually used WinZip for anything.]

So, now you have properly alienated existing customers.  Your product has gone through a number of version numbers (10.0, 11.0, 11.1, 11.2, 12.0, 12.1, 14.0, 14.5) yet the web site lists no significant feature that is not already present in the 9.0 version (from 2004), which still runs just fine, by the way.  I hope it was worth it (moreso than, say, actually creating value).

This sort of thoughtless approach also works nicely in other areas of business, not just software.  For instance, you could be a large chain video rental store, like Blockbuster, and introduce a rent-by-mail service to take on your most significant competitor (Netflix).  Offer a similar service, at a comparable price, with an added benefit than your competition cannot match: the ability to exchange a mailed rental for a store rental when you are finished.  You will get lots of customers who can get titles unavailable in the retail stores by mail, can keep them as long as they want, exchange them at the retail store for a newer release, keep those as long as they want (while a new title is sent by mail), and have a constant supply of rental movies to watch.  Brilliant! [seriously]

Where does one go from there, though.  With a nearly unassailable product offering, and happy customers, you cannot just sit there and leave well enough alone.  No, first you need to raise prices, and then email every current customer to let them know that they are “grandfathered in” to the original price, but be sure to emphasize that they are now locked in, so if they let it lapse, the new price applies.  Next, change the program, so now for the same price, the mailed rentals are not sent until the in-store rentals are returned.  Then, inform customers (like you failed to do last time) that now the number of retail exchanges is limited.  Never, ever, consider reducing the cost to match the reduced services.  (My prediction is that the next move will be to add due dates to these rentals, just to be sure that we switch to the competition.)

Anyway, there are two good examples of how to mistreat your valuable customers.

On the other hand, one could always recognize customer value in simpler ways, like abiding by agreements and promises, and not being so obvious about caring only about their money.  We love our customers; they allow us to stay in business and continue to do what we truly enjoy.