A company worse than Comcast?

I hereby declare that a new low has been reached in the "treat your oldest customers best" pricing strategy and the new winner after many years of Comcast holding the medal is Blockbuster.

There are 2 pricing strategies that seem to work very well here in the USA (maybe in Europe as well too - been a while since I lived there)

Strategy #1

  1. Assume all people are idiots
  2. Tell them you are giving them something very expensive FOR FREE
  3. Tell them that this free thing will have a service cost of just $X9.99 or $X9.95 per month - even if you don't use it
  4. ...very quietly say "for 2 years"
  5. ...and even more quietly say "and if you lose it you have to buy another one for full price"
  6. ...because they are not really free but we know you are too stupid to work that out

Strategy #2

  1. Assume all people are lazy and hate confrontation
  2. Tell them that this service will cost just $X9.99 or $X9.95 per month
  3. Tell them that you will throw in an upgrade to the next level FOR FREE
  4. ...but only for 3/6/9 months
  5. ...and we won't tell you what the real cost will be afterwards
  6. ...nor will we downgrade you back to the level you original asked for
  7. ...we hope you wont notice the increase on your bill
  8. ...because know that most of you are too lazy or embarrassed to call and cancel

#1 is every cell phone company in America and #2 is every cable/satellite provider

But most of those companies seem to make lots of money thereby proving that these strategies work well and that the assumptions of people being idiots ad lazy is a very good assumption.

Its long bothered me that Comcast prefers new customers over the ones who have stayed with them for years - but I've never switched from Comcast so I guess I am very lazy (though satellite doesn't work well with my ReplayTV boxes) and I can't switch from my cell company because there really are no alternatives and the pay as you go all have minutes that expire even if you've paid for them.

I blogged about blockbusters 30% increase back in October so I was quite surprised when 2 months later I get another email saying that they had increased my bill another $2 to $9.99. Do the math folks that's a 100% increase in 3 months. DVD costs don't appear to have gone up where I shop, postage has risen a few cents and I think their staff probably deserve a 4% pay rise (quite generous for 2007) so where the hell is the extra money going?

I see only 3 alternatives:

  • Fat cat executives - got to get that 1.6 million from somewhere eh?
  • Somebody did the math wrong when they added in the 'in store return' for free. Suddenly they doubled the amount of videos people used and removed half the stock from the local stores without increasing revenue. I suspect this is partly true based on this article 
  • The whole thing was a huge bait and switch similar to strategy #2 above except they didn't even have the integrity to call it an 'introductory offer'. Comcast may be annoying with their so called 'special offers' but at least they call it by its correct name.

I, of course, sent them my usual polite complaint email and they, of course, sent me their 'written by a team of lawyers and marketing managers' standard response. I shouldn't really expect more I think 

Well blockbuster - it seems like NetFlix have a 1 DVD at a time unlimited plan for $1 less than your 2 by mail 2 in store plan. I rarely get through more than 1 a week anyway so I think we will be parting company real soon - apparently blockbuster is happy to lose some customers.

 

Published 20 December 2007 09:05 AM by zman

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