Reward good customers instead of punishing the bad ones

February 2, 2012

Anyone who tells you that a price increase is an easy business proposition is crazy. Even when customers are happy, they rarely look forward to paying more for the products and services they need. PR News recently shared good advice for businesses that are considering raising their prices, and they mentioned several examples of announced price increases that backfired, including those by Verizon and Netflix.

Those two episodes from last year have been well chronicled, but few people have suggested what the companies should have done instead. In hindsight, I’m wondering whether Verizon should have offered its customers a $2 discount for signing up for automatic payments from their bank accounts instead of attempting to charge customers who use phones or the company’s website to pay their bills.

It seems highly likely, from the outside looking in, that Verizon wanted to steer its customers to automated payments so that more customers pay their bills promptly. That goal is understandable, but the tactic for reaching it clearly didn’t work. Whenever possible, businesses should look for ways to reward customers for behaviors that benefit their bottom lines, rather than punishing them for choosing other options.

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