I just cancelled our cable TV service. We had a promotional rate from Comcast of $20/month for basic cable. They wanted to raise it to $50 or offer me a “special” deal on upgrading to digital. I asked if I could keep my promotional rate. They said no, it is only for attracting new customers. So I cancelled it. I will miss some of the channels but I don’t think it is worth the price they want to charge me.
I am just forced to wonder why the special deals are reserved for new customers. I know this is a common complaint about cell phone service too. Attracting new customers is a far more expensive proposition than keeping old ones happy, so why not work on that aspect. Instead of getting $20/month out of me, they now get nothing. It seems very silly to me. I know they think customers will not cancel their service, but when one actually does, you’d think they’d make some sort of last ditch offer.
Oh well, I guess I will look at satellite TV now or just wait until the next good offer rolls around from Comcast. Or just use this opportunity to spend more time reading and hang out outside this summer.
April 6th, 2006 at 5:16 pm
I wish I had my satellite dish back… It was the best TV service I ever had.
I never lost service, I had digital quality on every TV channel… and I paid $39 a month for 150 channels plus local… and it was another $11 per month when I added the 6 HBO channels.
Plus the Football package!
When we went bought our new house… we have a hill with trees behind the house (neighbors property) and so we have no line of sight for the dish. I need Mega $$$ to pay to cut down the trees… so until that day, I suffer with comcast…. one of the worst companies ever!
So good for you, Sujal… and buy the Dish… it was so worth it… I wish I had it now!
April 6th, 2006 at 7:07 pm
It’s tamar, not me.
April 6th, 2006 at 9:36 pm
i thought it was sujal for a second, too, and my jaw dropped in shock… but was disbelieving enough to double check who wrote it!
April 6th, 2006 at 9:54 pm
What satellite service do you recommend? We are looking at it very seriously. Down with Comcast!
April 7th, 2006 at 8:02 am
Writing in rough terms, since I don’t have the time to snag all my notes.
Customer Lifetime Value = Discounted contribution margins over time - Acquisition costs
Acquisition costs per customer = That promotional disount you got + some proportion of acquisition marketing (advertising, etc)
Discounted contribution margins over time = Some retension measure * SUM (annual marginal revenue - annual marginal cost)/(that year’s discount rate)
Retention measure (this is where I get fuzzy) = some proportion of your likelihood to leave the service. This is directly informed by the quality of competitors available.
In short: a good CRM system will look at the quality of competitors available before daring you to leave. However, they can’t offer you that promo deal too frequently, of else you’ll keep canceling and re-signing-up.
Most CRM systems don’t look at the competitors specifically. They stick to their knitting: how much margin are we willing to give up to keep this customer? How likely are they to stay? (use some average, based on a data-mined model) In the case of Comcast, they ought to have a regionalized model, but I don’t know whether they do.
Assuming they’re dumb: they just aren’t built for that.
Assuming they’re smart: your behavior looks highly price-sensitive (taking low promo rate then threatening to cancel when price returns to normal rate) and that puts you squarely in the “deadbeat” category. They’re OK with losing you because you look like the kind of person they like to lose.
Cell phones have big problems now, due to the very low switching costs and number portability. Whenever they treat you like crap, just remember that their target market is not individual customers, but rather corporate accounts. Just because $100/month feels like a lot to us, compare it to the revenues they get by putting a cell phone on the hip of every garbageman in your town.
…and I thought it was Sujal, too. Then I realized he can’t cancel ESPN or else the Disney Thought Police will send him to re-Ned-ucation.
April 7th, 2006 at 8:58 am
While I am sure I am not their preferred type of customer, the marginal cost of actually providing my service is probably very close to zero, so forgoing any revenue from me seems very silly in the long run. Especially since I am the sort of customer who always pays my bill on time, etc.
I understand new customer acquisition is the “holy grail” of sales, but I think with increased competition in other fields (number portability in cell phones being a prime example), I would think the cable companies might be looking over their shoulder. Obviously not yet, but I suspect there will be more de-regulation in the space, allowing true competition. For example, we have SBC/ATT phone service, but there is another company here that does phone service (not VOIP, but real landline service). We have a very good deal from SBC because of that fact.
April 7th, 2006 at 9:25 am
The marginal cost is low, but not truly zero. They have to put a box at your house, and they attach some opportunity cost of that box, as well as the risk of you never returning it (see customer segmentation, above). There’s definitely some cost accounting attached to the account (your fair share of the depreciation on their capital expenditures). And I don’t know the structure of Comcast’s payments to its content providers. Those that are subscriber-based may add up per user. I don’t know whether that all adds up to $1 or $10 per user, but at some point, they have a decision to make.
You should take issue with my representation of cost accounting. Clearly as a marginal additional customer, you don’t cost any more to the overhead budget. But they’ve got to account for you somehow, which means some kind of cost accounting system, which means some cost associated with your account.
And yes, competition is good for consumers. That’s why these companies lobby so hard to keep their local monopolies.
April 7th, 2006 at 9:42 am
Well we don’t actually have a box (it’s just basic cable and it is just a wire into our basement and I paid $50 for installation 1 year ago), but that isn’t the issue. I suspect they make money at $20/month, but that they want more money.
It isn’t really that big a deal to me. I will miss baseball games and news around the clock, but a lot of what I watch is netowrk TV.
April 7th, 2006 at 11:16 am
As for services - I got fed up with paying for Comcast (over $90 for digital cable in one room with HBO - no DVR, though). So when I moved I switched to Dish Network. Now I’m paying about $50 for 3 rooms, 2 with a DVR (it’s really only 2 boxes - the one with a DVR has two tuners and lines out so you can watch different shows in two rooms). I have the 2nd cheapest channel lineup - America’s 60, I think? (The cheapest one is the family package.) It has all the channels I want (but wouldn’t be right for you if you’re a sports nut). Direct TV is slightly more expensive for the same number of rooms, but the basic package has more channels. If you plan to have the Vice President come visit you, you should probably go with Direct TV. Since Direct TV is partially owned by News Corp, the base package has Fox News. To get Fox News on Dish Network, you have to go up to a higher-cost package, which eliminates the cost savings of Dish Network.
April 7th, 2006 at 11:22 am
You can get the Dish Network Family package plus local channels for $24.99 per month. The cost for America’s 60 plus local channels is $34.99.
April 7th, 2006 at 2:24 pm
Thank you Kim, I am going to check them out. I would love DVR and I’d pay extra for that service. I am not sure Dick will be coming to visit anytime soon, so I don’t need Fox News that badly.
April 7th, 2006 at 3:19 pm
What’s your broadband service, Kim, if you’re on Satellite?
April 7th, 2006 at 3:33 pm
My brother has Dish Network… but one thing to remember if Bram is interested… Direct TV now holds the exclusive NFL package, they don’t share… and I believe they may also own a few other packages… so if that is of interest
Therefore, if there are some movie/athletic packages you may be interested in….make sure they are available via the service you are trying to acquire. Dish Network has great service but no NFL package… so you take the good with the bad as my brother says…
One other thing to consider is “line of site”. You must be able to have a clear shot from the satellite location in your yard to the satellite in the sky….it’s why I no longer have a satellite. Each company has different coordinates… Dish works at my brother’s house.. but he has no line of site for Direct TV and the coordinates aren’t that far apart.
April 7th, 2006 at 3:38 pm
and sorry, Sujal… I thought it was you.
April 7th, 2006 at 5:50 pm
I have Verizon DSL. Of course, I still haven’t hooked it up yet (it’s wireless, and I don’t have a wireless card for my old desktop… so yesterday I ordered a new Dell laptop).
April 7th, 2006 at 6:41 pm
Follow up:
Comcast calls me just now and offers me a promo rate for 6 months of $30/month for digital cable w/150 channels. So I ask what the rate will be after the promotion ends. They “don’t have that information at this time.” WTF?
I’m tempted to call back and take the offer for 6 months and then cancel again.
April 7th, 2006 at 10:57 pm
You should do it, to puninsh them for having idiotic CRM software. Then have them call me
April 9th, 2006 at 2:23 pm
Get the Dish and be done with them!