& Roo

the well-lived life is not a spectator sport

Verizon - Sacrificing the War To Win the Battle

Verizon FiOS offers less expensive packages to new customers than existing ones.  It’s a standard practice, but it's short-sighted.

As a marketer, I get the customer acquisition and retention game. You need to do something special to attract new customers. Once they are customers, as long as you don’t piss them off too much (and your rates are close enough to competitors), they’ll stick with you because people hate change and the efforts/hurdles it entails.

They acquired me in 2010 with high speeds and quality service. What has Verizon done to show me they value me as a customer since? They send me a magazine once a month with the latest movies being shown. I never read it. 

I've been a FiOS customer for 4 years. It was a must-have for any place I lived since I worked for Boxee, an Internet TV startup. After leaving full-time work to go into business for myself last year, I was looking for ways to cut back on my monthly bills. Internet & Pay TV was an obvious place to start since my bill was $135 / month. 

I started researching my options. I wanted 15+Mbps speeds for gaming / Netflix / Vudu / Amazon, and didn’t care about TV. Time Warner had a special for $45/month. Verizon also had an offer for $50/month. 

I immediately noticed the Internet on its own was more expensive than Internet plus Pay TV.

A + B < A
The typical "if you buy A and B together we'll give you a 25% discount on both" is fairly common. In this case it was "buy A (Internet) AND get a discount if you take B (Local TV + HBO) for free". This doesn't seem to make sense, but obviously there’s mechanics behind the scenes at play. I assume Verizon (NYSE: VZ) is attempting to maintain the perception of Pay TV subscriber rates/growth for Wall St., and is willing to cannibalize Internet margins to do so. More subscribers also means more leverage to negotiate rates with content providers. 

Unfortunately the monthly rates they offered me are only available to new subscribers. So I called up threatening to leave. They offered me $25 off my bill for a year. I was currently getting 15 Mbps + extended Cable + Showtime. Okay, but not good enough. For even less money I could get almost double the Internet speeds (25Mbps) and HBO (Tyrion Lannister & Erlich Bachmann every Sunday this Spring, JOY!).

They would not offer me the deal they give random strangers who haven’t been paying their bill on time each month for the past 4 years.

So I canceled my account. I signed up in my girlfriend’s name. I returned all the equipment they had given me via UPS. I set up brand new equipment they shipped out to me. I logged into her account and changed all the contact details to me. I set up an automatic bill pay again.
All in, it took me about 5-6 hours to get the whole thing done. 

Yes. It saved me $300+ over the next year.  That equates to about $50 / hour tax free that I made. Even better for you, reader, know that if you cancel your Verizon account, they seemingly automatically offer you $25 off your monthly premium for the next year. That’s $300 for free. And if you do that, then you won’t have to do any of the returning / installing I did. 

At the end of the day though, it was my first negative experience with the FiOS brand. My first indication that Verizon cares more about my girlfriend (a new customer) than they do about me (an old customer).

There’s an opportunity for a major telco brand to start talking about loyalty as something they care about. Retail stores, movie theaters, even your grocer has a loyalty program that rewards you for shopping there. Maybe it’s time telco’s took notice and rewarded long-standing customers with tiered billing that declines over time? Or maybe a simple monthly credit every now and then to say thanks for being a valued customer. 

As it stands, I’m on a new plan for $50 /month. My perception of FiOS has gone from a "must-have" to “good.” I’m telling friends how to “cheat” Verizon and save $25 / month. But if the customer service department had said, “Yes, Mr. Kippen. You’ve been with us for 4 years and so we’d be happy to offer that plan.” then I’d be on social media telling you how much I continue to love them and how they take care of loyal customers.

I wonder what that’s worth to them?