My wife and I joined a gym a few weeks ago. I signed up for a month to month plan. They tried to get me to sign up for an 18 month contract, "It goes month to month at the end." The whole process got me thinking about how companies try to keep customers, basically by making it inconvenient and/or expensive. Take cell phone companies, as an example.
Most people, to get a good deal on a phone, sign a 2 year agreement. There is an early termination fee if you decide to cancel before the two years is up. Recently, most cell phone companies started prorating the amount, but it is still a big hit. For me, not signing a new contract kept me with my original carrier longer than I would have liked. But at that time, I was going month to month. I didn't want to sign a new contract. Same thing with the gym. I would have joined a lot earlier, but in my experience are very reluctant to do month to month memberships, at least until recently.
In these two cases, and really many more, locking in current customers actually kept new customers out. I'm sure, well, pretty sure anyway, that this is not the intention. The intention is to keep customers, to kepp money, coming in. Unfortunately, businesses have gotten in the habit of imprisoning their customers, instead of just offering a better customer experience. Wow, imagine the idea. Treating your customers right. Listen up Verizon. Yes, I left and got an iPhone. But I didn't have to. I would have loved to stay. But I couldn't see how any of your smart phones actually worked. I went into the Apple store, and I surfed the net, checked e-mail, even made a call, on the iPhone. I knew what it could do. Why don't you have demo phones? Not cardboard cutouts, but real, turned on, phones. I was also mad because of the poor customer service I received. Your people were rude. Truthfully, I expected AT&T to be the same, but so far they are for more pleasant. And I like the rollover minutes.
But AT&T still rolls with the contract. I understand that I am getting a discount on the phone. Here is a fair way to do it. The discount amount is my early termination fee. Say I got $100 off the price of a phone for signing a two year contract. If I leave after one year, I have pay half the discount price, $50. Much more fair, I think, than the arbitrary amount there is now.
But I digress. Back to the main point. Trying to trap your customers really just keeps new customers away. Don't you think the gym would have been more happy to have me as a customer earlier on? When people see a situation that is hard to get out of, they are going to think more about, and maybe even decide against it. You should focus on keeping customers around by being the best gym, or best cell phone company. A superior customer experience is going to keep your customers around. Trying to trap them is just going to make them made.