How New Customer Only Deals Burn Your Brand

light bulb burning bright unlike new customer only deals which hurt your brandIn addition to my roles as wife, mother, healer and finder of things in our household, I am also Chief Operations Officer.  Like any good COO, I seek to keep overhead costs down.

So when our electricity bill shot up this winter, I investigated.

Last April I had signed up to get our electricity supplied from Think Energy.  They were less expensive than Eversource, our electricity delivery service, and than most other electricity suppliers.  I had opted for Think Energy’s 10.5 cents per kilowatt 6-month rate.

When the contract ended we were converted to a floating monthly rate.  In November the rate was 9.5 cents per kilowatt.  Even better!  But in December it jumped to 12.1 and in January it hit 13.1.  I no longer liked the way the rate was floating.

Kelly at Think Energy told me that my options were 12.3 for a 6-month contract, 12.6 for a 1-year contract and 13.1 for an 18-month contract.  Meanwhile my research showed that Eversource was now offering a 10.8 cents per kilowatt rate to my town for a 6-month contract.

I cancelled my Think Energy account.  Then on a lark I went to their website and saw this:

Think Energy Offer for 8.7 cents per kilowatt

8.7 cents per kilowatt?  Sign me up!

I called Think Energy back.

But Kesha at Think Energy told me I was not eligible for this rate.  It was for new customers only.

Now we’re back to Eversource.

And I have completely soured on the Think Energy brand.  I don’t trust them because what I see offered on their website is not available to me.  Moreover, the huge discrepancy between the new customer rate and the existing customer rate makes me feel like they value my business less than landing a new customer.

New customer only deals damage your brand several ways:

  1. They signal to new customers that you want to appeal to them based on price.
  2. They alienate current customers who can’t get the same terms they enjoyed as new customers.
  3. They do nothing to build a relationship with the customer based on the brand’s value.
  4. And the kicker, they cost more than other marketing programs because the cost of acquiring a new customer is more than keeping an existing one.

When you invest in building a brand, your goal is to establish a relationship with your customers.  A relationship that includes trust, mutual respect, emotional connection and good will.

If all you do is compete on price, you don’t have a brand.  You have a commodity.

As the owner of a consumer business, what can you do to attract new customers without focusing on price or alienating your existing ones?

  • Sample your product for free. Sampling is a powerful marketing tool for converting prospects because it removes the risk of purchasing something unknown.  That is why food companies often enable you to sample your way through the supermarket.  Food companies know you’ve got food on your mind and are much more likely to buy their product with the taste of it on the tip of your tongue.
  • Create an entry level product. Lower cost entry level products reflect well on your brand as they enable new customers to see how your brand solves their problem and to begin to enjoy the benefits of your solution.  Done well, entry level products build trust in your brand and confidence in your products, laying the groundwork for upselling and repeat business.
  • Structure your promotions to include all your customers. Everyone loves a good deal.  Reward your customers by promoting the deal to them and they may very well share it with their friends and family.  Personal recommendations are another way that prospects look to reduce the risk of trying a new brand.

In the end, it comes down to this:  treat your customers as you would like to be treated.  Wouldn’t you like the best deal available?

I would.  So as household COO, I’ve set a task every 6 months to comparison shop for electricity rates!

P.S. Not convinced that new customer only deals should be banished from your marketing?  Read about my father’s epic battle with the New York Times.  Which he won.

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2 Responses to How New Customer Only Deals Burn Your Brand

  1. Jeremy Bromberg says:

    Interesting post, Evelyn. What if….

    …you tell the potential new client, “the typical price for this good or service is $x, but as an inducement to try us we’ll mark your first use down by [some] percentage.” In this way you are being completely transparent about how the deal will work – unlike Think Energy.

    I also think the sampling approach is good, but at the same time it risks communicating zero value, which may not really motivate trial.

    • Evelyn Starr says:

      Your introductory offer would work fine, but it may also lead to situations where the company loses that x% when it didn’t have to. I disagree that sampling communicates zero value. It is a taste, a preview that eliminates or reduces the uncertainty. In a consulting context it could be an initial consult to see if the parties are compatible or an assessment that precedes a proposal. In the services area, people want to know if they like you and what it would be like to work with you before they sign on. For example, I learned much the contractors we were considering when they came in to look at our space and to talk about how they would approach it.

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