Mobile renewals - Are the companies nuts?

[Deleted User]

Both my wife and myself mobile contracts coming to an end.

In both cases, provider has offered a luke warm phone upgrade deal. In my case, Orange wanted £36 a month, plus £30 for the phone. I phoned them to get PAC code and told them I could phone for free and same tariff from t-mobile (which uses orange network) for £26 a month. So I wait 25 days give t-mobile my PAC code and off we go. Result.

Surprisingly, they said they couldn't come close to this.

Same with wife. She was with O2. They wanted £100 for the phone. Ended up cancelling, getting new phone and starting a new O2 contract with phone for free and £3 month cheaper.

Do mobile providers think we're all stupid? Or do they rely on people stupidity or think they cant be bothered?

latecomer

They rely on retaining those people that make them money and not caring so much about those who dont. Its more valuable to them to get a new customer paying full rate than to retain someone who isn't that profitable.

Buzby

Do they think the customer is stupid?

Let's see -

1. We'll tie you down to a 24 month contract because you don't look at anything but the upfront cost, which is often nil - never the total cost of ownership.

2. If for any reason, you are unable to make any payment we will insist in doing so, and will report any lateness to a credit reference bureau, even though we have no plans to offer you credit under the CCA.

3. Assuming you do not complete the minimum term of the contract, and refuse to pay all outstanding balances, we will default your credit file as a warning to other companies, irrespective of your personal circumstances or the reasons for non payment.

4. We will never take you to court for any non-payment. We will, however sell on the debt to a third party outfit who has the resources to harass you relentlessly for up to 6 years at all numbers and addresses we hold for you.

5. Even if you have been with us for many years, we will not show you any loyalty for being a good customer, and will always give better deals through cashback schemes for a new connection that passes our credit check.

6. Unless you use every little bit of your monthly allowance for calls, texts and data it will evaporate and not roll forward to the next month. 80% of out customers do not use their allowances, and we thank them profusely for adding even more money to our bottom line profitability.

7. Unless you give us the right to take your money for as much and as often as we require by the Direct Debit scheme, we will reserve the right to refuse to have you as a customer, or, if this gets us into trouble, we'll charge you an additional fee to make it worth our while.

I think the answer to that question is 'Yes'.

visidigi

Its also because people generally want to keep their number, and arent overly familiar with the whole switch to PAYG and back process.

People value the number over the cost and lets face it, if they can get more money for same thing, why not?

buscape

[quote=[Deleted User];discussion/4082617]In both cases, provider has offered a luke warm phone upgrade deal. In my case, Orange wanted £36 a month, plus £30 for the phone. I phoned them to get PAC code and told them I could phone for free and same tariff from t-mobile (which uses orange network) for £26 a month. So I wait 25 days give t-mobile my PAC code and off we go. Result.

Surprisingly, they said they couldn't come close to this.[/QUOTE]The parent company, Everything Everywhere, are still getting the money which is probably why they didn't care.

Same with wife. She was with O2. They wanted £100 for the phone. Ended up cancelling, getting new phone and starting a new O2 contract with phone for free and £3 month cheaper.

I bet it would have cost O2 more than the £72 your saving (assuming it's a 24 month contract) to uprgrade your wife which might explain why they weren't willing to budge.

Do mobile providers think we're all stupid? Or do they rely on people stupidity or think they cant be bothered?

All three.

esuhl

They just look at the statistics. Customers typically don't leave when their contracted period ends and are too easily persuaded to "upgrade" to an uncompetitive deal by a smooth-talking someone from the retentions/upgrade department.

So new customers are worth getting -- there's a good chance they'll spend much more money with you that they were expecting... So "new" customers always get the best deals. You just have to play the game...

Guys_Dad

esuhl wrote: »

They just look at the statistics. Customers typically don't leave when their contracted period ends and are too easily persuaded to "upgrade" to an uncompetitive deal by a smooth-talking someone from the retentions/upgrade department.

So new customers are worth getting -- there's a good chance they'll spend much more money with you that they were expecting... So "new" customers always get the best deals. You just have to play the game...

The big flaw in that argument is, of course, a "new" customer to the network is statistically likely to be a leaver from another network. Only first timers are really "new" customers.

Personally, I have never seen the economic sense in paying a 3rd party like CPW/P4U a huge commission for churned customers rather than making existing customers a better offer than CPW/P4U could make.

I am sim-only and I have always had a good deal from Vodafone at renewal time. The 3rd party resellers don't really offer me anything comparable, if at all.

So I agree with the OIP's sentiments. :beer:

esuhl

Guys_Dad wrote: »

The big flaw in that argument is, of course, a "new" customer to the network is statistically likely to be a leaver from another network. Only first timers are really "new" customers.

I don't think it matters to the networks whether the customer has never had a SIM card before or just isn't a customer with them at present. In either case they're not getting any money from them! If they can convert this person into a "new" customer (note the inverted commas), then it's more profit for them.

I don't think it's a flawed argument, because it seems to work! If customers continue beyond their minimum contracted period, or negotiate an uncompetitive deal because they can't be bothered to change networks (or just take whatever they're given without shopping around), then you don't need many people to do this to generate a significant additional revenue.

Even if most people cancel at the earliest opportunity and always move to the most cost-effective plan, some won't. It's not a flawed system if it generates more profit for the networks than if they gave better deals (and thus earned less profit) to existing customers.

Guys_Dad

esuhl wrote: »

Even if most people cancel at the earliest opportunity and always move to the most cost-effective plan, some won't. It's not a flawed system if it generates more profit for the networks than if they gave better deals (and thus earned less profit) to existing customers.

So you are saying that it is more cost-effective to pay a 3rd party a commission - and a decent one looking at the cost and profits of a company like CPW - than giving an existing customer a smaller discount on their bundle?

That's economics I don't understand, but, as you say, it seems to work.

[Deleted User]

visidigi wrote: »

Its also because people generally want to keep their number, and arent overly familiar with the whole switch to PAYG and back process.

People value the number over the cost and lets face it, if they can get more money for same thing, why not?

But its easy to get a PAC code. They guy knew I knew this but still wouldnt budge.

[Deleted User]

esuhl wrote: »

They just look at the statistics. Customers typically don't leave when their contracted period ends and are too easily persuaded to "upgrade" to an uncompetitive deal by a smooth-talking someone from the retentions/upgrade department.

So new customers are worth getting -- there's a good chance they'll spend much more money with you that they were expecting... So "new" customers always get the best deals. You just have to play the game...

I guess people must be stupid then.....

Not me. If I dont get a good deal to renew at the end I leave EVERY time.