Being frugal and smart helps your budget and bottom line but guess what… many companies you shop or do business with don’t want or need you anymore.
Back in the day, many businesses used to beg, fight, and plead to keep every single customer…not anymore.
We’re Making More Money Than Ever
Recently I have done business with three companies and they all said the same thing when I brought up their loss in customers: we’re making more money than ever! Wait, what is going on? Why are companies not sad about their customer base decreasing?
Frugal Folks Are Not Ideal Customers
Have you cut the cord? I have myself…but many cable and satellite companies are making more money despite losses in subscribers because they aren’t losing many of their ideal customers: “the premiums.”
See cable isn’t making much money off of folks who sign up for basic packages for $30-50 a month, however, those that pay for premium packages and premium channels make a ton of money. They keep basic packages and offer free channels to entice you to bigger packages. If you want to stay there or leave then you are not ideal.
You can spend a lot of time and effort to make a little bit of money with customers that may haggle with you on price or jump back and forth between competitors.
Or you can concentrate your time and effort and customer service on people that want premium experiences. These premium folks make the companies much more money. I know in my business you almost always end up putting more time and effort into small accounts than bigger accounts.
When I cut the cord the satellite company asked what we were going to do and I said we were going with Netflix and apps and they said, “that’s nice.” No fight, I thought it was really unusual. Not one counteroffer, now I get it.
Those that cord shave are more worrisome to companies. Cable and satellite will let your basic package folks go, but those that are premiums and downgrade…that is a problem along with “cord nevers.”
Empty Football & Basketball Stadiums
If you watch some sporting events on TV you may notice a lot more open seats in the stands lately. With HDTVs and rising ticket, parking, and concession prices many people are staying home.
I advertise with a local college football team and an NBA team. The local football team is down 10,000 people in attendance this season and I told them I’m worried about their trend in attendance. Why would I continue to pay the high price of advertising when you have fewer customers? They told me that just because they have fewer customers doesn’t mean they are losing money, in fact, they are making more than ever…although some revenue has come from increased TV contracts.
Both the football and basketball team raised their prices again and some folks didn’t come back same day walk up tickets are down…but their premium or season ticket holders are better than ever and paying more. They are offering a better experience (free luxury dinners each game, photos and autographs with players, team trips, & more) for these fans that are willing to pay.
They said, “who do you want to advertise to? Are you targeting people in the nose bleeds or people with money…because the people with real money are still showing up to the games…as an advertiser you are targeting the ideal customer: the business owners, decision-makers, and influential people.” They’re absolutely right. However many of us know that frugal people can be rich too and just choose not to live the lifestyle.
Lower Prices Are Hitting Companies Hard
Fast food restaurants have been competing for dollar menus and those that own franchises hate those menus. Many end up losing money…and the problem is they have built up a customer base that has been dependent on lower prices.
Big box stores fought for a long time to be the cheapest or lowest price, but are finding that the loss in profits and hassle over customers complaining about coupons and price matching isn’t always worth the time and effort.
Companies Aren’t Going To Cater To Frugal
Don’t be surprised that you don’t get the best customer service anymore if you are “frugal.” Premium customers are the target nowadays. Cheaper products to cheaper customers just aren’t ideal for many companies anymore. You aren’t making them money!
That doesn’t mean you should change your shopping or spending habits. You just need to realize that companies just aren’t going to cry if you leave anymore…there are customers out there that are willing to pay. Is it a long-term viable strategy for companies? Probably not.
However, most are thinking for the short term so they can keep shareholders happy with increased revenue. It’s the new world of business.