Making Loyal Customers Pay
New Yorker Stacy Cowley recently wrote to complain about her annual renewal battle with Time magazine. It's a "tale of consumer injustice that gets me cranky every year," Cowley said.
The problem, Cowley says, is that when it comes time to renew, loyal subscribers are asked to pay far more than new customers.
Cowley has written about her frustrations on her own blog. Here's the shorthand version. When it came time to renew this year, Cowley visited Time's Web site, which offered a year subscription at $29.95. "That's been the subscription price for at least two or three years," she said. But when Cowley clicked on the "renew" button to log in, she was asked to pay $49.84.
In other words, Cowley said, Time wants "to reward my customer loyalty by charging me $20 more than a new subscriber would pay." Making matters worse, if you go to eBay, you can find an annual subscription to Time for $9.49.
Time Inc. spokeswoman Dawn Bridges said the practice of charging loyal existing customers more for the same product is not new. "Many products use special introductory offers to introduce people to a product. It's a traditional marketing and selling strategy."
It's also a strategy that may alienate longtime customers, as Cowley's experience demonstrates. Cowley could drop her subscription but because reading Time is one of those "few habits from my childhood...impossible to shake off," she doesn't. Instead, every year at renewal time she calls or writes to complain. This year she sent an e-mail. Two days later Time replied:
The offer you mention is targeting new subscribers. The offer enables potential customers to review the magazines at that low rate to decide if they would like to continue with a subscription. Because we value your business, we will be happy to extend your current subscription with that offer, if you like.
This process is not unique to Time. Most other publications seem to follow the same process. And so it's no surprise that the Magazine Publishers of America's statement about introductory pricing is almost identical to Time's: "Introductory pricing is a common marketing practice for many types of businesses and industries. The magazine industry sees introductory subscription pricing as an effective tool to reach out to new customers."
Cowley says the annual renewal process has become so painful she anticipates it as eagerly as a trip to the dentist. It doesn't have to be that way she adds. "Please, Time Inc., can we have a cease fire? I will give you the thing every marketer dreams of, my credit card number and a standing annual-renewal order, if you will please just promise to do one simple thing: Give me your lowest subscription rate. It's been 10 years, and I think we're ready for that kind of commitment. It's time for us to break this cycle of dysfunction."
Will Time change its ways? Maybe, maybe not. Bridges says that with the media landscape changing so dramatically, the company is looking at every aspect of its business practices. "Can I promise this will change?" she asked. No, she answered. But, she quickly added, everything is up for discussion. I guess this is the case where only Time will tell.
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