Is Stubbornness Blinding Your Judgement?
Why Foxtel's 'our way or leave' response to customers should be a lesson for every small business
As many of you know, I love my sport so it's probably no surprise I've had Foxtel for a long time.
But I only ever wanted the Sports Package to which Foxtel's response for years has been:
Sorry you must buy the base package and then add Sports to it.
Such a frustrating response to me – the customer; but as Kayo was not available, it was the only choice and an expensive one to see all the sports I wanted to watch.
However, Foxtel then decided to 'invest' in a cheaper version of their premium product to open up their customer base, and thus Kayo was born.
And in the beginning, there were teething problems as there always is with a new product so not many people jumped ship.
But with rising costs in all aspects of our lives, Foxtel is now a very expensive choice for products customers don't want. The base Entertainment Package has moved from being an annoyance sports package customers had to have, to a very expensive product they don't want.
Result: Foxtel sports customers are leaving in droves to the IDENTICAL and CHEAPER product in Kayo.
Now you may be thinking, what's this got to do with running my small business, and the answer is a lot.
Foxtel has made 3 key mistakes after they created a cheaper version of their premium Sports Package product, all of which customers are told when they contact Foxtel to cancel their subscription.
3 MISTAKES BY FOXTEL ABOUT CUSTOMER LOYALTY AND RETENTION
MISTAKE #1 Not Offering Existing Customers Just The Sports Package
Many businesses develop a 'cheaper and sometimes less superior' version of their premium products to open up their marketplace, and I agree this can be a good strategy eg we know the big 2 supermarket products are often manufactured at the same plant as the brand names – all that changes is the packaging.
So you would think once Kayo was a viable product in the marketplace, all Foxtel Sports Package customers would have been contacted and offered just the Sports Package option for the same price as Kayo so customers not only received the product they wanted, but remained with Foxtel who may get further business eg purchasing movie rentals, main event fights etc.
Foxtel Response: Ahh No - in order to have the sports channels (ie Kayo), you must also purchase the base Entertainment Package so Foxtel will cost over $65/month versus Kayo $35/month for the same product! The only difference is you can't record sport on Kayo as it's a streaming service.
MISTAKE #2 Not Changing Their Business Model
For years, customers have been asking Foxtel to let them purchase just the channels they wanted and the answer has always been an emphatic no.
Yet the world of watching TV has changed significantly especially after the pandemic, something Foxtel Group's chief technology, operations and product innovation officer Les Wigan acknowledged in
2022 as he discussed how they're investing in the innovation of sports production to make Kayo a viable sports streaming service.
So Foxtel know people are comfortable and prefer streaming versus recording programs but instead of changing their business model to give existing customers exactly what they want, they're actually inviting customers to leave because of the substantial price differential.
And when you say you want to leave, Foxtel tells customers:
Well it's your choice if you want to go to Kayo but you will have streaming issues and can't record shows.
Which is technically true but when there's little or no willingness to keep you as a customer, why stay?
Now there are certainly times when your business needs to let certain customers go – you know the 'problematic' ones who expect more than what is realistic or want more than what they've paid for AND DON'T...
• pay on time
• meet deadlines
• read your emails
• follow your processes
• want to pay more for your services.
BUT when your regular clients who've provided your business with steady cashflow continue to leave in droves simply because you won't change your product offering to meet their needs, then this says to me 'Warning Will Robinson' and I'd be looking at why this is happening, what I could do to halt the exodus and then do I want to do that?
MISTAKE #3 Telling Customers It's Not Possible To Just Have The Channels You Want
It's amazing how the simplest solutions are often ignored by businesses because they don't want to change things.
Foxtel continues to tell customers they can't get just the Sports Package because you have to have the base Entertainment Package first and then add on what you'd like.
So you'd think there'd be a technical issue why it can't be done.
Nope – it's just Foxtel's 'My Way or The Highway' attitude and thinking, and their business model.
Foxtel can turn on and off extra channels at their will – it's the way they entice people to upgrade by suddenly making them appear and be available when customers next turn on their box.
But instead, they'd prefer to frustrate customers and happily let them leave instead of providing a product they want and would pay for at the Kayo monthly price.
As this
article from Signal Mind shows, it's
6 to 7 times more expensive to acquire a new customer than to keep a current one so I can't understand why Foxtel is happy to lose so many customers.
My thinking is because Kayo is a subsidiary of the Foxtel Group, they view it as swings and roundabouts – what they lose with one, they pick up with another. I also believe it's their not so subtle way of reducing the number of boxes they have to make, repair and upgrade because there's none of that maintenance upkeep with a streaming service.
All valid points but is the reputational risk/reward really worth it? Only time will tell.
So....
If you're losing customers like Foxtel, do you have a system in place to actually find out why; or are you happy to let them go with the risk of bad word of mouth feedback from frustrated customers?
Are you also like Foxtel with a dogmatic attitude of 'here's my product/service – take it or leave it'.
Or are you asking customers what they actually want and providing that to them, rather than what you think they want or is easy for you?
And here's my final thought:
Loyalty is an undervalued commodity in business and in life these days so how are you building a loyal community within your small business?
Are you focusing your valuable time and energy on your existing database who already know, trust and have bought from you?
Or are you like too many businesses who offer the world to get new customers at the expense of your loyal customers?
I know which one I encourage my clients to build as they grow their small business... one brick at a time.
Cheers
Tamara
P.S Need some help to REPAIR, RENOVATE or REBUILD your small business?
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