Sam Newman's site, a Consultant at ThoughtWorks

h3. A Happy Customer

I’ve been with my current mobile provider, “Orange”:, for at least seven years now – certainly for as long as I’ve had a phone. Up until recently I’ve been very happy with their service. I’ve had no problem with their coverage, the contracts are good, but most importantly the customer service has always been good.

The first hiccup occured last year, when it came time to renew my contract. I wanted the new (at the time) Sony Ericsson K750i – however virtually every other mobile phone company was making better offers than Orange. In the end I managed to get a trade-in deal for an old phone which just about made up for the difference, however I still ended up worse off than if I’d change provider.

h3. New Year, New Phone

This year, my contract is once again up for renewal. This time around I was after the new Nokia N80, and into the bargin I thought I’d get the kind of contract which would qualify me for the ‘free’ broadband. My current supplier, “Zen Internet”:, has been excellent – however they specialise in providing high-end, no-contention services for business and are a bit overpriced for my occasional home use.

Checking the Orange website, it seemed that I could get the N80 on an 18 month contract worth £30 or more – that would also qualify me for the free broadband offer. I phoned Zen, got my MAC code (used for broadband migration) and phoned Orange this morning.

h3. Problems, problems, problems…

Pretty early into the call, it’s clear that I’m not going to get what I want. When I aget told “With your account history, that phone will cost you £259”. £259? “But the site says £49!”. “Did you read the small print?”. It seems tha the figure quoted on the website is a minimum, and “other circumstances” can change this amount. The print really is very small.

I enquire why my account history as a loyal seven year customer who has never missed a payment means that I have to pay much more for a phone than I would if I jumped ship to another operator. At this point the helpful customer service rep says “I’ll see what she can do”.

h3. Bartering > loyalty

I get transfered to another person – let’s call her Tracey.

“So, you want to cancel your contract because you can get your phone cheaper elsewhere”?

I explain to Tracey that actually I _don’t_ want to cancel my contract. I ask why I can’t get the phone for £49. I’m told:

“That deal is only for new customers”.

I counter:

“So you reward new customers, not your existing ones?”.

I point out that by moving to a new provider I can get a much better deal.

“I don’t want to leave” I explain, “but you’re making it very easy”.

Tracey’s first counter offer is a contract of £25, with the same minutes as the £30 package I looked at, and the phone will only cost me £9.99!

“Great! Does that include the free broadband too?”.

“No sir, you need a contract of £30 or more”.

“OK, so can I have the original £30 contract I wanted?”.

“Yes, but that will mean you’ll have to pay £259 for the handset”.

“Hang on, are you saying that if I pay £25 a month I get the phone for £9.99. But If I pay £30 a month – for the same inclusive minutes – the phone will cost me £259. How does that work?”.

Then there was a pause, and I realised I’d hit paydirt.

“Well, I can offer you a £30 contract with more minutes, and you will qualify for the free broadband too”.

Which of course I accepted.

h3. Rules, rules, rules…

I had been the victim of a rules engine. A few years back I did some work for a credit scoring company. I’d helped on a generic scoring system. You defined custom rules based on customer data, and you offered them a product at the end of it. The product might be a loan at a certain percentage rate, it might be car insurance with a certain premium, or it might be a handset at a certain price.

Orange are clearly using a rule-based system – it may even be the same one. The problem is they score the fact that a customer is new over a loyal customer. The sad reality is, that their scoring system probably isn’t wrong for them. If the rules are wrong, they’ll loose money and they’ll change the scoring. And Orange are not an exception – all mobile phone companies seem to reward new customers over existing ones.

When I get through to Tracy, she may of provided an overide to the automated rules. What is more likely is that Orange only offer the good deals to those people who jump through hoops. Given the choice between loosing me and giving me a good deal, they’ll go for offering me a deal everytime. This in itself is a form of Market Segmentation – Joel has a “good essay(Joel On Software – Camels and Rubber Duckies)”: on this. Orange have sold the expensive handset and crappy contract to the people who cannot be bothered to kick up a fuss. Now they’ve sold a (slightly less) profitable package to someone who is willing to go to some effort.

h3. A sorry – but profitable – state of affairs

Sites like Martin Lewis’ “Money Saving Expert”: show that my experience is far from unique, and Orange is certainly far from being the only company who do not go out of their way to reward loyality. Martin shows that by shopping around and by bartering you can save a fortune. The reality of the current state of the consumer market is that loyal customers are viewed as nothing more than a captive audience who can be used as a cash cow. Those of us who shop around will continue to save money – while those that don’t will continue to get taken advantage of.

So if you dont’ like the deal your being offered, it pays to shop around – or at least threaten to do so.

6 Responses to “Rewarding Customer Loyalty”

  1. Mark Matthews

    I had the same problems with Orange last weekend…
    For the last 2 months I have been trying to get a better deal from them. Nothing. They even messed up and gave me a more expensive tariff.

    So I shopped around and went with O2. After I’d gone into an orange shop and said I was going to leave if they did not help, and the assistant didn’t acre or help at all.
    So into the O2 shop, get a great deal.
    Then I call Orange for a PNC (keep-your-number authorization code), and *THEN* they start offering me the great deals. They guy on the phone was unhelpful, a bit rude, and when I pointed out that they should have been able to offer me the great deals in the shop he gave me a corporate speech about why they couldn’t.
    Very happy with my ace deal from O2. Their loss.

  2. Shaun Krislock

    Customer service is what makes and can spoil the goodwill of any organisation. It should be the foremost motive of the company and so as you say and i too feel after reading your post that Orange support needs a praise and appreciation. 🙂

  3. Martyn Traynor

    Similar experience happened with me a year ago.

    Had been with Orange for 4 years, very happy with them and when my contract came up for renewal I decided I wanted to change phone and get the Nokia 7610. After doing my research I worked out if I changed to a higher Orange contract they’d charge me £80 for the phone but if I was a new customer going for the same contract it’d be £40.

    Went into an Orange shop and tried to find out why as an existing customer I was being punished! They wouldn’t let me have the phone at a lower price so I said fine, I’ll go get the phone from O2. No attempt to do a deal for me, it was only the person on the other end of the line when I rung up to get my PAC code who was trying to keep my custom.

    I’ve been with O2 since and have been happy with them. So I’m one customer Orange have lost thanks to their ridiculous rules!

  4. G Willmott

    I have had a similar experience recently, i have only been with orange for about 15 months , so my 12 month contract was up but i was waiting for the new nokia N95 to come out. It has just now been released so i phone Orange and ask how much it would cost me to upgrade to the N95 on my current contract and they tell me £180. I said ok ill call you back. After researching on thier website i found that i could get a much better tariff for just £5 a month more than i am currently paying and get the N95 for £89.99 as a new customer on thier website.

    So i phoned orange back and said ok, if i change to this new tariff (being the dolphin 35) could i have the phone at the price new customer would get the phone at (89.99). The reply to this was no we cant do that, as upgrades are based on your current contract. So i say ok then it looks like ill cancel this contract and have to start a new one with you, which you will obviosuly incure more admin costs, hang on they say and put me on hold. Then after a 5 min wait , hurray the CS Adviser comes back on the phone and says yes we can put you on the new contract and can give you the N95 for £50 due to your loyalty points.

    Just goes to show if you dont just take thier word for it you can get alot better deals.


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