I love reading about the broadband industry these days. Articles about how Comcast and Time Warner Cable are pushing for home broadband caps just tickle me to death. This gets me to thinking about how you treat your highest volume but lowest margin customers (because that’s what high data users are to Comcast, et al).
1. Treat them as if they are a burden that you don’t want to support.
This is the Comcast way. High usage customers are a drain on their rightful profits and should be forced to change their behavior or simply pay more. Why can’t every customer who uses broadband internet simply check their email 3 times a day and nothing more? Margins would go WAY up!
2. Treat them as if they are your future.
This is the Facebook way. Treat your biggest users as if they are the future of your company and your job is to keep them happiest. It costs Facebook WAY more money to support their addicts that post 10k times a day but you don’t see them complaining. These are the evangelists, the ones that bring in other users, the ones that give the company an idea on where they should be innovating.
So given these two ways, why don’t Comcast and many other businesses like them go down route 2?
Route 2 is hard. It involves structuring your company to think about the future and not the past. It involves sacrificing some profits and margin today for bigger profits and margins tomorrow. Route 2 involves partnering with your customers and not just treating them as currency transferers. Their money does not rightly belong to you, you must earn it.
Route 1 is easy to fall into. Even the best companies in the world get caught up in it – even innovative goliaths like Apple. Until they released the iPhone 6 they resolutely refused to serve customers desiring a larger phone screen. It took years for them to finally cave and move back to Route 2.
Wall Street and Executive Compensation is part of the problem. Short term profits and revenues are valued above and beyond the 5 year plan – whether business is currently good or bad; whether trends are currently in your favor or not. Amazon, Google, and Apple have figured out that long-term views can pay off – even on Wall Street – but you have to train investors to think differently about your company. It’s very hard.
But hard is not an excuse any consumer should accept because a company they do business with doesn’t think they are a profitable enough transaction.