Capturing Hearts, One Upgrade at a Time (New York Times)
Marketers face a difficult task when introducing products that are considered upgrades of existing products. The key decision confronting these marketers is what to do about a potentially large percentage of customers who already own an older version of the product. To drive higher sales, many marketers maintain the mindset that existing customers must purchase the new product if they want the latest features. They take the position that new is new and if customers want the new stuff they need to pay to upgrade to the new product.
But, other companies have learned it is not a good idea to upset existing customers by forcing them to pay the full purchase price for a product upgrade. These companies know continued customer service is important for existing customers since these customers may someday want to purchase new products. To keep existing customers happy, marketers need to look for ways to let existing customers know they are not being forgotten once an upgraded product is marketed.
The high-tech industry provides an excellent example of how companies can strengthen their relationships with existing customers when the company rolls out product upgrades. One way this is done is to offer purchasers protection in case a product upgrade occurs within a certain period of time. For instance, the marketer can offer existing customers heavy discounts (and possibly free product) if a product upgrade happens within one year from the date of purchase. Such methods are a way of reassuring the customer that their original purchase decision was not a mistake in timing.
As discussed in this story, companies whose products run on software, such as smartphones, video games, and computers, are finding they can build more loyalty among their existing customers by offering free upgrades to the latest software even though the software is primarily intended to create interest in the latest hardware product. In this way, existing customers continue to feel attached to the brand even though they do not have the latest hardware.
Suddenly, that old phone could run an application in the background while another app was being used, apps could be organized into folders, and users gained access to Apple’s new electronic bookstore. Without having to spend a dime, people got what was essentially a brand new phone, one that could do nearly everything the newer model could do.
How can companies outside the high-tech industry keep their existing customers happy once an upgraded product is introduced?
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