Big companies often find great ways to aggravate their customers, and cell phone giant Sprint proves the point. John Wall of the Ronin Marketing blog posted a rant about Sprint’s advertising for their Centro Palm smartphone, Screw Your Customers. Wall was understandably miffed when he found out that the $99 advertised price for the phone applied only to new customers, and that as an existing four-phone Sprint customer, he would have to pay $250 for the Centro. Beyond exacting what appears to be a penalty for customer loyalty, Sprint has committed a second sin of the neuromarketing variety.
Sprint’s second transgression is ratcheting up the “paying pain” for their customers. This is all too common, as we chronicled in Penalty Pain: How to Make Your Customers Hate You. Neuroeconomics research tells us that paying money for things activates the pain center in our brain, and that this effect is increased if the price is perceived to be unfair. If you expect a cup of coffee to cost less than a couple of dollars, and you get charged five, buying pain kicks in.
So what does a Centro smartphone cost? What’s fair? I wouldn’t know – I just paid $299 for an AT&T Tilt… and I’ve seen smartphones selling for $500 and more. It’s likely that a $250 price might seem fair enough to me, based on my unfamiliarity with the Centro and the wide variety of smartphone price points. But wait – if Sprint tells me the phone sells for $99 with their advertising, now I know what’s fair – a hundred bucks or so. Charge me two and a half times that, and I’m going to feel the pain.
That Sprint customers will be upset by this marketing strategy should be no surprise. First, they establish a value for the phone by advertising a $99 price. Then, they tell existing customers that the real price is $250 – ouch! Finally, they rub salt in the wound by making it clear that the only reason the price is that high is because they are loyal customers. Wouldn’t it be fun to have a Sprint customer in an fMRI machine while they have THAT conversation?