Are companies wrong to offer incentives to new customers that they don’t offer to existing customers?
I was a fan of the former television critic for the Boston Globe before he stepped down from the position after holding it for 27 years. His take on which shows were worth watching generally matched my own taste. Often, however, he would recommend a show that appeared on a streaming service to which I didn’t subscribe. On more than one occasion, his recommendation to readers who balked at paying for yet another streaming service was that they take advantage of the many free trial offers that often allowed new viewers several months for free. After that, he advised, you could cancel before the fees kicked in.
Alas, I had no interest in keeping track of which services I needed to cancel before the trial was up. Admittedly, there has never been a television show I’ve missed that made me feel as if my life was somehow less complete. But his advice reminded me of a recent question from a reader about whether it was fair that companies offered incentives to new customers that weren’t offered to existing customers.
The reader, whom we’re calling Clare, had been seeing advertisements from her cable television service, her cell phone provider, and other service providers that offered either better rates or attractive product discounts to new subscribers. The offers were far better than what she was receiving as an existing customer. On the one occasion she called her cable provider and waited on hold for several minutes, she was told the offers she saw were indeed not for her.
The only way Clare figured she might get some of these incentives would be to cancel whatever service she’d been getting and then wait to sign up as a new customer. But even if that were permitted, that meant the possibility of living without television service for a spell. It was hardly worth the effort Clare figured, but it was something she found annoying.
Clare wonders if it’s unethical for companies to offer new customers offers they don’t offer to existing customers.
There’s nothing wrong with companies offering incentives to attract new customers as long as they are clear and honest about whatever it is they are offering. Clare herself may have been attracted to her providers initially because of a new customer incentive. Companies do run the risk of annoying existing customers with such offers, but such risks are likely worth it to them to build up their client base. If Clare is annoyed to the point of wanting to search for new service providers, she should do that if such offers are available.
Even if there’s nothing wrong with such offers, there’s also nothing wrong with companies making sure their existing customers are rewarded for their loyalty by offering them incentives to stick around. Might cable television or cell phone providers lock in customers for life if, say, for every 10 years of being a customer they received a break on their bill or even a month free? Perhaps, no matter how unlikely it is for them to exhibit such gratitude.
As long as companies make clear to customers what they are paying for and for how long, they are doing the right thing. Customers should be able to make as informed a decision as possible.
Jeffrey L. Seglin, author of The Simple Art of Business Etiquette: How to Rise to the Top by Playing Nice, is a senior lecturer in public policy and director of the communications program at Harvard's Kennedy School. He is also the administrator of www.jeffreyseglin.com, a blog focused on ethical issues.
Do you have ethical questions that you need to have answered? Send them to jeffreyseglin@gmail.com.
Follow him on Twitter @jseglin.
(c) 2025 JEFFREY L. SEGLIN. Distributed by TRIBUNE CONTENT AGENCY, LLC.
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