Commentary

Study: Subscription Discounts For Delivery Failures Can Backfire

Newspaper subscribers who receive a temporary price cut for a failed delivery are less likely to renew their subscription later, a study found.

That’s because consumers may end up feeling cheated, instead of rewarded by the discount, according to a report by lead author Vamsi Kanuri, an assistant professor of marketing at Notre Dame’s Mendoza College of Business.

“If a firm is able to delight a customer at the point of service failure, the customer is likely to be more satisfied than under normal conditions,” Kanuri stated. “How the firm chooses to delight its customers can make all the difference.”

A better strategy is to offer discounts on renewals, extend or upgrade an existing subscription or regularly take the opportunity to remind customers of what the “full” subscription price is, the study said.

Kamuri and Michelle Andrews, an assistant professor of marketing at Emory University’s Goizueta Business School, gathered data on about 7,000 renewal decisions of readers who threatened to cancel their subscriptions from an unnamed big-city newspaper.

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The data cover 10 delivery failures frequently experienced by customers, including late delivery, wrong newspaper delivered, missed delivery, newspaper delivered to the wrong location and property damage during delivery.

The researchers also looked at the demographic data about subscribers, household income and whether they had threatened to quit before.

Long-term subscribers weren’t more likely to renew their subscription at full price, possibly indicating the discounted price became a negative reference point, the study said.

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