Question

A productive discussion can be focused around the logic of segmenting customers based on

profitability, how to determine who is profitable, and how to handle communication and

“downgrading” of service to less profitable segments. Students will no doubt have their own personal

examples of times when they have been downgraded, and can discuss their feelings, reactions, and

behavior toward the firm. The idea of potentially needing to “fire” some customers who will never be

profitable is also a good point for discussion

As shown above, Describe a personal example of times when you have been downgraded and can discuss their feelings, reactions, and behavior toward the firm.

Answer 1

One of the key examples of downgrading that we regularly experience (and seldom realize) is when we use trial version of any software. Consider an educational software such as SPSS from IBM. While we can use the trial version for a while, if we do not pay and become a paid customer, the software stops functioning after the trial period. This is a downgrade. This is done because the customers who will not be paying for the software is removed from the list of prospects to accommodate a more prospective customer.

Personally I have faced this many times. However, I do not feel resentment towards the software company that builds this kind of features into their product because I understand their need to make profit. After all, any business is meant to profit and not give away free stuff. Thus being downgraded due to inactivity or not purchasing additional software has not changed my behavior towards these firms.