Loyal customers are tired of being treated like second-class citizens. They want some respect.

Amy Conwell of Natick has watched with frustration as her gym and her heating oil company have offered steep discounts or freebies to new customers while all but ignoring her.

"It forces the savvy consumer to constantly change companies every year or two," she said. "Their practices are really just bad business. If anyone should receive a discount, it's long-term customers."

Research on the subject indicates Conwell may have a point. The pervasive corporate practice of lowering prices for new customers to get them to try a product or service may end up doing a company more harm than good over the long run.

A study released late last year by researchers at the University of Michigan Business School found that price promotions targeted at "switchers" have the side-effect of making the company's loyal customers feel betrayed. The more often loyal customers become aware of promotions targeted at switchers, the study found, the more likely they are to switch, even if they have nothing to gain from it.

Corporate America's costly preoccupation with winning over new customers tends to overshadow the much larger financial benefits of keeping existing customers happy, said Frederick F. Reichheld, a fellow at Bain & Co. in Boston and the author of "The Loyalty Effect" and "Loyalty Rules."

All too often, Reichheld said, companies get customers in the door and then try to pump them dry. He said "loyalty leaders" like State Farm Insurance, Lexus, eBay, and Vanguard find a way to reward their loyal customers and turn them into an adjunct sales force.

When he hears executives lament that consumers today are no longer loyal to companies, the executives themselves are usually to blame, Reichheld said.
"Consumers have been trained that being loyal is being stupid," he said. "If you're loyal as a customer, chances are you'll be abused."

Many customers apparently feel that way. I asked readers in last week's column what they thought about the practice of offering discounts to new customers instead of existing ones, and they responded with a torrent of examples that angered them.

Bill O'Neil was annoyed by retailers who offer on-the-spot discounts to customers who open a charge card account but nothing to existing cardholders. Robert S. Levine, a DirecTV customer for five years who recently added a second receiver, was angry that he couldn't avail himself of the same equipment promotions available to new customers. Jim Barletta was miffed at FleetBoston Financial for offering $25 to customers to try its online bill-paying service while ignoring existing users.

"I disagree with the practice of rewarding the fickle and penalizing the loyal customer," said Nancy Burke of Waltham, whose beef was with heating oil companies. "While it is understandable that companies want to encourage new business, they should also make it a practice to let their loyal customers know how much they appreciate repeat business and reward it as well. To coin a phrase, a bird in the hand is worth two in the bush."

Of 46 e-mails and calls I received, 29 focused on The Boston Globe. Like most subscription publications, the Globe regularly offers new subscribers special discounts not available to existing subscribers.

"I definitely feel penalized every time I see a Globe home delivery promotion followed by the words `for new customers only,'" said Mary Husen, who said she has been a subscriber since the 1960s. "I keep waiting for one `for loyal customers only.'"

Robin Abbott was one of several Globe readers who said they regularly start and stop delivery or use the threat of stopping delivery to continue receiving a discount targeted at new customers. "I do get tired of playing the game," she said.

Yasmin Namini, senior vice president of circulation at the Globe, said discounts are a common practice in the publishing industry because they succeed in boosting subscriptions. She said the Globe has no plans to discontinue the promotions.

But Namini acknowledged the practice can irritate loyal subscribers and said the newspaper needs to do a better job of making existing customers feel valued. "We absolutely need to figure out how to reward and reinforce loyalty," she said.

Other companies expressed similar sentiments. "Customer loyalty is critical to our long-term success, and we are continually seeking new and creative ways to build and enhance it," said Fleet spokesman James Schepker.
DirecTV spokesman Bob Marsocci said the company began focusing late last year on ways to reward loyal customers, much as airlines offer special perks to frequent fliers.

"It costs us $525 to get a customer. We want to keep that customer as happy as possible," he said.

Stop & Shop apology
Last week's report about Stop & Shop's failure to cut the price of Tide HE when the product was downsized by the manufacturer brought a belated mea culpa from the supermarket chain.

Faith Weiner, the company's spokeswoman, blamed the pricing problem on "communication breakdowns between Stop & Shop and Procter & Gamble, which prevented us from following established procedures."

Procter & Gamble downsized its Tide for high-efficiency washers from 125 to 100 ounces and lowered the wholesale price in late April, but Stop & Shop kept its retail price at $12.99 at most of its Massachusetts stores through May 25.

Weiner said customers with concerns about being overcharged should call Stop & Shop customer service at 800-767-7772.