There are many reasons why Sirius XM Radio's
The satellite radio giant has earlier subscribers on lifetime plans. There are also family discounts, and we can't forget the new tire kickers who aren't yet self-pay customers. However, Sirius XM does have a habit of discounting the service to folks who it thinks will walk away.
It's at this point where you find me on the phone with Sirius XM customer service last night.
When I bought a Ford
This was September, and I knew that the "prevailing" rate would mean the 12% rate hike that I knew would kick in come January. However, I figured I'd ride the discount out. My Ford doesn't have the slick MyFord Touch interface, but it is one of the more than 4 million Ford cars with SYNC -- which essentially allows me to stream smartphone content through my car's audio system.
More importantly, I wanted to see what would happen if I tried to cancel my service before it renews in late March.
Well, the cancellation process seemed to be going smoothly. I was even given a reference number. Wow. They were really going to let me go. The rep then told me to hold because I had to be transferred to a different department to complete the cancellation.
Ah, the retention department.
I didn't put up a stink. I just said that I'm not driving around as much as I need to in order to justify paying $14.49 a month plus the music royalty fee and taxes. Without missing a beat, I was offered another six months at half the price. Done.
What will happen when I call to cancel in September? I'd like to think that Sirius XM tracks these things, and there are only so many retention promotions before they go out on a limb and realize that I'd be willing to pay full price. I have now been discounted twice. Will it be time to shut the spigot this fall?
It's a dicey proposition. Pandora
There is no option as tantalizing as satellite radio, but the poor substitutes are growing in number.
From floors to ceiling
Ideally, we wouldn't be talking about how much lower Sirius XM's average revenue per user is relative to the current combined monthly rate and music royalty fee.
For every discount, there are even more opportunities to go the other way. Sirius XM is starting to see its ad revenue grow again. There are upgrades to be scored when existing subscribers tack on its improving streaming product or the "best of" content available when a Sirius or XM subscriber pays up to hear the premium exclusive content on the other platform.
In time there will also be opportunities to generate revenue from its users through promotional opportunities or by monetizing its website.
In time, Sirius XM will be making far more off me even if it has to offer me a discount to keep me around. With 21.9 million subscribers -- and counting -- the best truly is yet to come.
Don't discount Sirius XM just because it discounts.
Running of the bulls
I remain bullish on Sirius XM's future. It should come as no surprise that I'm promoting the CAPScall initiative for accountability by reiterating my bullish call on Sirius XM for Motley Fool CAPS.
XM Satellite Radio was a Rule Breakers recommendation before the Sirius XM merger. It's now gone from the scorecard, but if you want to discover the newsletter service's next rule-breaking multibagger, a free report reveals all.
The Motley Fool owns shares of Ford Motor. Motley Fool newsletter services have recommended buying shares of Ford Motor. Motley Fool newsletter services have recommended creating a synthetic long position in Ford Motor. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.
Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story, except for Ford. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.