By Peter Kelly on 23 January 2018
Have you ever tried to change your bank, electricity supplier or phone/internet provider?
Why is it just so hard?
A couple of years back I heard a theory that banks aspire to have multiple relationships with their customers. They work on the philosophy that the more relationships (i.e. accounts) a person has with them, the harder it is for customers to change. Apparently the optimal number is four.
That is why banks are always wanting to upsell new accounts, products and services to their customers.
And four accounts is not a lot. Considering a savings account, a ‘high interest’ account (that is a bit of a misnomer in today’s low interest environment), a credit card, a mortgage or personal loan, insurance policy or a share trading account - the number of ‘touch points’ add up very quickly.
Apparently, the theory is that if you have four relationships, most people simply find it too difficult to change. The same applies to other service providers, although I am not sure we are likely to have multiple services with our electricity supplier. Perhaps this is why so many single product suppliers are looking to offer other services.
Of course, we do have multiple relationships with our phone company.
We have our home phone (anyone still have one of those?), a couple of mobile service contracts, internet, and probably a streaming service for movies and the like.
So, all service providers are following a similar business model. Bulk up as many services as possible and customers become very ‘sticky’.
The longer we remain with our supplier or bank, the more we get taken for granted.
Have you noticed your current supplier advertising sweeter deals to attract new customers?
It might be a higher ‘honeymoon’ interest rate, an extra monthly data allowance, a magazine subscription, or something like that. As good as these deals are, they are generally not available to existing customers. Surely it is the current customers that should be rewarded first for their loyalty
I was recently reading an article on how existing customers can get a better deal from their service providers. You simply have to ask, and be persistent.
A year or so back, I called up my phone/internet provider and asked if I was still under a contract with them. They suspected I was looking to move and without so much as a whimper on my part, they knocked $15 per month off my internet bill. That discount would apply for a year at which time they said I just need to call and they would extend it for another year.
Guess what… I didn’t call them - so now I pay full price and get cranky about it. I only have myself to blame. Apathy is hard to beat!
So where does that leave us?
As consumers, we need to:
- Be aware of the tactics our bank and other suppliers use to make it difficult for us to move.
- Understand exactly what we are getting for our hard earned money.
- Don’t be afraid to ask for a better deal – remember it is far cheaper for a provider to give us a better deal than it is for to find a new customer to replace us
- If you do decide to change banks or other suppliers, have the resolve to persevere with the obstacles and bureaucracy they will put in our way and, in the words of Nike, ‘just do it!’
What are your experiences with changing service providers? Feel free to share them in the comments below. We would love to hear from you.