Irish

Friday 25 July 2014

Customer pays when loyalty blinds them to wily companies

Charlie Weston

Published 29/06/2014|02:30

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Disruptive: The message from the market is that if you don’t move around, you’ll suffer financially

CONSUMERS are being punished for their loyalty. Another way of putting this is that it is easy for companies to make money in this country.

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Massive discounts are being offered by broadband providers, energy companies and mobile phone providers to new customers only.

Then there are a range of new health insurance plans being offered all the time which offer better benefits at much cheaper rates.

The logic of all of this should be that families keep moving around providers, or even switching products offered by their current provider.

Otherwise, companies will reward your loyalty by forcing you to pay up to three times the rate they are prepared to offer new customers.

Getting customers is an expensive business for service providers and product providers. That is why they are prepared to offer huge discounts to new subscribers.

But retaining customers is easy peasy, and partly explains why the cost of living in Ireland is sky-high by European standards.

Research carried out by price comparison site Bonkers.ie shows huge discounts being offered to new customers who sign up for electricity deals with all the main providers. Those loyal non-switchers are offered little or nothing in terms of discounts.

The broadband market is notorious for offering deep discounts in attempts at customer land grabs. Mobile phone operators, with the multitude of plans which are impossible for all but experts to decipher, are also good at reserving good-value deals for new customers while forcing loyal customers to pay over the odds.

Take UPC. It is offering its Horizon Essential bundle of broadband, TV and phone for nothing for six months for those living in Cork and Limerick only. Others pay €73 a month.

The message from the health insurance market has to be that if you do not move around you will suffer financially. There are now close to 300 different plans being offered by the four providers. The new polices tend to be the better value ones.

Your plan may well have gone up by 40 per cent, as some Laya plans have, but there are still many who will not move to another Laya plan, never mind switching to another provider.

Firms exploit the fact that their customers are too busy or too apathetic to switch to another provider.

Research published last year by the National Consumer Agency found that half of consumers had not checked in the past three years whether there was a better package or deal available to them.

That makes life too easy for companies. There is no real need to compete, or even reward loyalty, when half the market can't be bothered to check for better value.

Twitter: @Cweston_Indo

Sunday Indo Business

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