Tag Archives: insurance

Encourage your customers to desert you … why don’t you?

Last week’s debate on energy costs and the recommendations by Chris Huhne [UK Secretary of State for Energy and Climate Change] for us to switch users really got me mad – why on earth would any sane business encourage its loyal customers to take their business elsewhere. When I’m helping my clients with customer care, I always start out with a recommendation that they work on customer retention.

All the evidence I’ve ever seen says that it costs more to get a new customer than it does to retain an existing one and even more to recruit one who has defected to a rival. Yet the strategy of the major energy providers [aided and abetted by the Energy Secretary] is to penalise loyal customers and reward those who defect.

I’ve just seen exactly the same strategy in play with my car insurance providers – my policy was due for renewal at the weekend. Last year my insurer quoted a renewal premium which was eye-watering! So I visited a price comparison site and I eventually got a deal with a reputable insurer for just over a third of the quoted cost. This year, my insurer’s renewal quote was higher than last year’s premium but the increase was less than I had expected from stories in the press.

I got a reminder from the price comparison site so I submitted a request and got three surprises:

  1. My renewal quote was about 15% over the lowest
  2. The company I was then with offered me a lower priced deal via the price comparison site!
  3. My previous insurer offered the third lowest price [and included an introductory bonus!]

All this with no changes to the conditions, same car, same record, same job etc.

My next surprise was when I phoned my insurer to ask if they would do the renewal at the price I’d obtained over the internet – but they wouldn’t honour the offer, so I’ve got a new insurer now!

So three questions for the insurance and energy companies:

  1. Why don’t you just offer your current customers the best possible deal?
  2. Why do you encourage them to check out your competitors’ offers?
  3. How much does it cost you to process all of these changes?

When I work with customers I recommend that they focus their attention on the “3Rs”:

  • Repeat Business
  • Referrals
  • References

Give it a try! Building customer loyalty works for me and my customers and is the theme of this upcoming conference: Loyalty Beyond Reason

Shouldn’t loyalty work both ways?

It’s coming up to the end of the tax year in UK so banks and other financial institutions are encouraging their customers to take advantage of products with tax breaks.

I got a letter from the Building Society  have been a customer of for approaching 40 years suggesting that I use my ISA [tax-free saving scheme] allowances before the end of the tax year. They highlighted the returns that I am getting on my scheme and enclosed a brochure with details of their current schemes. I was shocked to find that the rate of interest for new customers was almost 6 times that I was getting – so much for loyalty.

Obviously I can transfer but it needs me to take action – surely a customer focused organisation would ensure that their most loyal customers always get the best possible deal. I know I do that for my customers.

It seems to be becoming more prevalent to treat loyal customers badly – the best customers get the worst deal.

I’ve noticed similar issues with:

  • Utilities
  • Communications providers
  • Insurance companies
  • Mobile phone companies

This flies in the face of the advice I give my customers on developing their businesses – focus on the 3Rs:

  1. Repeat Business
  2. Referrals
  3. References

I strongly recommend that you treat your most loyal customers well – especially in the good times: if you want them around in the tough times!

What do you think?