How high a price are older people paying because of loyalty to their suppliers? Over £250 a year according to one recent extended trial.
If you’re of a certain vintage, like me, you’ll remember the execrable “Tell Sid” ads back in 1986 advising the public to cash in on the upcoming privatisation of British Gas. Our electricity, water and telephone utilities duly followed.
Ten years further on, and the energy market was opened up to competition.
Whether or not you think a more open market has been a good thing, we now all need to review our purchasing decisions on a regular basis to get a half decent price. The best deals are invariably offered to new customers… certainly not the loyal ones who stick with a supplier.
From all my years working in the marketing sector, that has always puzzled me because I’m keenly aware of the high cost to a company of “customer churn”. In short, winning new customers costs you money – it’s far better to retain your customer base if you can.
From a consumer’s perspective it can be annoying and time wasting to ensure that you’re always getting the best deal available… even though switching has been made a lot easier in recent years. It’s also important not to compare apples with pears: checking out customer ratings is also well worth doing, as getting a better service is always worth paying a little extra – especially broadband and smartphones.
But there’s not much that can (theoretically) go wrong with your gas or electric supply, so loyalty (while an admirable quality) can be very expensive.
A change is going to come
How expensive? Well a trial project involving 50,000 customers has just ended where energy consumers were offered (by industry regulator Ofgem no less) the chance of saving around £250 a year if they were prepared to switch suppliers, and the switching process was made as simple as it is possible to be. But only a fifth did make the switch.
Tellingly, most of the sample were older consumers who (as marketeers will tell you) are traditionally far more loyal to suppliers than younger generations.
If you apply the same principle to your telephone, broadband, mobile and broadband suppliers, it’s no wonder these companies are prepared to risk not helping loyal customers benefit from better tariffs… why not let them carry on paying top dollar?
It used to be all about some older people not being quite so Internet savvy… and yes, there’s no question that having access to the web makes it far easier to shop around. But you CAN do it by phone: in the trial I mentioned, customers were encouraged to contact price comparison site Energy helpline – and of those who switched, 71% dealt with them by phone. Other comparison sites also have a telephone service.
I’d also add into the “review regularly” mix your house and car insurance – and your roadside rescue service. A year or two ago I found my automatic RAC renewal was over £100 more than if I went online and switched… to the RAC. I phoned to tell them that – but they couldn’t give me the better price over the phone. I had to first leave the RAC and then re-join via the comparison website.
Madness.
Everyone’s circumstances will be different, but the new findings should make all of us (at the very least) relook at our assumptions on how we fund our retirement
Using the RetireEasy LifePlan gives you a head start here, because (with the Classic and Premium versions) you can play out as many different scenarios as you think of, each showing the impact on your finances depending on how many years you expect to live, how much you will need to put aside to fund your care and so on.
That may help you determine whether you should cut back your spending, save more, stay in work for longer than you had planned…or if you could even spend out a little more.
Having oversight and control of your finances will make a big difference to making the very most of your retirement years.
