Saturday, 19 October 2013

Loyal consumers could be losing out to the tune of 4 billion pounds

Companies are having to work very hard to retain their customers and many are very successful in keeping customers loyal to their brand. However, yesterday a marketing report was published that seemed to suggest for some consumers, remaining loyal meant that you could be losing money. Researchers had focused on the price of car insurance and household energy providers and it would seem that by sticking with our favoured provider, we collectively could be losing up to around 4 billion pounds per annum. If this is the case, then the people at Beehive Research were keen to understand why, so these busy bees started speaking with a number of consumers to find out why they were reluctant to switch.

Which Switch group do you come under?

What they found was that around 40% of bill paying adults in the UK know that they could get a better deal elsewhere for car insurance and energy bills, but prefer to remain with the provider they currently use. The research company came up with four different consumer “types” of which the largest group is known as the “conditioned switcher”. This group are very aware of new offers, have little faith in brand names and switching is a price game they are happy to play. The “sceptical loyalists” are the next biggest group, they don’t look for new and better deals because they just don’t have the time, nor the energy I suspect, to hunt down new deals and then go through the rigmarole of changing. They have also, more than likely had a bad experience with a provider, hence their scepticism of brand names.

The next largest group is the “passive loyalists” who account for a fifth of consumers, again not having a lot of time to look for bargains and don’t have a lot of awareness about other offers available because they want loyalty from their trusted provider. Last of all are what Beehive class as “loyal opportunity switchers”. This group are quite bemused by all the different switching offers and can easily be convinced to stay loyal to their trusted provider. A brand that makes them happy might be able to keep their custom.

Loyal customers need to be rewarded

It has taken a research company a lot of time, and I suspect funding, to come up with the following statement that we at iRateiSlate have used as our mantra for some time now. Managing Director Paul Kavanagh at Beehive said of consumers,” they want to be treated well and have relationships with companies they trust.” Brands can make people stay or switch, but it is the customer service level that backs up that brand that will keep people loyal. That and the feeling that consumers are being rewarded for their loyalty. It will be interesting over the coming months to see what approach the energy companies take, because if they want to retain loyal customers whilst putting the price up, then we are going to have to be treated a whole lot better than we are at present.

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