Does loyalty pay?

Motor insurance companies served us well at one time, allowing their customers to build up useful no-claims bonuses. Nowadays it is common for companies to hike prices for existing customers, making it necessary to compare premiums annually. If you get a competitive quotation and go back to your existing insurer they may undercut this by a few pounds. I suggest forgoing this small saving and use the opportunity to tell your existing insurer that you are not fond of loyal customers being treated in this way. Take the opportunity to ask them to take you off the mailing list, though that request will probably be ignored.

Companies are out there to make money for their shareholders, so whatever business model they use will be aimed at that objective. Otherwise shareholders will invest elsewhere and the company will fail. However, to be a successful business means attracting and keeping customers. So they have to balance maximising profits with customer satisfaction. Whether we like it or not, we customers have to look after ourselves and that means surveying the market for what are the best deals for us – our objectives are to look after our own interests, and not those of any company; it works both ways.
I do not believe many think they are being “loyal” to a company – why would they unless they have a special relationship with them – family/friends business, or a shareholding perhaps? I think for most they stay through “inertia” – not bothering to look around, or the incentive to move is not sufficiently enticing.
We need to properly assess these introductory offers. You take out new broadband – half price for 6 months. Then perhaps not competitive afterwards. Insurance 30% off for the first year, but then more expensive than your current provider (as I found with house insurance). Is it worth the hassle? Time to negotiate with your current provider. As Which? has reminded us before, haggling pays.

No loyalty does not pay.
I cannot think of any example over my life where being a customer for a prolonged period has resulted in a cheaper service than a new customer gets. Haggling does pay whether that, be as a new customer, threatening to leave or just doing arice comparison. Even this week I managed to reduce by home insurance by over 20%, with my existing supplier. This was by doing a price comparison where they came out the cheapest and I asked them to price match themselves.:-)

I am fascinated by how we think of businesses as an entity in themselves, after all aren’t they staffed by us, customers?
Whilst the employees may not have much choice on the company pricing the directors do. Do those people as customers view loyalty differently. I suspect they are pragmatic, and may I say callous, with possibly a view of look after yourself. Caveat emptor.

Over the years I have seen considerable evidence of smaller companies showing loyalty. For example one person businesses or larger ones where you are usually dealing with the same person will often quote prices that are lower than what they advertise for a job. I design leaflets, posters, booklets and banners for charities. I have to get competitive quotations to make sure we are spending money wisely, even though I know my favoured companies will be cheaper. It is fairly obvious that I am being treated as a loyal customer.

There must be many who are sick of haggling with insurance companies and perhaps business opportunities for companies that do respect loyal customers.

If I was a business then I’d say YES, it helps me milk the cash cows of this world. As a consumer, it’s a big fat NO.