Why Customer Loyalty can be a Trap
Hello Fellow FiftyUp Club Members,
This week I’d like to talk to you about a business expression known as “churn”.
Churn is when a company calculates how many customers it has lost versus how many customers it has gained over a period of time.
It is the bane of many a corporate executive in Australia and is currently at an all-time high.
At our end, we call it switching.
Switching – or at least the preparedness to move providers – is what gives consumers power in their relationships with businesses.
And the number one reason for switching is price, followed by customer service problems.
Recently I have received many emails and comments from you about the difficulty or ease of switching. Let me tell you; the reason it’s at an all-time high is because it has become so much easier to do.
Would you be surprised if I told you a survey of the past 12 months has the top five churners as telephone companies with 19%; mobile phone companies with 17%; electric utilities at 17%; broadband suppliers 15%; and insurance companies at 12%?
And with good reason. With home computers, the internet and sophisticated IT, it’s easier to do than ever before.
For example, with electricity and gas you can complete a switching form online in five minutes! Unfortunately, I must warn you that you are then at the mercy of the electricity networks, who have to do a final meter-read before moving you over and that can take up to two months in the worst cases. But the effort required by you is minimal and can save you hundreds each year.
Switching insurance is easier these days also. Again, you can fill out a form online in minutes or even over the phone in minutes. Sometimes, you then have to call your old provider and cancel … but you don’t physically need to visit your insurer’s offices or branches anymore.
As for your mobile phone, even simpler – you can now port your number and move carriers with the click of a button.
In July 2012, the Federal government made it easier to switch banks, but I am the first to admit that it is still onerous, especially on savings accounts and home loans. But there are brokers (who charge a fee) to make it easier than it’s been in the past.
How do I know all this stuff? I am currently in the process of switching my electricity provider. Just one phone call and I learned my two-year contract comes up on May 27, 2015. My company charges $150 to exit in the first year and just $50 if you exit in the second year, so I am going to wait a week … save a hundred bucks … then click and switch.
Over the longer term, as the father of a young family, I will save a small fortune.
As I said, it’s not as hard as it used to be, doesn’t take as long as it used to, you can do it from home and with our increasing numbers in FiftyUp Club our voice gets louder, we get more powerful, more companies compete for our business or try to resist “churn”, and we get the better deals we deserve.
Before I leave this week I’d like you to know some of our team and I had a lovely meeting with our friends and partners at Macquarie Radio this week, and boy are they onside! In the weeks and months ahead you will hear more about us on radio, and on the 2GB and 2CH websites. Thanks guys, we appreciate your ongoing and dedicated support.
That’s it from me, keep well and keep switching!
Warmest Wishes,
John
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