Treat your customers right

Whilst this post relates to insurance policies, it applies to all types of yearly service charges

At home recently,  I’ve had two renewal reminders. I won’t  mention company names, but one was a car breakdown company and one was insurance for plumbing and drainage. The car recovery service had increased in price considerably over the last year or so, despite me being a customer for 17 years and only ever having called them out a few times in those 17 years. I’d located one of the other popular car breakdown companies and they were offering their “new customer” discount which resulted in a massive saving  so we rang up the existing one to cancel, only to be told “Oh, you’ve received our standard renewal reminder form, we can provide you with a better price than that”.

Flip now to the drainage insurance company.  Price increases over recent years have resulted in this “low cost” insurance being £104 a year, so I called  to cancel the service. They looked back over the last couple of years and mentioned that last year it was £85 and the previous year it was £79. They gave no explanation as to the price increases – the house is about 40 years old so the increase from 40 to 41 years shouldn’t make much difference.  On saying I was unlikely to take the insurance with them unless it was something ridiculous like £15, they came back to me with a quote of £50 – no change in policy, no policy excess to pay etc, just instantly reduced by more than 50%.

In both cases, its a “screw your existing customer to the wall” scenario. They know that “most” customers will just accept that the current company is providing a good level of cover for a good price and will renew blindly. Its only when you ring up and start complaining about the price increases that suddenly you find that the “best price” they could offer you is only a “this is what we want to get out of you” price.

Don’t get me wrong, I realise that the business is doing what it thinks can make it the most money but how many more people would renew without question if they received a renewal letter that said “You paid £85 last year, most of our competitors are charging £104 this year and we’ve managed to keep it at £85 for this year with no increases” … or even “its now £83 because you are an existing customer” .  The company gets £85 not £50 and the customer can see they are getting a good deal. Its not all about new customers – its about keeping your existing ones. Or in the case of these two companies, losing a customer  of 17 years and 6 years respectively.

I know business is business and its probably more cost effective to charge £104 and get that from most customers and just have to offer the service at £50 for those who complain about the price but when that customer is annoyed and chooses to go elsewhere, then who’s laughing? It costs far more to get a new customer than it does to keep an existing one and occasionally companies ought to factor that in before they put their prices up.