Shop Around !

" Loyalty " means different things to different people.   In the commercial world, a loyal customer is the person that renews an annual service without question when it becomes due - and is ripe for a profit increase.   It works on the " creatures of habit " syndrome.   The vast majority of people think that because they stick with the same supplier - year after year - they are regarded as a valued customer and that company will bestow on them the best price as a reward for that loyalty.    The exact reverse is usually the outcome.

Very highly paid people devise most companies " marketing strategy " and this calls for the customer base to be constantly expanded.    Attracting new customers requires an incentive - and this is usually either a price drop or the provision of an extra benefit that is not available to existing customers.   In the vast majority of cases, if an existing customer makes an enquiry as an intending new customer, they will receive a better deal.

In particular, this double standard applies across the range of insurance products offering and the renewal of existing policies are at the forefront.    Because a large customer segment renews without question this provides an opportunity to slowly " inflate " the premium and use this to " balance " the lower price obtained by way of incentives offered to new customers.

It is rife in general car insurance policies and has crept into the pricing of compulsory third party insurance needed for annual registration.  The " asking renewal fee " invariably contains an increase on last year, and a few enquiries can find a more competitive price from a competitor seeking an increase in market share.

This same situation exists with house and contents insurance.   The customer who treats each policy renewal as a " new deal " and seeks a range of alternative quotes for the same cover will undoubtedly save money. In most cases, merely querying the renewal price will bring an offer of a new benefit to keep the customer happy.     In this modern world - most terms of trade are " negotiable " !

This " benefits syndrome " even intrudes into the world of finance.   Those with a little money on term deposit with the banks receive a notice when the present term is about to expire which gives them  a seven day period to instruct the bank on the future of these funds.     It advises that should no instruction be forthcoming, the bank will reinvest the capital for the same time period - at a rate appropriate.  The rate quoted in this advice is always lower than can be obtained by direct negotiation with the bank.

It seems that those who mistakenly think that loyalty brings with it rewards are believers in a past age. Today - we live in the era of the " bean counters " - and the unwary are the victims of the relentless chase for added profits.

If there is a mantra for the twenty-first century - " Always shop around " would be appropriate !