Don't mistake customer apathy for loyalty

13 Jan 2014

As featured on TM Forum's the Insider blog.

If you think telcos are bearing all the brunt of press attacks about bill shock and ripping customers off, think again. During the lean news period around Christmas one journalist in Australia let fly after he realised just how much his ‘laziness’ had cost him with regard to his power supplier. But he didn’t stop there.

Michael Pascoe, one of the countries leading financial writers, stated that, “the major electricity and gas suppliers make vast amounts of money by relying on customers' inertia, the tendency to let bills come and go and not do anything other than pay them, to not climb that insurmountable wall of inaction to seek a better price. So much for all the talk of competitive markets when most of us are mugs.”

When Mr Pascoe took a closer look at what he was paying and what was on offer in his deregulated market he discovered, to his shock, that he could have been saving 17% of his bills simply by switching suppliers. “How angry do you have to be with your energy supplier to refuse a 17% discount? As angry as you get when you realize you’ve been overcharged for years, treated with contempt, taken for a ride, ripped off and generally played for a mug. And that’s probably what they’re doing to you too,” he wrote.

This triggered a series of events you can read about in his article that started him questioning other suppliers he was dealing with, including his bank and the ‘not so obvious’ fees they were charging down to transaction level. But it was the utility companies that he was aiming squarely at.
As we know only too well, he wrote that “one of the most basic laws of business is that an existing customer is more valuable than a new one as it’s much more expensive to acquire that new customer than it is to keep the existing one.”

His easy solution was to utilize the services of a comparison site that allows the customer to enter some basic details from their bill and by using some clever software it goes away and finds the best deals applicable to their usage patterns, location, etc. These have been around in the telecom industry for years but many proactive CSPs now provide a similar service to their own customers, not to suggest competitor products, but other tariffs they have in the bag.

Whilst it was great to see we were spared, it did highlight just how easy it is for customers to switch. The article supports the findings of recent Oracle research that found apathy, not loyalty, was the main reason customers hung about.

Clever marketing people should see this as a fantastic avenue to reinforce customer retention, simply by addressing this apathy. By proactively using all that fantastic ‘big data’ now at hand, and understanding clearly the limitations and strengths of existing billing and charging systems, they could create personalized tariffs specifically targeting customers who, for years, have done nothing more than pay their bills. He managed to pull over 110 comments from equally disgruntled consumers.

Those same marketing people keep shooting out fantastic offers in the media ‘for new customers only’ and making ‘old customers’ feel a bit left out. If Mr Pascoe is a ‘normal’ example of an apathetic customer that has been ignored for years, and we can see the radical action he took when he realized, even naming names, then CSPs will need to be far more proactive.

The good news is, somebody else is getting the attention for a change so maybe we are already on the way.

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