Have We Become Suckers as Consumers?
I recently posted on the increasing competitiveness of high-interest rate savings accounts this summer. As reported elsewhere, HSBC has entered into the fray with a 5% account but with one caveat- it only relates to new account holders. Existing account-holders continue to receive the lower stated rates (3.5% at HSBC). Yes, loyalty clearly does not pay. As
One of the marketing lessons that every entrepreneur/owner-manager learns is that it takes 4-5 times more money to find a new client than to keep an existing one. Thus, it is counter-institutive business sense for HSBC to offer a promotion that implicitly makes existing customers feel like they are second class citizens (as a side-note, the fact that interest rates keep increasing in high interest savings accounts means that money is increasingly becoming more expensive to borrow).
Wouldn’t the smarter promotion be to offer higher interest rates to existing account holders who hold a minimum balance if they increased their monthly contributions for a period of time? For example, an account holder with over $2,500 balance and who increased their monthly contributions by more than 15% for 6 consecutive months would have their interest rate retroactively increased by 1% for that period of time. For the record, I have switched accounts from ING to PC Financial.
My larger point, however, is what can we do to prevent ourselves from being suckers for bad service or being taken for granted? To paraphrase an interview I once saw with the author of the Naked Investor (a book about the excess and abuses of the investment industry): the financial industry preys on inertia. We should never take bad service lying down. I noticed in other blogs that many commentators have informed ING that they would be moving their money to the competition.
This is a great first step but we have to inform the right people. A client of mine who consults big businesses on improving customer experiences once commented that the role of a customer service representative was not to help us but to weed out “troublesome clients” such that they never got past their $12/hour representative. If you want to inform a company that it is losing your business, avoid telling the customer service representative (who, frankly, isn’t paid enough to care) and write a letter to the people who matter- senior executives, the board of directors and other decision makers (in publicly traded companies, these are listed on most websites). They’ll get the message that existing customers count if they get enough letters.
Before you buy, I would not only research the product but who is selling it. There are many sites such as this one which now lists the customer service experience of various retailers. The internet has been instrumental in leveling the playing field between the consumer and businesses. We just have to remember to use it and not let inertia set in.