Customer loyalty brings no rewards
LOYALTY is history for bank and finance customers, with many ready to switch providers at a moment’s notice to get a better deal, researchers say.
More competition and new incentives have played a part, but people are also repaying banks and insurance providers for their own disloyalty, according to social researcher Mark McCrindle.
“Australians have observed loyalty doesn’t go both ways so feel empowered to change,” he said. “We’ve remained loyal to buying Australian produce, but are fed up with financials, especially with recent events like the banking commission.”
Modern-day loyalty must be bought with rewards and points, Mr McCrindle said.
“In a saturated marketplace, customers get a lot of offers and are prepared to take them,” he said. “Australians feel protected by consumer law and are happy to go with new startups or online-only lenders.”
A recent survey of 1300 credit card customers by comparison site Credit Card Compare found 72 per cent had considered switching providers in the past two years and 67 per cent had shopped around for better deals. Credit Card Compare founder David Boyd said it was “extremely promising” to see consumers actively assessing their options, but was concerned many were switching for short-term bonuses.
“Attractive introductory offers are effective at bringing customers in, but do little in the way of retention,” he said.
The One Big Switch campaign has had success in identifying consumer price pain in areas of finance such as health insurance and energy and using people power to win better deals.
OBS campaign director Joel Gibson said difficulty in switching was often mistaken for loyalty.
“Many remain loyal because of complexity,” he said. “Very few providers reward loyalty so our propensity to stay comes down usually to how hard it is to compare products and switch.”
Bianca Stone, 40, is setting up a personal styling business, which means regular credit card use. She also likes to take her four-year-old daughter on holidays, so compares cards online, looking for bonuses or reward. Switching cards with a sign-up bonus gave her enough points to pay for a recent flight to Bali and accommodation.