Brendan Burgess
Founder
- Messages
- 52,118
I heard an ad for car insurance on the radio offering a 10% discount, but to new customers only.
Some lenders, e.g. ptsb, have lower rates for lower Loan to Value mortgages, but they don't apply to existing customers.
Other lenders used to give a discounted rate for the first year of the mortgage.
When looking at Laya health insurance recently, one plan was €3,600 and another was €5,100 but I could not see any difference. When I rang Laya, the guy told me that there was no difference,but that the more expensive plan was an older plan. I understood this to mean that some customers just renew automatically and so pay a much higher price for their failure to shop around.
There have been shocking examples in the UK of house insurance companies renewing policies at £1,200 but when the insured rang the company pretending to be a new customer, they got quotes of £300.
What would happen if a financial services provider decided to reward loyalty rather than new business?
Let's say that ptsb told its customers that customers who have paid their mortgage on time and now have less than 50% LTV will pay a lower rate to reflect their much reduced risk.
Or a pensions provider guaranteed to give its retiring customers the best annuity rate available.
Or an insurance company gave a 10% discount to loyal customer on top of any no claims discount.
Surely it's easier and cheaper to keep existing customers than to win new customers?
Or do they just do a calculation that inertia is such that they can squeeze more money out of existing customers?
Some lenders, e.g. ptsb, have lower rates for lower Loan to Value mortgages, but they don't apply to existing customers.
Other lenders used to give a discounted rate for the first year of the mortgage.
When looking at Laya health insurance recently, one plan was €3,600 and another was €5,100 but I could not see any difference. When I rang Laya, the guy told me that there was no difference,but that the more expensive plan was an older plan. I understood this to mean that some customers just renew automatically and so pay a much higher price for their failure to shop around.
There have been shocking examples in the UK of house insurance companies renewing policies at £1,200 but when the insured rang the company pretending to be a new customer, they got quotes of £300.
What would happen if a financial services provider decided to reward loyalty rather than new business?
Let's say that ptsb told its customers that customers who have paid their mortgage on time and now have less than 50% LTV will pay a lower rate to reflect their much reduced risk.
Or a pensions provider guaranteed to give its retiring customers the best annuity rate available.
Or an insurance company gave a 10% discount to loyal customer on top of any no claims discount.
Surely it's easier and cheaper to keep existing customers than to win new customers?
Or do they just do a calculation that inertia is such that they can squeeze more money out of existing customers?
