Lessons in Customer inertia


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With healthcare reform around the corner, although somewhat dependent on the Presidential election, many healthcare insurance companies are now scurrying around in fear of the ‘exchanges’. They are worried the exchanges on the online sites will show a side-by-side comparison of similar services, will further drive commoditisation in their market, driving price and profits down. Clearly it doesn’t take a rocket scientist to make that assumption, but as I am not a rocket scientist let me take a contrary view.

Let me draw you an analogy to help me make my case. The UK government thought the same thing when they introduced a competitive electricity and gas market in the UK. For those not aware of how the UK energy market works there are a number of companies who compete for customers. They are not selling ‘different’ energy. It’s the same power lines and pipes into people’s homes, effectively the retail aspects of these businesses are competitive.

Like with the Healthcare exchanges, the UK government set up ‘exchanges’ by another name. These are places like uswitch.com Customers simply enter where they live, the amount of energy they use and within 15 mins you can move your supplier. Simple ‘eh?

So given the sharp rise in energy prices over the last few years surely there must be a mass of people who have moved from one supplier to another in the quest of the best deal? Well actually, no.

When this was first launched a number of people moved away for the incumbent supplier but as the market stabilised not many people are moving as outlined in this BBC News article.

The BBC outlines that four-fifths of people cannot be bothered to look for cheaper gas or electric bills despite the urging of numerous consumer gurus to switch as they would save £ 100 ($160) a year.

The issue for me is quite simple. It’s a hassle. Like with most human behaviors the perceived pain of change needs to be lower than the pain of staying where you are. The reality is that most of the providers in the UK market are much the same. Their prices are similar and it’s just too much hassle to change.

Again this situation shows that people are not the rational animals that many organizations and marketers think they are. It is not just about price. In all our work within the healthcare industry and elsewhere we prove this every time.

People will move if the price differential is high, or the Customer Experience is poor. Simple as that. That is why the sensible Healthcare suppliers and utilities in the UK are focussing on improving their Customer Experience

Republished with author's permission from original post.

Colin Shaw
Colin is an original pioneer of Customer Experience. LinkedIn has recognized Colin as one of the ‘World's Top 150 Business Influencers’ Colin is an official LinkedIn "Top Voice", with over 280,000 followers & 80,000 subscribed to his newsletter 'Why Customers Buy'. Colin's consulting company Beyond Philosophy, was recognized by the Financial Times as ‘one of the leading consultancies’. Colin is the co-host of the highly successful Intuitive Customer podcast, which is rated in the top 2% of podcasts.


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