When Loyalty Doesn’t Pay

As part of the work I do, I’ve always continued working with most of my clients over the long term by tailoring what I do to suit their needs, always being available when needed, and ensuring I always consider their needs first. 

The same can be said for accountants and a number of professionals that offer an ongoing service with clients where you have a relationship with a specific individual. But when does Loyalty not pay? Almost never. 

If you are dealing with a company of individuals where you may speak to a different person every time and have been with for many years, you are likely not to have paid the price for loyalty, and here’s why:

Price Staircasing

It is human nature to be apathetic where possible especially to something as boring as bills. Life is complex enough without being focused and invested saving a few pounds here on there. So what happens if the price you pay each year or on the renewal of contracts slowly increases?

An example is my car insurance with £300. At renewal, it goes up to £400. I call and ask why since I’m such a safe driver (my wife would disagree). They give me a variety of excuses, including:

‘there’s been lots of claims in the UK last year’

‘car insurance fraud is on the rise’

‘covid – you understand, right?’

‘inflation is pushing the prices up’

I then went on a comparison website to shop around, and to my surprise, that same insurer will be offering £300, or perhaps add a small increase to inflation. Many people will read this and say ‘I always shop around, doesn’t everybody?’

Well, they don’t and you are the exception, so spread the word. Shop around on everything and don’t believe excuses as to why your costs go up. We believe companies make a lot more money from people staircase up their costs gradually than they lose from clients leaving as a result. You may often find mysterious discounts arise when you call to cancel, which leads onto my next point.

The Monopoly Effect

Clients may have limited broadband operators, important insurances, or love watching certain expensive TV packages that shall not be named…and you feel that you get enough value from it that it is worth the money.

No one else can really fill their shoes, so you just have to eat the cost right? Wrong. ‘Deprive’ yourself of this service, or at least give the company the impression you are prepared to. Suddenly, you will watch the pennies, pounds and hundreds fall away from your yearly bill to retain you.

For those who put into action what I preach, beware that you may get a person on the phone who has their finger on the button ready to cancel the service you want without a fight, thus there is no guarantee this will succeed the first time. This is a skill that needs to be honed but when perfected, and I have found it can save you thousands over your lifetime. Do we really need to be going through this effort though, surely there are regulations that should protect us?

Things are changing…slowly

In some areas, regulations may be coming in to better protect consumers, particularly in the insurance industry. These should have the effect of forcing them to offer renewal insurance using the same rates they give to new clients. This is shifting the problem from one foot to another because what will happen is the cost of new contracts will go up or they will create specific ‘introductory offers’ or ‘discounts’ to skirt the rules.

The conclusion – you are the solution, so as a starting point you should:

  1. Use comparison websites to shop around when your contracts and services come up for renewal
  1. Make notes in your diary a month before to shop around with time to avoid a panic
  1. Challenge any providers you have been with for years with as to why you have seen increases in any costs




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Michael Nicolaou

Michael Nicolaou

All Aspects Financial

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