It never ceases to amaze me that brands carry on this dirty tactic of raising prices for existing customers while cutting them for newcomers. I think everybody gets the principle of attracting new blood, but the point is that it's counterproductive because it assumes customers are too stupid to realise.
Every brand that does this will be fretting about retention rates as they drum in to staff that a poor experience could lose a customer who is worth x pounds per year and cost x to attract to sign up.
So how on earth can it make sense to leave staff smiling and providing excellent customer support to then go on and stitch up customers on their renewal quote?
Let's pretend that a customer spends £200 a year on broadband, insurance, electricity, car breakdown cover or a mobile phone contract (the worst offenders in my experience) and they cost, say, £20 on average to recruit.
That is not just GBP200 you are risking, but you could be wasting the GBP20 it took to entice them in, not to mention another GBP20 to replace them should they leave. Why on earth would it make sense to increase their annual bill and give a newcomer a much better deal?
If you keep the original customer, you are guaranteed GBP200. Sign up someone new and you're paying GBP20 to earn, say, a discounted GBP180, meaning that you are swapping GBP200 for GBP160.
The only way this makes sense is if you truly think customers are idiots and are not wise enough to see they are being taken for a ride. Presumably it carries on because although we know we are being ripped off, not enough people are taking positive action and switching suppliers.
A case in point came the other week when I had a very long talk on the phone with my car insurance company after they bumped up my cover for the year by around GBP100. Nothing had changed -- just their price. They spent ages going through every one of the details they had on me during a long telephone call, only to arrive at the outcome I had predicted all along. The only thing had changed was their price, and there was nothing they could do. I immediately saved money by switching suppliers.
Savvy customers are becoming accustomed to this. Most people I know phone their car breakdown provider to get a better price than the renewal that has been mailed out to them. And they just about always get it.
It's the same with mobile phones or broadband. Call in and warn you're about to switch and as if by magic, there is a loyalty deal they can apply to avoid a price hike.
The whole thing just stinks, and it's effectively a tax on laziness. Those who just sleepwalk into new contracts or don't get a new deal when a welcome offer has expired, are simply paying extra because they cannot be bothered to find time to make a call or log on to a price comparison website.
It's easy to see why. Life is busy, and it takes ages to get through to the right person. It's a chore.
The problem is that we have been locked into this system of having to push back against the brands we are loyal to against out will. Now, the CMA has urged the necessary authorities to make changes to their billing structures to avoid prices permanently rising for loyal customers.
Sky News is reporting there is now a six-month gap while the affected industries and their regulators come up with a plan to improve.
This intervention is welcome, and it is long overdue. The only remaining question is why brands thought they would never get caught out by their customers or the authorities? It's crazy it has had to come to this.