ARTICLE Martin Grunstein
THE PARADOX OF NEGLECT
Example number one. I have driven the same brand of car for 25 years. In that time I have bought seven or eight vehicles for me and my family. The cars were good, the servicing was very expensive but efficient and I was treated well as a customer. Then the following happened. My son, who drives an old car of mine, complained that there was a strange sound when he was driving and the oil warning light wouldn’t go off, even after he topped up with oil, so I told him to take it to the dealer and they would advise us what to do. He was told by the service manager that the engine was “stuffed” and it would cost over $20K to replace it and the car wasn’t worth that much so we should sell it and buy another one. I decided to get a second opinion from a mechanic friend of a relative. He said the engine is fine. The oil had become sludgy and if it was cleaned out and replaced as it should have been at its most recent service, the car had many years left in it. He did exactly that for us. Cost involved – almost negligible. That mechanic now services all of our cars and I have no intention of going back to my previous dealer for service or the purchase of another vehicle. Example number two. I had my financial planner for over 20 years. His fees were high but he told me that my plan was working perfectly (even though I had nothing to compare it to). He and his staff were always friendly and we were happy clients. Then the following happened. He suggested I should organise estate planning and recommended a firm to do that for me. We met with the people he recommended and they sent us a proposed fee that was astronomical. I got a second opinion and was quoted a fee that was way less than half of the original quote. It made me think about my relationship with my financial planner. Why would he recommend someone who would massively overcharge me for what was a commodity item? So, on the recommendation of my accountant, I saw another financial adviser and got a second opinion on my financial plan. I was told that the fees I was being charged were ridiculous for basically managing a superannuation fund and that I was massively overinsured and, by amazing coincidence, those insurance policies were delivering enormous commissions to the planner. I changed financial planners. Here’s the point. Even though I had probably been ripped off for years by the car dealer and the financial planner, I probably would never have known until they tried to rip me off even further and it made me reconsider my whole relationship with them. This kind of thing is happening every day in Australian business. You go to your existing phone company or energy provider and say you have been offered a quote of 30% less by a competitor – and they match price immediately. What about the twenty years before I complained when I was paying way over the odds for my power or phone bill? My wife was actually told by our car insurance provider “you should have rung up when you got your bill every year and we would have always matched any competitive quote”. What the hell is going on here? Not only is the existing customer not being rewarded for their loyalty, they are actually being told to their face that they are suckers for being loyal and non-complaining!!!!! I have been told stories like the above in customer service workshops I have been running for years and, in almost 100% of cases, when the customer finds out that they have been ripped off in the past, rather than accepting the price match from their existing provider, they take their business to the competitor even if it inconveniences them to do it. Why? Because the ego drive is stronger than the money drive!
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