Big Bank Switch - why group switching is here to stay31 Jul 11 10:00AM EST |
Try this. You gather a group of people together who want the same thing and negotiate a better price than even the best solo haggler could achieve. You might even get the kind of discounts normally reserved for big spenders like millionaire business people or celebrities.
It’s called group buying and has been around for a long time in different incarnations. It works for everything from food cooperatives in rural India purchasing staples like lentils to Internet deal of the day sites offering everything from discounted meals to massages.
It’s popular because the purchasing power of the group is more effective at extracting better deals from merchants who benefit from economies of scale. To use the cliché it’s a win/win.
Now try this. You gather a group of people together who want to switch from one product or service to another and introduce a subtle difference.
If the group is large enough, the merchants eager enough to grow their business and the group’s negotiators savvy enough to bring the two together at the right time: it should create a better deal.
This is the revolution we call group switching. It’s not about taking up a good deal that’s already on offer, it’s about creating a much better deal than what’s in the market by simply gathering a group who are considering a switch.
We know switching is the best policy to save money in some of the most significant areas of the household budget: banking, mobile phones, broadband, electricity and gas. Move to a cheaper and better provider and if the service is comparable you are demonstrably better off. Unlike group buying deals which can actually lead to you spending more money on non-essentials, group switching is about saving you money on essential services.
Despite the savings switching can achieve, we know consumers are often too wary to take advantage.
There are a few definite barriers to change - some of which are erected by businesses to deter consumers from the very sensible strategy of switching. They include:
- Contracts that lock you in, such as electricity supply.
- Complex offerings that paralyse informed choice, known in the telco circles as the confusopoly.
- Fees and charges for those who move, such as the mortgage exit fees, which have just been abandoned for new home loans.
There’s also a certain apathy which says it’s better the devil you know than the one you don’t. And some businesses take full advantage of their existing customers’ reluctance to shift.
For example, CHOICE research found insurance companies willing to offer much better priced policies to new customers than the loyal clients they think will never bother moving. This is particularly true of the incumbents - the large established players who might think you owe them a living.
So let’s consider the home loan market. The group is definitely large enough, with about $1 trillion loaned out as mortgages, and there are plenty of people concerned over cost of living pressures.
CHOICE’s vision is to unlock the power of consumers in a way which can change existing markets to their benefit. One Big Switch is a small company keen to demonstrate the power of group switching and the skills and experience required to secure special deals.
Together we have partnered for a bold experiment. Can we gather together 1,000 mortgage holders who are willing to switch banks together, for a better deal? To support the CHOICE Big Bank Switch campaign all you have to do is register your name, email address and postcode. The beauty is that registering is obligation-free. In the end it’s your decision whether you take up the any of the deals which are negotiated for the group.
We ask you to consider the proposition and weigh up the options. It might not be in the area you’re considering switching this time, but we believe group switching is here to stay. Now it’s up to you - the consumers - to get on board to demand a better deal. Remember nothing ventured, nothing gained.
Visit www.bigbankswitch.com for more information or to register to take part.