At what price, loyalty?
One of the first items in about every article you read about saving money is to shop around your auto insurance for cheaper rates. While this is not a bad idea, I will be the first to admit I have not been aggressive about switching mine around even though I could probably save a few bucks a month by doing so.
The reason I have not is my agent whom I have had insurance with as long as I have been driving. He is the brother of a person who went to school with my dad and became my agent by default because he was my parent’s agent when I started driving. When I had my first accident that required claims and was freaking out after talking to other insurance people, who was there to calm me down and explain what to do. Well in that case it was his wife, but in some ways that is the point, he is not some guy on an 1-800 number looking at a policy number on a screen, but a guy who I can call and reach him or a member of his family and they recognize who I am by name. When my little brother wanted to know what and why he was paying the amount for insurance that he did, he was the one who sat patiently and went over line by line explaining all the factors and benefits received.
I know I could probably receive good service from some other company whether the person was across town or 1000 miles away via the phone, but I don’t feel the need to rush out and make a bunch of changes because of the loyalty factor. Does this mean I would not switch if I found out I could save a serious amount of money? No of course not, but the threshold is probably a bit higher than otherwise.
I know that this all comes in large part from my parents. They are the type that tends to stick with those they know. I get my glasses from a local optical store that my dad once wrote a story about and got to know the owner. The owner liked the story and gave my family a discount that continues to this day even though a new generation has taken over the store.
Of course, the loyalty can vary over time, which can lead you to reconsider the basic question, at what price, loyalty? In the case of the optical store, as new people take over, the same connection as with the original owner does not exist. Maybe they are not as aggressive about the discount or would prefer to get rid of it, but then again they do not have quite the same connection with me or the parents that existed with the original person. (As a disclaimer, in this case, I was speaking in part hypothetically; they have always honored the discount without saying one word of question as far as I know.) It is a two-way street though; I do not have the same connection to them either as my dad has. Although I have always gone to them for my glasses, my level of loyalty is not the same as my dad’s. Similarly if my auto agent were to retire and his son or someone else take over the agency, the level would not quite be the same because the connection with the new person has not been established to the same extent. Sure the relationship could built over time, but maybe along the way, cheap glasses at the Wal-Mart optical department or great rates from another company capture my attention in the meantime.
I am not trying to make the point that loyalty is good or bad, but instead to consider the impact that it has on our day-to-day decision making when it comes to our finances. It is a never ending aspect of the consumer experience, businesses are always trying to find new ways of increasing consumer loyalty, and consumers always have a choice where to make their next purchase from. So what is the price of your loyalty?