Phone customers slow to switch over

By Pádraig Hoare

More than half of mobile phone users will not switch company even if it costs them significant sums of money, because of perceived loyalty or fear of making a mistake, research has found.

The Economic and Social Research Institute (ESRI) found the apathy of a significant amount of broadband and mobile phone customers was hampering competition in the entire population.

The research by Peter Lunn and Seán Lyons found people who have been with a company a long time and who have never switched before are “exceptionally resistant to switching”.

“This group is large — about 44% of broadband subscribers and 57% of mobile telephone users.

“For many, a dramatic signal seems to be needed to make switching a live option, such as the shock of receiving an unexpectedly high bill or believing that particularly large savings might be available — especially more than 20%. Even such exceptional events mainly affect people who are already somewhat open to switching,” the report said.

The authors said a significant number of consumers need to be willing to compare offers and to consider switching to better ones if the benefits of competition are going to be spread more widely.

“In particular, if there are identifiable groups of consumers who are unlikely to consider switching, they may end up with worse deals than other consumers,” the report said.

The results implied that Ireland has a core of “inert” non-switchers who are likely to stay that way for a long time unless policy or something in the market changes, the authors said.

The reluctance to switch goes across all socio-economic brackets, the report said.

Contrary to the view that there is a special uniquely vulnerable group of users that is unwilling to search and switch service providers, we find that unwillingness to switch is not confined to particular social groups.

“The persistence of consumer inertia is a potential concern, because these consumers may be left on relatively expensive tariffs or with lower quality service than consumers who are willing to switch,” it said.

The authors said further research was needed as to why people were reluctant to change providers.

“There are competing psychological explanations for this strong unwillingness to switch, including loyalty and worrying about making a mistake.

“Future research is needed to discover whether individuals feel different levels of competence in actively choosing telecoms services,” it said.

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