Consumers switch service providers at a higher rate during times of economic instability
In times of instability, consumers are likely to switch service providers at a higher rate, according to new international researchthat considers the so-called ‘foresight effect,’ and how it influences consumers and their purchasing behaviour.
“We certainly concur as we notice a marked increase of insurance quote comparisons during challenging economic times versus the times during which the market is more stable,” explained Derek Wilson, Head of South Africa’s leading online insuranceand financial services comparison website, Hippo.co.za. Especially since independent research indicates that one in two people could save hundreds of Rands per month* on their Car Insurance alone by comparing with Hippo.co.za.
Dr. Mignon Reyneke of the Gordon Institute of Business Science (GIBS) was recently quoted as saying that the ‘foresight effect’ comes into play when people are either optimistic or pessimistic about the future – such as the potential to get a higher-paying job or the likely onset of a recession. Positive expectations about the future cause consumers to favour remaining with their usual habits. Conversely, a negative view of the future causes people to try new products.
An interesting point highlighted in the research is that consumers exhibit this behaviour even when there is no change to the usual product or it’s pricing.
Data and analytics company Acxiom1released a study in 2012 that clearly showed that consumers switch providers at a rate of 10-30% per year. Given the current state of flux in South Africa, it is easy to see why service providers will likely see a notable change in consumer purchasing patterns.
The good news for consumers is that shopping around to look for alternative providers for products like Car and HouseholdInsurance, Medical Aid, Personal Loans, Life Insurance and more is now made easy with comparison websites such as Hippo.co.za.