Switching behaviour

Current level of switching through PCWs

Around half of the consumers (52 per cent) in our quantitative survey say they have switched providers or purchased directly using a PCW, while the remainder (48 per cent) have not.

Those who think PCWs are ‘very reliable’ (63 per cent) or are heavy users of the sites (59 per cent) are significantly more inclined to switch on the sites.

Consumers use PCWs to purchase car insurance directly or switch providers more than for other product categories: over three-quarters (77 per cent) have done so. Over a third have switched electricity or home insurance (37 per cent respectively) via a PCW, while smaller proportions (16 per cent) have switched travel insurance or bought other travel related services (15 per cent) such as flights or hotels, directly on PCWs. Only seven per cent have bought landline or mobile telephone services, and only three per cent TV services.

Figure 5.6: Products/services switched for using price comparison websites

When asked to rate how useful the sites are for switching providers, those who have used them for gas or electricity rate the sites much higher than those using PCWs for other reasons. Forty six per cent of people using PCWs for gas or electricity think they are

‘excellent or very good’ and on average give them a score of 7.1 out of 10 on this measure.

For insurance, consumers are slightly more sceptical as only 39 per cent give them the highest scores and the mean score is 6.8. The usefulness of these sites for switching mobile or broadband is much less; the sites receive average scores of 4.8 and 3.7 respectively.

Reasons for switching providers

Consumers switch insurance providers more frequently than other providers because they believe there is little to gain from being loyal to their current provider. The quotes are normally fixed for a year and the costs tend to increase year-on-year. This is the case

especially with car but also with home insurance. As the prices vary greatly and the purchase cycle is fairly frequent, they are keener to compare prices for these products. A few

consumers also mentioned that switching on PCWs is also fairly easy for insurances, so they are generally happy to do this online.

‘I think consumers now have got easy access to far more availability of where they can shop around and what is on offer, what deals, how they can strike a better deal for themselves…Information is the greatest tool in the world, isn't it? I think it has made it more competitive and it has certainly made it easier for the consumer. I would like to think that it has made these companies think…. If they want to stay in the business, let’s give a bit better deal here and I think it has improved that way as well. I would like to think it has.’

Male, Midlands, SEG C1, 60-74, heavy internet user

In terms of utilities, consumers have started to switch providers more in recent years and say that, to some extent, this is due to PCWs. The sites are seen to have put more pressure on the companies and, consequently, to have changed the market. The change has come about in part because consumers now have more information on competitors’ prices.

Some also think that switching utility providers is now easier as it can be done directly on the PCW, which then does the work on behalf of the consumer.

‘The opportunity to change has gone through the roof. My parents were with one provider and I don’t suppose they would even have contemplated changing. I am not even sure you could [in the past]. Also, I don't think there was the competitive edge between the electric cost, the pound a unit and that was the cost of electricity and it went up next year and it is £1.05 a unit. There wasn’t that ability to slice a tenth of a penny here and 5p here.’

South East, SEG E, 45-59, E, heavy internet user

‘I have actually used those and changed through them because it is very convenient. They do all the work.’

North East, SEG A, 75+, light internet user

Reasons for not switching

The main barrier to switching or purchasing directly on PCWs is that consumers want to speak to their current providers before switching. Almost two-thirds of consumers (63 per cent) give this reason. Consumers commonly use the information that they gather on PCWs as a bargaining tool to extract a better deal from their existing provider, especially on mobile phone deals. Occasionally, the very act of wishing to switch providers may prompt the existing provider to offer the consumer a better package. This opportunity to use the data from the PCWs to negotiate a better deal offline is another reason why most consumers prefer to defer and not purchase, there and then, via the PCW.

‘If you go through to the retention department and say, "I have just seen it for £50 cheaper" quite often, because they want to retain you, they [will let you use information you have found elsewhere as a bargaining tool]. That happened. Also a lot of people will say the same. It might be that you get extra minutes. It did work.’

Wales, SEG C1, 45-59, light internet user

'When I want to go and change my phone contract I will probably have a look on the comparison website but I will have to call up O2 to cancel it anyway, so they will probably then try and give me a better offer, which I could be swayed by.'

South East, SEG D, 18-29, heavy internet user

Almost a third (30 per cent) of consumers don’t switch via PCWs because they are unwilling to provide all the details that the sites require. Consumers in London (38 per cent) are more likely to be disinclined to switch because they don’t want to provide personal details to the PCW. Just over a quarter (27 per cent) simply prefer to purchase offline.

Figure 5.7: Reasons for not switching products/ services using price comparison websites

Switching providers can occasionally be constrained by factors that are specific to the individual consumer – such as their location, or the nature of an existing contract – which mean they have no possibility to switch. Switching broadband and mobile phone contracts can be complicated for those, who are bound into a contract with their current provider, and penalties for switching prohibitive. Furthermore, the choice of provider can also be

constrained by where the consumer lives. For example, some areas have good mobile coverage for only one provider; some live in areas where fibre optic broadband is not available.

5.5 Non-user decision-making