Thought you may be interested in the following dialogue…

E-mail from Vodafone PR…

“Vodafone has launched a new reward scheme for pay as you go customers, offering 10% back every time they top up.

Let me know if you have any further questions.

Warm regards”

Then details of the press release were attached.

My response…

Yes… Why doesn’t it just cut the price by 10%?

Her reply…

“It’s a reward scheme – just like a Tesco Clubcard or Boots Advantage Card.

These ‘banked’ savings can then be put towards a new phone or Bluetooth headset, for example, not just to save on call costs.”

Of course any reduction is a good one, but like all reward schemes, the aim is to try and make something seem like a bigger offer than it is. (more…)

If I had a penny for every time that thought had popped into my head in response to a question I’ve been sent, I reckon I could easily have £17.28.

Whilst not much money, it’s a lot of people. Whether it’s emails to the site, suggestions for Question of the week in the email, or emails for my News of the World column, whatever the subject the answer’s the same…

Here’s some recent examples…

• How can a credit card provider increase the credit card APR from 16.9% to 34%?
• How can credit reference companies justify charging £70 a year for files that only cost £2?
• How can Ryanair charge £10 per person each way just for paying by debit card?
• How can Tesco justify giving me less compensation because I spotted their mistake before leaving the store, rather than having to come back?
• How can companies deny me a mortgage just because I’ve become self employed?

These are the tip of the proverbial iceberg. The problem stems from the fact most people assume that companies need to behave fairly, or that we’ve a right to access their services. This is especially true with questions starting “How can they justify…”. Inevitably the answer is, because they don’t justify it; you can either choose to access that service/buy that good or not.

Neither are true, companies need behave within the law (barring financial services where treating customers fairly counts too – see the financial ombudsman guide) yet laws don’t stretch far.

Let’s re-examine those example questions above, this time with an expanded answer – purely from a technical basis not considering fairness.

• How can a credit card provider increase the credit card APR from 16.9% to 34%?
  …because it can. Your credit agreement says it can, and there’s no regulation limiting APRs. In the terms it says your rate is variable, as an aside t also almost certainly says it could demand you repay in full too. Now you could and probably should question the ‘fairness’ of this one with the Financial Ombudsman- and there is a chance – but in general “because it can” still stands.

• How can credit reference companies justify charging £70 a year for files that only cost £2?
  …because they can. They can charge what they like for their services; it’s our choice whether to buy them. The law only says that they must offer access to credit reference files by POST for £2. They have no need to justify their charges, their need is to sell their services and persuade you it’s worth paying (see the credit scoring guide for how to beat them).
• How can Ryanair charge £10 per person each way just for paying by debit card?
  …because it can. There are no rules stopping airlines adding extra charges for paying by debit card. It’s arguable though that to describe these as ‘extra’ due to the fact Electron cards are free is wrong, and I hope we’ll see pressure brought to bear to change this soon (see the Beat Budget Airline charges note for how to beat these).
• How can Tesco justify giving me less compensation because I spotted their mistake before leaving the store, rather than having to come back?
  …because it can. That’s a Tesco internal policy, which is far more generous than the law sets out, so as long as it follows clear guidelines, it can do what it wants.
• How can companies deny me a mortgage just because I’ve become self employed?
  …because they can. You have no right to borrow money, whether a mortgage, loan or credit card. Lenders are private companies trying to make profit and if they don’t want to take the risk lending you cash they needn’t. Sadly they perceive self-employed people as less certain so a higher risk. This isn’t an issue for an individual company, it’s one to take up with politicians and regulators if we want borrowing to be available we need lobby them to put controls in place (or make the banks they now own actually work).

Overall the answer is there are times to exercise our rights, but when we have no rights it’s time to exercise our choice and not use the company’s services any more. The worry is when there’s no choice and it’s a systemic, industry-wide issue. Then it’s time to campaign (part of what MSE’s here for).

Comment and Discuss.

I’ve had a rather strange, name-calling email from someone due to the site’s Cheap Flights Guide and FlightChecker, which successfully show people how to get the cheapest flights.

While I believe environmental concerns are important, so is protecting the pounds in peoples’ pockets. And the clue to this site’s priorties lies at the top of every page: “Money Saving Expert”. That means our key concern is showing people how to do what they want to do for less.

The ‘Complaint’

While not the first to send such an email is certainly the most vituperative. Before I explain my viewpoint on this I thought you’d like to read the unedited email and make your own mind up. It’s worth noting this was titled “formal complaint”, whatever that means. (more…)

Not my blog this time, but from MSE Archna, who as part of her arduous work, I forced to go and research shoe discounts for the weekly e-mail. Over to Archie…

“I can’t deny it, pretty shoes make my heart flutter and blood pound. So when Martin needed someone to check out a potential loophole at posh shoe shop Kurt Geiger, I was straight out the door. The deal was, buy a copy of magazine Elle for £3.50 and get a £15 gift card to spend in-store. What we needed to find out was if more than one gift card could be used per transaction: if so this was going to be a MAJOR loophole for the weekly email. I knew my MoneySaving credibility was depending on this, so armed with four copies of Elle (paid for by Martin of course!) and my most charming smile, I headed to the mammoth Westfield centre on my mission, convinced I would succeed.

Now, I hadn’t realised you had to register the cards online so I nipped to the Apple store on the way to nick the internet and register the cards. First obstacle: you can only register one card per email address, but I sneakily used a couple of spare ones with success.

After chatting up the sales assistant and tottering around in some fierce heels I picked the cheapest shoes I could find (for £55) and went in for the kill, handing over the four giftcards and my (cashback) credit card in one go. Just when I thought I was going to get away with it, my new BFF handed them back and shook her head. Sadly no amount of sweet talking could change her mind, even when I pointed out the ts and cs didn’t forbid it. Back to MSE Towers it was, red-faced and minus the free shoes. Still, being paid to try on shoes is never a bad thing!”

Discuss this blog

I wonder if Consumer Focus read my blog a few weeks ago when British Gas cut prices (Is Consumer Focus in British Gas’ pocket?). Essentially they applauded British Gas’ palty 10% gas price cut; quite ridiculous for a Consumer organisation.

Yet, I’ve just received the following from it.

“Responding to news that EON is to cut electricity prices by 9% from 31 March 09, Audrey Gallacher, energy expert at consumer champion Consumer Focus, said:

With consumers facing tough times, the prices they pay should fully reflect the cuts in the wholesale market.

Quite right. Though I must admit if I were E.ON I’d be a little annoyed, after all, why is British Gas’ 10% gas cut good news, but E.ON’s 9% electricity cut not enough? OK, British Gas’ cut hits earlier, but less people use gas than electiricity.

Either way, that’s not my concern, the main news is I’m glad to see the new consumer watchdog starting to find its teeth, even if they’re still milk ones.

Comment and Discuss

Of course, the answer’s no, but you’d be hard-pressed not to ask such a question after its press release yesterday. The official consumer group that has taken over from Energywatch has singularly FAILED in its first big test. Why Energywatch, one of the few official consumer bodies that actually had teeth, has been replaced by this flaccid beast is anyone’s guess.

Frankly I was flabbergasted when I read its press release on British Gas’ rather paltry 10% gas price cut (and no electricity cut). Sit back and read this:

From Consumer Focus’ press release:

“At last, we have an energy company that the public can be proud of. British Gas today has had the courage to do the right thing as wholesale prices tumble. We have long been critical of the way in which the six energy companies act as a herd, giving consumers little real choice. Now, we have a choice.

“We would caution that tariffs are complex, British Gas hasn’t always been the cheapest and consumers need to check that they will get a better deal from this price cut. But if they will, our call is for consumers to switch to British Gas, not just because they would be cheaper but because they are doing the right thing.”

What kind of consumer champion are they?

Energywatch used to have teeth. Most other commentators, including me, have rightly said “it’s too little, too late”. Yet to applaud British Gas for this is shameful.

Frankly British Gas’ cut is so poor it may’ve let other companies off the hook of bringing their prices down. I’m simply stunned. Even with the cut, its standard tariff is only £3 a YEAR cheaper than NPower’s existing tariff.

And it ACTUALLY tells people to switch to it.

The worst bit for me is the phrase, “consumers need to check that they will get a better deal from this price cut. But if they will, our call is for consumers to switch to British Gas, not just because they would be cheaper but because they are doing the right thing.”

This is wrong on two points. Firstly, as explained in the Cheap Gas & Electricity guide, the likelihood is that other companies will follow suit, therefore by switching now, you run the risk of ditching a provider that will be the cheapest in a month or so. Plus the tariff hasn’t been launched yet, so it isn’t on comparison sites to compare.

And even if that doesn’t happen, this cut is so low, it’s worth sticking with your current provider while you wait and see.

Worst of all is the “doing the right thing line”. I read this as a political point to try and make other providers cut prices, by threatening them with lack of custom if they don’t. Yet is it really trying to use people’s bills to play politics.

Come back Energywatch … please.

Comment and Discuss

Supermarket habits are changing across the nation. I first came up with both the downshift challenge technique and name five or more years ago. The aim was to codify a way of dropping brands, and provide research into the savings it’d bring.

Now the system seems to be mainstream and the lexis does too. I remember trying to think of a name for downgrading supermarket products and in the end decided downshift challenge was simple and descriptive.

These days, it seems as if it’s been with us all along. The following is a press release put out this week by supermarket comparison site mysupermarket…

“2008 was a year in which shoppers faced steep rises in the price of their staple food items, far beyond the general rate of food inflation. mySupermarket.co.uk, the supermarket comparison site, has uncovered an increasing trend of ‘downshifting’: consumers swapping their favourite branded products for a supermarket own brand alternative, often surrendering long-standing brand loyalty to make significant savings.

The attached table gives a detailed insight into this recent trend, but to summarise:

• Pasta is the product people are most willing to downshift on with an 8% increase in the sales of own brand items since last year.
• Other items people are happy to downshift include crisps, tomato ketchup and cereal – with sales of own brand products up 4% on last year.
• Cola is one product which shoppers don’t seem to be willing to compromise on with 91% of sales going on branded, a figure which hasn’t changed in the last 12 months.

The items which have seen the greatest trend for downshifting are many of the staple items which have seen significant price rises.

“With shoppers seeing the price of their weekly shop rising, becoming a savvy shopper became more important than ever in 2008. Downshifting is a quick and easy way of saving money and is something which is becoming increasingly popular. There is a definite correlation between the areas where prices have risen sharply over the past year and where shoppers are downshifting and whilst there are certain products which shoppers seem unwilling to compromise on, many are surrendering their brand loyalty on favourites such as ketchup as they move to an own brand alternative.

Saving money doesn’t have to mean giving up our favourite products or deserting our chosen supermarket. By simply swapping brands or taking full advantage of special offers we believe shoppers can often save up to 20% on their shopping bill. The trend for downshifting is set to continue into 2009, but rather than shoppers having to trawl the aisles, they can input their weekly shop into mySupermarket.co.uk and the Price Checker tool will automatically highlight the ‘downshift’ item as well as like-for-like alternatives.”

Comment and Discuss.

OK I feel better now I’ve come clean. It’s been playing on my mind for a while; there’s something about the scent you wear that says a lot, and this is my dirty secret.

The idea of wearing a personal brand scent fills me with horror, especially when it’s from a football player who made his name for United. This isn’t just a male issue either, I suspect women will find the concept of wearing “Britney Spears” a polarising one… some will think fab others would rather bathe in a stagnant pond.

Yet it’s worth thinking about it before going to the shops (and if you are buying then see the Cheap perfume guide and the new perfume comparison in the mega-shopbot.)

How it happened

For years, I’ve safely had Chanel Sport pour homme in my cupboard for the moments I need to smell. Yet early this year I went to a TV show (I think it was An audience with…) and as I left, I got a goodie bag which included a bottle of the Beckham aftershave. And for a while it lingered in the bathroom cabinet, as lonely as Victoria on matchday.

Then one day, I felt compelled to try my freebie. It smelled perfectly reasonable so I splashed it all over. Rather shockingly, I started to receive some decent feedback. The MSF, and many of my female friends kept saying “what’s that you’re wearing; it smells lovely?” My reply: “just something I picked up.”

And ever since, I’ve worn it occasionally, not completely replacing the Chanel, but as an option, and it continues to garner positive nasal feedback.

Fragrance is all about the brand

It does go to prove that most of the smelly market is about branding. After all, you can’t really see it or hear it, so pictures and TV ads don’t convey any of its real qualities. That’s why we get the ridiculously pretentious TV ads for perfume, the ones with 17 glamourous women, pouting about the essence of life.

The link with celebrity isn’t new, many have been used to promote brands in the past, but actually naming a perfume after them seems to be very noughties. Of course, it’s hard to believe Beckham or Britney actually designed their scents, rather just put their name on the bottle. And as with all brands, there are some that’ll be attracted and others who’ll be repulsed by the concept of wearing a celeb scent.

Yet if you go beneath that and just check out what smells nice, there are of course some great bargains to be had. Still, it’s a hell of a mouthful to explain that when people ask “what’s that nice smell?” I seem to find myself coughing and never quite saying the words…

Comment and Discuss

Today we heard Tesco is reducing 1,000 lines by up to 50%. House of Fraser doing something similar, and of course there’s the Woolworths closing down sale. Is this finally the beginning of pre-Christmas sales?

You may be surprised by that question; after all, the one day sales and shopping vouchers deals notes on the site have been reporting a raft of different sales types for weeks now. However I was mulling the idea that we’re seeing sales move into a pattern of three overlapping types:

• Tactical/Discrete Sales

  These are sales primarily designed to attract new customers without cannibalising the existing trade.

  The obvious examples of these are shopping vouchers, which are discrete discounts to those in the know. If you’ve got the piece of paper you get it cheaper, yet if you walk in you pay full price.

  However, less focused one-day store wide discounts, like those Marks & Spencer has twice done, can have a similar impact. With heavy publicity these can draw in shoppers, especially price-sensitive ones, who wouldn’t shop there otherwise. While of course it brings in regulars too, the overall impact is likely to skew towards new customers.

• Promotional Sales

  Here the aim is to publicise the store, bring in more customers, keep it fresh in the mind, and make it the first port of call. Many pre-Christmas sales seem to have this aim, as well as lightening stock levels slightly. Yet the discounting often isn’t too heavy, it’s more about drawing in customers and maintaining market position.

  What I find interesting is how the pre-Christmas sales seem to keep being reported as a ‘shock’ event. Actually it’s become a stalwart part of the retail calendar, as regular as January and summer sales.

  We’ve had these sales for years now and they tend to come in a week or so before Christmas to catch the impulse or last-chance buyers, whilst persuading those waiting for the sales that the discounts have arrived early.

• Stock clearance sales

  This is the aim of the January sales and summer sales: to clear the floor space so the stores can restock to enable next season’s ranges to be brought in.

  These seasonal clearance sales are usually by far the most heavily discounted, with prices of whatever sales stock is left continuing to drop until it’s all gone.

Now of course my definitions are arbitrary, and with different stores the distinctions are blurred. Yet as a thought piece it’s interesting to try and characterise the different types.

At this point I’ll revert to my original question, have the pre-Christmas sales started? It seems the volume of one day sales and vouchers are dropping and slowly we’re hearing announcement of the “up to 25% off selected lines” such as Ikea’s sale starting on 18 December, that have more traditionally characterised the late December reductions.

Comment and Discuss