The (un)informed consumer: a tale of telcos and beyond...

And he didn't have to choose his own phone plan... ©

Last year, I switched mobile phone providers. Not because there was anything wrong with the one I had, but rather because my mobile broadband provider went belly-up, and my husband and I decided that this was an opportunity to do a blanket telecommunications upgrade. With this in mind, I went to the websites of various providers to compare plans. I had a spreadsheet ready to enter the information. Did I meet with success? No.

Instead, bleary-eyed, I gave up after a few hours, and the next day went to the Telstra store and spent a packet of money and signed lots of contracts on the promises of good coverage, bundling discounts, and single billing. Fulfilment of these has been mixed, and I’m left with the sour taste that comes from being disappointed in something that looked too good to be true, and in myself for having foolishly believed the promises. Most of all, though, I feel angry: why is it so difficult to figure out what’s really going on with telco plans and pricing?

The baffling nature of these plans is just one example of corporate ‘communication’ that is more confusing than enlightening. Think of air ticket pricing, insurance, and credit cards. While there’s theoretical transparency – after all, you can find the description of these products online – it’s very hard to compare them, and even harder to assess them. Yet these same companies seem perfectly able to craft a television ad or billboard that delivers clear and crisp messages. What is going on here? It almost seems as if the complexity is deliberate.

Indeed, in a piece in The Sydney Morning Herald, Ross Gittins notes how complex policies and plans can be read as competitive barriers: when customers can’t figure out how to compare companies properly (or it requires too much time to do so), they are unable to be ‘educated’ consumers and therefore don’t have the knowledge to change providers based on these factors. So, for example, the huge array of mobile phone plans is designed to be mind-numbingly complex: faced with this, the customer (read: me) will give up on fact-based comparisons and just go on instinct (which is usually based on advertising). And once I’m with a provider, I’m unlikely to switch, because I don’t have confidence that I’ll be able to find a better one– and I’m unwilling to risk the investment of time and energy. No wonder big companies always seem to want consumers to have less information: witness the demise of GroceryChoice.

While this is their effect, the origin of approaches like this is probably less sinister. More likely, it’s because the people who develop products, pricing, and policies are usually different – and sit in a different group – from those who know the customer. Companies who really care about their customers make customers’ needs central to all decisions – not just marketing. They don’t have so many plans that it’s impossible to choose unless you’ve been to the company’s sales training; they don’t have contracts that you need a legal degree to decipher.

Barring attending Telstra’s sales training – and I almost wish I could attend it, so that I could share this wisdom with the world – what should the average consumer do? I can’t advocate individual investment of time and energy – while there may be some virtuous, patient types out there, I’m personally not ready to do this. I feel time-poor already, and allocating my limited leisure time to phone plan research is...not appealing to say the least. Especially since it’s unclear exactly how much money I would save – and that the investment in time will have no other value (since I change plans only infrequently).

The right solution (for now) is in the uniting with other consumers – after all, companies’ power comes from having a large pool of apathetic (or distracted) customers. I’ve seen a few good sites that aggregate information to help consumers: in the US there’s Nerd Wallet, a site that compares credit cards; in Australia, there’s (the admittedly niche) Funeral Comparisons. There are also a few Australian sites that theoretically compare phone plans and ISPs – but I haven’t found these that useful. I hope these improve, and that more appear. I hope that you’ll use the Underground to share your views about different businesses.

Most of all, I hope that businesses learn to treat us customers with the value we deserve – for it is we who fill their coffers. We’re (mostly) grown-ups: we accept that we need to pay for a service, and that we should pay for what it really costs. So why not be clear and transparent? Why not reduce the number of options to the ones that relate to genuinely different customer needs, and then help us choose the right plan? This would – at least in me – generate the true loyalty that comes with value and respect, not the one that comes via handcuffs.

In the meantime, I’m in the handcuffs, stuck with my multi-year contract with Telstra, and the slightly sick feeling that I’m overpaying.

What other products or services come with too many, confusing options? How do you end up making your decision about which company to go with? Have you found any great tools to help you make these decisions? Share your wisdom with the rest of the Underground by adding your comment – or rate your favourite (or least-favourite) businesses to give others the inside view. Customers unite!