Thursday, February 5, 2009

Consumers To Businesses: Level With Us

While this article is directed toward banks and financial institutions, the message is the same for all businesses - be honest with us. Don't try to paint a rosier picture that reality is, consumers want factual reassurance of your stability and commitment. In short, be honest and sincere with your marketing. Now is not the time for outlandish or insincere marketing programs. Further, make sure your sales staff understand that customers want facts, straight talk and sincerity.

Financial services providers can diminish defections by simply communicating with consumers, according to a study from Boston Consulting Group, which also explored which specific kinds of communications consumers want from their financial services firms.

BCG found that 83% of U.S. consumers contacted by their primary bank about the economic crisis--via emails, phone calls, and snail mail--were satisfied with the banks, compared with only 53% of those who had not been contacted. For investment/brokerage firms, the respective figures were 71% versus 34%, and for insurance companies, 71% versus 45%.

Yet, just 21% of the survey respondents had been contacted by their banks, 26% by their investment/brokerage firms, and 15% by their insurance companies.

American consumers were least satisfied with credit card companies--only 58% of consumers contacted expressed satisfaction, compared with 35% of those who had not received any contact. Credit card companies had only contacted 17% of consumers--a figure surpassing only insurance companies, brokers and agents among all financial institutions.

Despite the lack of contact from financial institutions, only 29% of U.S. respondents told BCG they would like more communication from them--the lowest of the six countries involved in the study.

Kate Manfred, a Chicago-based principal in BCG's Financial Institutions practice, attributed this apparent discrepancy to consumers' reaction to "business-as-usual communication/marketing programs," which she said have been continuing at pre-crisis levels as opposed to financial firms offering targeted, relevant information that addresses the current economic situation.

The study pointed specifically to the advertising from financial firms in the November and December issues of Fortune, Smart Money and Time, where only 8 of 52 print ads addressed the financial downturn.

While saying they get enough communication, consumers still want factual reassurance, according to Manfred. The study found that 53% of respondents specifically want such reassurance of a provider's financial stability. Majorities also said they would like to receive "information on what to consider in these economic times" and FAQs containing current information about the crisis.

Exactly half of the respondents said the economic crisis has caused them to lose trust in their investment/brokerage firms, followed by investment advisors and banks (46% each), insurance brokers (38%), insurance companies (36%) and insurance agents (32%).

What has consumers' response been to the crisis? BCG found that the most common activity was less credit card spending, which 47% said they have already done or are considering. A quarter of respondents said they had looked--or were considering looking--for cheaper offers on insurance for home, car and other non-life policies. Other popular options were investing more in stable savings products rather than the stock market, and changing retirement plans.

High-income consumers are more likely to make financial moves due to the economic crisis, BCG found.

BCG's recommendations to financial services firms include:
• Quickly adapt marketing and sales strategies and develop customer outreach plans.
• Communicate more with updated and relevant information, FAQs and reassurance.
• Equip the sales force to answer questions and provide valuable guidance for the current market.
• Target most-concerned customer segments with the right messages and products ("according to behaviors and attitudes, not just income/assets--who is losing trust? Who is most anxious?")

"If you're not appropriately responsive, then you're at risk of losing market share," stated BCG partner Kilian Berz, who heads the firm's retail banking practice in the Americas. "The banks that are more nimble and able to provide timely messages through more interactive advertising channels are going to be advantaged." As an example, Berz pointed to JP Morgan Chase's "The Way Forward," a series of Web-based opinion papers about topics such as lending and mortgage practices.

The BCG study was conducted in November via an online survey of 1,000 18+ consumers in each of six countries.

No comments: