Consumers may claim to learn about financial products from friends and family members more often than from any other source, but companies that invest most heavily in advertising top the list of most favoured brands, according to the fourth biannual fast.MAP/DMA Financial Services Tracker study.
Presented with six statements about what consumers take into account when considering a financial brand, respondents place the views of others as second most important, while TV advertising comes last of the six options.
However, the companies rating highest in terms of consumer consideration remain those with greatest presence in the media.
Personal recommendations are a source of product information for 39% of people, the research shows, putting them down one percentage point from six months ago but ahead of comparison websites (38%, down from 43%) for the first time.
Views of others are important when considering financial brands, say 60% who either agree or strongly agree, which compares with only 15% who think a regular advertising presence on TV is important.
But these findings fail to correspond with the list of brands that consumers will pick if the offers are identical. Among car insurance brands, consumers say they prefer AA, Direct Line and Churchill, while the top credit cards are Barclaycard, Virgin, NatWest and Lloyds TSB.
Preference for the top insurers has fallen compared with the third wave of the study, carried out six months ago, but those companies that have gained share also use heavy media promotion. Virgin credit cards even appear to have benefited by association with other areas of the Virgin brand, despite little advertising of the cards. According to Paul Seabrook, director of fast.MAP, people honestly believe that advertising does not influence them. “But when it comes to selecting the brands they would choose if all other elements of the product offering were equal, the most heavily advertised brands are the ones most often named.”
Alex Walsh, associate director of the Direct Marketing Association (DMA), which commissions the biannual study, suggests that consumers’ dependence on familiar brands indicates the current economic conditions have made them more risk-averse.
He says: “People still like brands they have heard of, and when you are uncertain you tend to go to a familiar name. In some areas there is a perception that if a brand is spending all that money on television, then it must be a strong, secure company that can afford to do so.”
Consumers also claim to prefer a familiar name or a good reference to more generous rates. Presented with the statement “I don’t have to know them, but their rates have to be best in market”, only 9% strongly agree and 31% agree. That makes it only the fourth most important factor of the six proposed in the survey.
Trust appears to be a more important consideration than competitive rates, says fast.MAP managing director David Cole. “If you ask someone if advertising influences them, they will say no. But the reality is that trust is important and familiarity is part of that. Whether they recognise it or not, the very presence of the brand in their life is getting them closer to it.
“I don’t think they recognise the pervasive nature of advertising – the drip, drip, drip impact it can have. The very fact that they have to know a brand, regardless of the rates, suggests there is a very strong trade-off between brand and discount going on.”
However, the fact consumers want to trust brands does not necessarily mean they do. Neither does the apparent impact of brand advertising imply that consumers believe the claims made. Consumers might feel more comfortable opting for companies they know, but it appears they do not feel compelled to praise them, or take to heart what they say.
Of the 13 brands included in this study, 39% of consumers say “none of the above” can claim a good reputation in customer service. Nationwide Building Society is best placed with 19% endorsing it. In the past two years, no brand has rated higher than 20%, which Nationwide reached in December 2008.
Walsh at the DMA suggests that, on a conscious level at least, consumers hold a “general mistrust of claims, projections and information” from the financial sector.
This view is endorsed by fast.MAP’s Cole, who says: “Consumers have a high level of mistrust about the marketing messages they receive. They are more picky and critical than they were 10 or 15 years ago.”
The study indicates that consumers are more content pursuing information about financial products themselves. After friends and relatives, consumers consult comparison, independent and brand websites as the most frequented information sources (used by 38%, 35% and 34% of respondents, respectively).
A user-friendly website is also a particularly important factor when considering a financial services brand, with 75% of respondents either agreeing or strongly agreeing with this statement – the highest percentage for any of the six given statements.
This compares to 15% saying they find out about financial products from direct mail. This figure is consistent with the third wave of the research, but is a five-point drop from a year ago.
Walsh responds: “Direct mail is still a very important part of the overall marketing mix. I think what has changed is that over time there is an awful lot more media options available to people. Direct mail increases awareness, and we have seen that awareness of a brand has a definite positive impact on whether or not somebody is going to use a service.”
DM has evolved to become more agile through increased targeting and personalisation, with Walsh claiming: “More companies are actually sending mail, but at lower volumes.”
He concedes, however, that these techniques like including promotional messages on transactional documents are more effective at retention than acquisition of customers. “There is probably a good case for saying if you are acquiring new customers, it is cheaper through other media channels than direct mail.”
The strength of websites compared with other marketing channels, such as direct mail, indicates that consumers prefer to engage with financial brands on their own terms.
Yet despite this proactive approach to tracking down the facts, consumers seem to stick with what they know. “Previous experience and a good reputation remain the main motivating factors for those buying financial products,” says fast.MAP’s Seabrook. Indeed, previous experience was cited by 46% of respondents as the reason for a purchase, and reputation by 44%. Trust was mentioned by 26%, although, in the minds of consumers, this could also be bound up with the idea of reputation.
While consumers look to family, friends and independent sources for insight, they appear to have formed intimate relationships with brands – even if they do not realise it and even if those relationships are not always fulfilling.
WE ASK MARKETERS ON THE FRONTLINE WHETHER OUR ’TRENDS’ RESEARCH MATCHES THEIR EXPERIENCE ON THE GROUND
Cheryl Toner, group marketing and communication director, AXA
Building trust with consumers is crucial and is central to AXA’s long-term marketing strategy. It is recognised that this is a huge issue within the financial services industry and the financial crisis has added to this.
Maintaining general awareness is crucial and advertising will continue to play a role but we must not dismiss the impact that other traditional vehicles such as sponsorship can have in generating awareness. AXA’s sponsorship of the FA Cup is a good example.
However, as technology becomes more prevalent in our lives, marketers will have to learn to bridge the gap between the new and old worlds. A more integrated approach will be required.
Customer service continues to be a big issue for the industry and one we are committed to addressing at AXA. Research tells us the two main causes of customer dissatisfaction are not being kept informed and promises not being delivered. The introduction of our “promise delivery system” aims to counteract this by ensuring that if any promise made to a customer cannot be met against the original timescales, an adviser will contact the customer.
Gary Twelvetree, global brand director, Barclaycard
It is no surprise that when customers are making any purchase decision they will seek out sources they can trust to give them an honest opinion or recommendation.
Our job is to ensure we are offering the right mix of products, the information about them is in the right place, we have a brand that customers feel comfortable with and we meet their expectations when they become customers. Our priorities are to ensure the Barclaycard brand is recognised, relevant and trusted with our target audiences.
It is important that we invest in our brand through advertising and other means to ensure it remains relevant to our customers and potential customers. I would hope advertising influences customers, and our ads have certainly had a huge impact.
Customers do not tend to compare rates through advertising alone, and we make sure there are a number of ways customers can compare our products against those of other providers if they are shopping around for the best rate.
Mark Vile, marketing director, Comparethemarket.com
Ultimately consumers want a product that will provide the best value, and comparison sites will continue to play a key role in purchase decisions, as will referrals from friends.
The most noticeable trend is the rise in consumers looking at products beyond car insurance. Consumers that first used Comparethemarket.com for their motor insurance are now using the site to compare other products such as loans, credit cards and life and home insurance.
In a growing market it is important to maintain awareness and presence through advertising. However, as the market matures the price comparison businesses with the most effective marketing strategies and optimal business models will continue to grow and prosper.
My view is that we will start to see more diverse marketing approaches from the different comparison sites.
Kerry Chilvers, head of marketing, Direct Line
Peer to peer review is becoming increasingly prevalent in many commercial sectors, as consumers navigate the numerous brands and products that are now available. Insurance is no different.
With so many insurance providers to choose from, advertising keeps Direct Line at the front of consumers’ minds. Knowing and trusting the brand you are buying from is important for many insurance customers, and advertising plays a critical role in helping us promote this message.
Price forms such a huge part of the decision-making process that marketers need to understand the price perception of their brands. But price is not the only deciding factor, and can easily be copied, so brands that want to succeed must meet a wider range of customer needs.
The financial crisis has changed the way consumers view financial services providers. They expect more from us, and quite rightly want to make sure we protect their interests. With more and more people choosing to transact via the internet, many of the traditional service values have disappeared, which presents an interesting challenge for marketers. We need to strike a careful balance in our marketing and customer service activity.