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At times it may seem like there’s an enormous gap between focusing on consumer advocacy and focusing on driving revenue at financial services companies. After all, banking is a fundamental utility rather than a form of entertainment or hospitality. What do consumers need beyond basic products and services?
And yet experts in the industry have repeatedly shown that advocacy is not just important, but is also the key to winning in the industry today. Forrester Research writes, “Customer advocacy is the key driver of loyalty at retail financial services firms. Loyalty, in turn, yields the most sustainable revenue growth for these firms. ... Focusing on customer loyalty is no longer just a smart strategy. In an age of empowered customers, it is an imperative.”
“Focusing on customer loyalty is no longer just a smart strategy. In an age of empowered customers, it is an imperative.” </i >
KPMG supports this view, declaring, “Banks that embrace change and systematically transform themselves to meet new customer demands will achieve a competitive advantage in the marketplace. Those that continue to ponder—or worse yet, resist—change will suffer.”
And Bradley Leimer, Co-founder of Unconventional Ventures, said in an interview with MX that “banks need to make customer lifetime value actually translate to a lifetime value from the financial provider — not the other way around.” He added, “With long-term advocacy programs like this, the incentives of financial institutions will be aligned with the incentives of account holders, and long-term relationships can develop.”
“Banks need to make customer lifetime value actually translate to a lifetime value </i >from the financial provider — not the other way around.” </i >
—Bradley Leimer, Co-founder at Unconventional Ventures
Put simply, as you become a true advocate for your customers, you’ll provide them with lifetime value and simultaneously win long-term brand loyalty.
Given that empowering financial strength can yield big results all around, it helps to first get a clear sense of what customers need. To this end, we surveyed 1,029 random U.S. consumers about their financial habits as part of our Ultimate Guide to Financial Advocacy. By understanding these survey results, you can start to plan for what will most help your customers.
Here are three of our findings. For the full data set, download the ultimate guide.
1. People want to save, but they need guidance.
Even though most people struggle to always stay within their budget, 99% say it’s either very (71%), important (20%), or somewhat important (8%) to put money in a savings account. Only 1% view it as not important.
This finding might not be terribly surprising; however, it does open up a core question for financial services companies. That is, when 71% of consumers say that something is very important to them and you offer products and services that directly help them on this front, how are you differentiating yourself? What education, incentives, technology, products, and services are you offering that truly help consumers on this front?
Given that a quarter of respondents say they’re rarely able to contribute to savings, it’s clear this is a service people need.
As an aside, these findings may seem surprising if you’ve ever heard the statistic that nearly half of Americans can’t afford a $400 unexpected expense. The good news is this: That statistic is wrong. It’s a misrepresentation of Federal Reserve survey data, which in actuality shows that the percentage of Americans who can’t afford an unexpected $400 expense is only 12% —still far too high, but not half. Fortunately, the overwhelming majority of Americans have some money stored away, as shown in our findings above.
Still, given that only a tenth of people save 20% or more of income per month, there’s a big need for financial services companies to pitch in here.
How do consumers perceive you’re doing on this front? 42% of consumers say financial institutions help at least a little bit, with 8% saying they help a lot and 34% saying they help a little bit.
Taken together, this means there is plenty of room for improvement here since 58% of consumers say their financial institution doesn’t help at all. Whether or not that’s true in practice, the fact that this is the perception of consumers is still critical information for financial institutions to keep in mind (though keep in mind that perception of help isn’t the same as actual help). If you offer financial guidance but your customers aren’t aware of it, your brand benefits little from your services.
Looking to make the transition from financial intermediary to financial advocate? Download the Ultimate Guide to Financial Advocacy.
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