The days of monogamous relationships between financial services providers and their customers are long gone. But it’s surprising how the presumption lives on, often to the detriment of successful marketing communications.
The financial services industry seems to have a pretty powerful predilection for corporate acquisition. Cast your mind back, say, twenty years (or, depending on your age, as far as you reasonably can) and play a little game called ‘Where are they now?’
A good place to start is with the Mutuals. Most of them are still here in some shape or form, but few remain independent, even fewer retain mutual status and quite a number have been so thoroughly subsumed into their acquirers that they have left little or no trace. You can go on to the insurers, the banks (remember the Midland?), asset managers and even IFA groups.
These activities raise a number of interesting questions, the most obvious of which is “Why?” Of course there are brands of sorts, but often the takeovers have resulted from the weakness of those brands; there might be retail outlets, funds under management, or ranges of other products and services.
Ultimately, of course, it’s all about customers – millions of them, on the face of it. The predators have acquired them in batches for as little as 1p a head up to about £25,000 each which, according to your personal viewpoint and the advice of your chief Bean counter, is either an unrepeatable bargain or an act of the grossest folly.
The logic – at either end of the price spectrum – requires further examination.
Risky rationale?
On the face of it, the logic is clear. Financial services institutions are expensive to run and the bigger the customer base, the greater the economies of scale, the more competitive the products, the bigger the brand, the more persuasive the marketing, the better the opportunities to cross sell and so on ad glorious infinitum.
But if the logic of building a customer base appears sound enough, the rationale for ‘acquiring’ customers takes us into somewhat murkier waters, because it carries with it the implication that the customers are now ‘owned’ by the acquiring institution, or at the very least have transferred their allegiance to it. And that, from a marketing perspective, is quite risky thinking.
Promiscuity rules
Let’s pause here for a moment to consider how many ‘relationships’ the average family man or woman might have with financial services providers. There will be a bank, or banks; a building society or mortgage provider; insurance companies (almost certainly plural); credit cards (a multiplicity in most households); savings and investment houses; perhaps a PMI provider and quite possibly an intermediary or two. Do all of these organisations ‘own’ the customer, or ‘have a relationship’ with the customer?
As consumers, we all know the answer to that one – today the customer is king, and we are the ones who hold court. Nobody ‘owns’ us. But what about ‘relationships’? Do we have relationships with all of these organisations, as many would like to imagine?
This is a much trickier area. Any insurance company that believes it has a ‘relationship’ with a customer simply because it has sold them a term assurance policy would do well to remind itself that no-one in their right mind would suggest that Argos has a relationship with a customer who simply bought a food mixer. On the other hand, we would probably accept that we have some kind of relationship with our bank, or with an IFA, but we would probably start to become a little prickly if we sensed that they regarded it as proprietary.
Building bridges
Financial services institutions are, as the description makes clear, ‘service’ businesses and it is fair to say that we are more inclined to develop relationships with those who render services than those who flog us a product and move on. The trouble is, quite a lot of financial services businesses consists of just that – flogging an ISA or a term policy, and moving on.
So where does all this head-scratching about relationships lead us to, in terms of marketing communications?
Presumption seems a very bad idea. We might see the recipient of our marketing communications as our customer. They see us (if we’re lucky) as one of their providers. They might not relate to us at all, particularly if we’ve changed our name or been taken over. So it’s best not to be over-familiar, or to presume too much. That way there’s more chance they’ll be open to overtures.
Unless you are a bank that provides a personalised service (most don’t), or an intermediary who has been handling family affairs for some years, it’s better to allow the recipient to determine whether or not there is a relationship. Too many marketing communications work on the assumption that recipients have been waiting by the mailbox for the latest update on how we can improve their lives. This is not only irritating for them, but counter-productive for us.
Be very careful with brands. The one we have acquired might be weak, but it is the only real link to the customers we have acquired. We can tell them it is now part of something bigger and better (and re-branded) but they might choose not to believe it.
It does no harm to acknowledge that the customer has a choice. Few providers have the stomach to do this, perhaps because they imagine it undermines the notion of relationship. Yet if there is a relationship, the acknowledgement can be seen as a gesture of confidence, of respect for your customer. If there is no relationship, it’s a good way to start to build one.
Let’s stop pretending that ‘prospects’ can’t tell the difference between a ‘personalised’ mass mailing and an individual communication. It is genuinely annoying to be addressed on a ‘one-to-one’ basis when it is evident that it is no such thing.
The Holy Grail
In the best of all worlds our communications will create the conditions for ‘our’ customers to want to have a relationship with us. We can contribute to this aim by recognising past business (without grovelling about it); by setting out our proposition in clear and accessible terms; by asking how we might help; by offering access to a choice of communications or services routes (which means electing for rather than having to opt out of the ubiquitous ‘news about our products and services’); and by recognising that they always have a choice.
Over and above all of this is the simple recognition that we are dealing with real individuals – with real, independent lives – and not file numbers, within cells, within a customer database.
It might sound like hard work. But it’s really only common sense. And by far the best way for acquirers to achieve a solid return on their database investment.
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