Confidence in the economy has dropped and customer loyalty is running thin on the ground as a result. Consumers are seeking ways to stretch their finances, but how should brands respond to support financial wellbeing while retaining their loyalty?
What does this financial instability mean for marketing?
Consumers are seriously assessing the value and worth of their current products and services. In times of low financial confidence consumers are more apt to ‘shop around’ for the best deals. A prime example is lower insurance premiums, usually open to new customers.
However, the FCA has introduced new rules for 2022 to help out existing customers by reducing the ‘loyalty penalty’. New customers previously took advantage of the best deals, leaving existing customers feeling left out in the cold.
The authority is actively tackling ‘price walking’ – where loyal customers see insurance premiums rise annually – to prevent insurers from quoting existing customers a higher price for renewing their insurance.
Over the next ten years, consumers are expected to save £4.2bn due to the change. However, it also means the end of exclusive discounts for new customers.
The move has actually reduced the number of low-price deals on the market, and home insurance premiums have jumped 9.1% in 2022 – the biggest rise in over eight years according to Consumer Intelligence. At the same time motor insurance rose by 4.9%: risk profile changes, as does the cost of servicing.
You need to keep investing in marketing
Consumers are seeking out the best deals to offset financial pressures. This means a much closer inspection of competitors, comparison sites or even negotiations with providers.
And when your customers start looking elsewhere, it’s high time to address your retention and acquisition efforts. Some companies are immediately tempted to slash marketing budgets, but history has shown that the brands that continue and even increase their investment in marketing outlast recessions and times of slowed growth.
It’s believed to be as much as 16 times as expensive to build a long-term business relationship with a new customer.
Retaining customers is the best way to keep healthy margins – research from Bain & Co and Harvard Business School reports that just a 5% rise in customer retention leads to a dramatic increase in profitability. Existing loyal customers are also 50% more likely to try new products.
It’s believed to be as much as 16 times as expensive to build a long-term business relationship with a new customer, compared to building loyalty with an existing one. The exact values vary by sector and business, but it always costs significantly more to acquire a new customer. Why not work on retaining the ones you have? The gloomy times will pass again, and customers will remember the brands that actively supported their financial wellbeing and resilience.
A one-size-fits-all approach limits engagement opportunities with your diverse customer base. Now is the time to consider the different ways your marketing efforts can help your customers understand how you can boost their finances.
Tactics to support financial resilience and loyalty
Loyal customers are the lifeblood of businesses and require nurturing and supportive strategies, from onboarding to advocacy. When a customer doesn’t understand the positive impacts of your products or services, they are more likely to switch brands.
If you have great tools or insights that can support customers through this difficult time, shout it from the rooftops!
- Revisit your onboarding strategy – although we’re concentrating on retention efforts in this blog, it’s important to set the scene for new acquisitions. It can also spark some ideas for your retention strategy. Target knowledge gaps and, in the case of financial wellbeing and resilience, guide customers to problem-solving content, products and services. Include tutorials, how-tos, and the best ways to contact you for each issue they may encounter.
Investigate ways to set up content and communication triggers in your CRM aligned to ‘unusual’ spending patterns
- Consider the tone and language style of your content – when customers are facing a financial crisis, they need to be able to quickly and simply understand the options open to them. Keep it clear, brief and include specific actions or takeaways. Sympathy and empathy are two important tones to weave through self-help hubs.
- Investigate ways to set up content and communication triggers in your CRM aligned to ‘unusual’ spending patterns such as increasingly using overdraft and credit facilities to pay the bills.
- Churn rate is another factor to keep an eye on – how many customers you are retaining within a specific period. This metric is especially helpful during economic downturn to understand how many customers you might be losing to competitors. It can also support the projected success of the business when finances stabilise.
We are here to help
Interested in getting to grips with building loyalty and supporting customers? Read our free playbook (UK or US version). If you want support with content that can improve customer loyalty and financial wellbeing, get in touch today.