As the UK economy recovers, a point of concern in the financial sector is the lingering impact that the downturn will have had on consumer behaviour. While analysts have predicted that market recovery and job creation will begin to take off in the summer of 2010, another key consideration is how recovery will take shape in the perception of Britons. The financial services sector, in its effort to rebuild confidence and lending activity, will need to take into account how its customers will respond post-recession.
It should come as no surprise, then, that recession-stricken consumers are not overeager to take more debt onboard – especially those who are middle-aged. We commissinoed research to look at what can be expected from consumer behaviour over the course of next year, in terms of consumers’ future savings and borrowing behaviour. The findings provide essential background for the financial industry to shape its services to mirror the demands and concerns of post-recession Britain – and to better tailor its direct marketing to make sure it is targeting the right consumers in the right way.
On average, 45% of Britons expect that they will put more money into savings in 2010. Significantly, 18 to 24-year-olds are the most determined to save money next year, with 68% stating that they plan to put more aside – followed by 52% of the 25 to 34 age group. These findings indicate that the tough times experienced by recent graduates and new members of the workforce have compelled them to better prepare for future downturns.
In contrast, the survey found that Britons reaching middle age are least concerned about bolstering their savings, with only 37% of 45-54 year olds saying they will save more in 2010. This same age group, however, is the most determined to cut back borrowings, with 63% intending to decrease them next year – versus 43% of the more cash-strapped 18 to 24-year-old age group, the least likely demographic to cut their borrowing
As consumers and businesses tentatively look toward the onset of financial recovery, it is important to consider how financial behaviour may influence the form that recovery will assume. With lending activity decreasing and consumers indicating that they will alter their savings levels, the financial sector needs to focus on this significant shift in consumer behaviour to tailor products and services to match these needs. The latest target marketing techniques, informed by insight based on available customer data, should be employed to develop a range of compelling propositions.
Banks and Independent Financial Advisers cannot afford to waste communication opportunities with individuals, particularly when marketing budgets are tight. And yet the information locked in their own systems can open up a wealth of insight that will allow financial organisations to understand which products and services would be relevant to different customers.
We can now see that young consumers in particular want to save more money next year, whereas older Britons want to decrease their debt instead of putting more aside. These are essential factors to consider when companies allocate marketing spend to communicate with existing and prospective customers. When organisations then start to drill down into their own data and analyse it, this can further inform their marketing strategies for individual customers – or even prospects.
The challenge will be for banks and IFAs to respond in a targeted fashion to the individual requirements of existing and potential customers post-recession. By tailoring products, services and customer communications to match consumer wants and needs, the industry will be better placed to work towards an economic rebound in tandem with customers.
