Our day to day lives have been turned upside down. Office workers have been forced to work remotely, masks have become an essential accessory for anyone looking to go outside and parts of the economy such as nightclubs and international travel have been shut for months.
For financial brands, an important change since the onset of COVID-19 in March has been the paradigm shift in customer habits. With government restrictions forcing people around the world to stay indoors and limit their daily routines, purchase behaviors, as a result, have been completely upended. People are no longer making the same weekly and monthly purchases such as buying lunch while at work, going for a pint with friends at the weekend, or booking a holiday abroad. In fact, the changes to shopping habits have been so severe that in America, Mckinsey has reported that 75% of consumers have changed brands during the pandemic.
While the changes in purchases may seem minor, the overall effect of these transactions means that historical customer data has become far less useful as an indicator of customer preference. Financial brands can no longer predict future customer transactions based on previous behaviors as those behaviors have changed radically. For example, credit card companies can no longer rely on the understanding that customers are regular travelers and therefore interested in perks and offers around air miles.
Financial brands may not be able to differentiate between a potential customer who is likely to buy a product and someone simply browsing items with no intention of making a final purchase. This lack of understanding in customers represents a major challenge for financial organizations as offers and marketing messages may become less effective and out of touch with a person’s individual wants and interests. With reports finding that personalization is key to long term success, it is crucial that financial brands need to find a way to better understand their customers sooner, rather than later.
The case for consumer vitality
Financial brands can close the gap in their understanding of customers by looking beyond transactional data to create a score that accounts for a customer’s ability to spend and financial confidence, alongside their health safety confidence and willingness to venture out. We call this the ‘consumer vitality’ score. Consumer vitality data analyses an individual’s spending habits across multiple different sectors in order to gain a holistic understanding of consumers. Financial brands can use this information to see how people’s habits have changed since the pandemic and how likely they are to react to certain offers and promotions. If someone has been spending money on entertainment and streaming services during lockdown, for example, then they might be interested in a bank that gives them discounts or perks on Netflix or Disney+ when they sign up for a new credit card.
At ADARA, we’ve used our data to create the ADARA Consumer Vitality Index. The index accounts for both the financial resources individuals have at their disposal as well as their willingness to participate in group settings – to be physically close to others – whether that is at restaurants, shops or on planes. Financial brands can use this information to clearly understand how their customers’ habits are changing in real-time and to send relevant and compelling messages that are based on how people are spending their time.
Until we are at an ‘end point’ of this pandemic and its impact on our activities, however that comes about, understanding the customer must go beyond knowing what they prefer to buy. Habits will evolve along with personal circumstances such as job changes, while confidence in venturing out varies by both individual and region. Those in Wales are under full lockdown. England is under three levels of restrictions – but there are huge differences even locally: people in Southend are enjoying much more freedom than the rest of their neighbours in Essex. Each person may have different opinions on how many trips to the shops is ‘too many’. To understand how to react to this, financial marketers must ensure that their data accounts for these variables and can help them to respond in real-time. Not only will it drive better results, but the customer will appreciate their financial providers understanding what they need at a given moment.
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