Winter is Coming

How are consumers’ relationships with their money evolving? What is the impact of uncertainty on consumer buying behaviour? How can brands plan for periods of uncertainty?

Ashley Knowles

Consultant at C Space

Ashley Knowles is the Rihanna of C Space – a Bajan Queen who believes in giving people a voice. Unlike Rihanna, she spends her days immersed in our online communities interacting with consumers to generate deep insight for clients, including Zurich Global Life, Philips, Tesco and Jaguar Landover.

Early this year, Michelle McGagh made the news for ending 2016 buying her friends a round of drinks at a pub. Though a simple action, it was a significant one: It was her first purchase that entire year. Concerned by her frivolous spending in 2015, McGagh undertook an experiment; she decided not to buy anything she didn’t absolutely need for the whole of 2016. It worked. She saved over £22,000, landed a major book deal and transformed her relationship with money. What’s most striking is that McGagh’s decision wasn’t based on financial guidance. It was a moment of anxious and intuitive self-awareness. Like McGagh, more consumers are making decisions based on their own instinct rather than guidance from traditional financial institutions.

How did we get here? When the markets crashed in 2008, consumers knew they had to tighten their belts. But 2016 was a different, more complex beast. There were new levels of financial scandal, shape-shifting conflicts over political leadership, and events without any precedent like Brexit. Age-old financial assumptions came under question: is property still a safe investment? Is fixed energy pricing a trap? Are ISAs safe or should I resort back to hiding money under the mattress? Unlike 2008, what to do next wasn’t clear.

“I feel like 2017 will be worst off until they learn you have to spend the pennies today to save the pounds tomorrow. The country will go downhill…I hope I am wrong.”

Financial brands are leaving consumers like Paul out in the storm by failing to address the new age of uncertainty we face in 2017. Handling our money has always been about managing risk, but how do we do this in an age where unexpected and extraordinary twists and turns make us question even our basic financial assumptions? We see traditional pillars of financial guidance sticking stubbornly to products and messages that have worked before. Even those we trust to tell it like it is (most notably, Martin Lewis) are quiet and non-committal about what’s to come. They’re stuck in a different world and as a result, consumers don’t know who to turn to. In a market of expert paralysis, brands will stand out and make an impact by tackling this new landscape head on.

“My main thing is ensuring I have enough financial provisions in place to see me through my final years, and making these decisions makes me feel extremely anxious and concerned.”

Across our communities, consumers are showing anxiety and with little relief in sight, acting in unpredictable ways. Some people are seduced by grassroots austerity movements like No Buy Day and are cutting spending to the bone. At the other extreme, many are living for the moment, spending tens of thousands (that they don’t have in the bank) on holidays, homes and the high life.

“Life’s for living…spend that pension pot on what matters to you, holidays etc. because you’ll never know what will happen!”

The financial brands that are winning today are those that step out of the shadow of denial and see 2017 for what it is. TSB Partners, for example, approaches personal financial challenges by building conversations with their consumers in mutual, human partnership. Their vision is to ‘actively help people, not just sell them things’. This is important: in a new climate of uncertainty consumers don’t want ivory towers talking down to them; they want adult to adult conversations.

2017 needs to be the year financial brands climb down from their pedestals. Their traditional position as the bastions of financial security no longer works. In today’s new uncertainty, no one knows the solution. The way to get to the best solution is for brands and consumers to work together. Brands need to follow three crucial principles.

  • First, acknowledge how tough a year it is. Admit the anxiety consumers are feeling and pave the way for real conversations.
  • Second, take a page from our value-focused friends and start having conversations with consumers about their financial values and goals.
  • Finally, keep it real. Talk about options, solutions and implications in the consumers’ language, so they can immediately understand and apply it to their own lives, no matter their level of financial knowledge.

It’s time for brands to confront their own fears about the year ahead and have real conversations because it’s in these tough times that the strongest relationships are built.

 

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