Winning Over Rich North Americans

A new Forrester report on "Winning The Affluent In A Downturn" recently surveyed 2,500 affluent North American households on the state of the economy, the market, and technology. The findings show the population to be generally confident about the economy and the market, secure in their wealth, and optimistic about technology.

Forrester's findings have led the company to recommend that companies should adopt one of two approaches in order to gain market share. These are either to attempt to breed loyalty and/or to promote a cohesive, relevant brand experience.

The report was originally conceived to help steer US companies through what is seen as the current volatile economy. Already many US financial services firms are changing their marketing campaigns to fear-inducing marketing messages to attract and retain clients. Forrester's initial assumption was that these efforts miss the mark with the affluent, i.e. those consumers with assets to invest of at least US$1 million.

Ekaterina O. Walsh, Ph.D., senior analyst at Forrester, noted that, "The bottom line is that retaining customers costs less than acquisition, and loyal customers buy more frequently and spend more. Moreover, loyal customers are a firm's best acquisition vehicle. One of the top three ways affluent investors learned about their most recently chosen financial provider was through some sort of referral."

To better understand what the affluent expect, Forrester analysed four areas in which these consumers interact with financial institutions: advice, branches, websites, and customer service. Timely, relevant, and customised advice, which includes everything from picking stocks to tax planning, plays a key role in retention. The affluent also expect this advice to be offered via multiple channels, with 84% of millionaires expecting online and offline advice to complement each other.

The greatest benefits to branch visits for the affluent are high-touch service and privacy. Clients who report that their firm offers a private setting are more likely to recommend that firm and less likely to move to another company, for anything from lower fees and cheaper credit.

Affluent consumers' affinity for technology is evident in how they use the Net to manage their finances: 44% of the wired affluent visit financial providers' websites, compared with just 25% of their non-affluent peers. In this vein, they are likely to be looking for accessible information and self-service when going online. Customer service is the fourth component to a firm's total experience. With today's tight budgets, financial firms should offer cross-channel service and rapid responses to client email.

Overall, the research findings clearly show that, to increase loyalty, companies must get back to basics by understanding their customers. Consumers do not separate their perception of a firm into individual channels or interactions. Instead, all their experiences, ranging from online statements to branch visits, mesh into an overall impression of the financial institution. In addition, financial firms can expect to succeed by focusing on the unique benefits of their services and integrating their delivery based on their target market's expectations.

"Affluent clients whose primary financial providers successfully integrate two or more desired services are 25% more likely to recommend the firm and 24% less likely to leave," Walsh added. "Since the affluent are seven times more likely to list credit referrals than ads as the way they heard about their current provider, firms can't ignore the power of loyalty."

All articles 2006-22 written and edited by Mel Crowther and/or Nick Thomas unless otherwise stated.

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