How Next Gen Customers Buy Financial Products Like They Buy Moisturizer -https://ift.tt/JxRFrWk –
Struggling to engage younger customers? Are you catching yourself thinking ‘is it our value proposition? Or our people?’ Is this making your head spin in circles?? We wouldn’t be surprised if it was! The next generation customer* is different. They are different in how they buy from financial services providers. They use reviews and look for flat out honesty to better inform their purchase decisions. And they are inspiring other generations to do the same. FS leaders looking to drive new business must embrace these changes by next generation customers and understand why they came to be in the first place.
Here are two important observations that financial services leaders need to know:
Change 1: Customers Review Financial Services Products Like They Review Skincare Products
Access to technology and information has enabled the next generation customer to go beyond traditional sources of information and make informed decisions from a wealth of sources. This is the case across industries where customers can learn about any product, any service, and any experience through reviews on channels like Reddit, YouTube etc. These channels provide brutal honesty that speaks to the next generation customer. Unexpected and detrimental events such as the COVID-19 pandemic spurred many customers to focus on and open up about health, whether physical, emotional or financial. Next generation customers are growing up with this and are not averse to transparency and honesty — values that they are bringing with them when making important decisions.
When it comes to skincare products or financial services products, customers want to be told by people they trust about whether the product is actually going to do something to improve their health; the health of their skin from within, or their financial health. This is why we have seen a rise in celebrity skincare brands and FS firms partnering with social media influencers to build trust with younger customers. So how different is a moisturizer designed to retain moisture in your skin and prevent wrinkles to an AI powered savings account aimed at preventing excessive spending and help the customer get to their goal?
Financial services leaders must acknowledge that next generation customers are natural truth-seekers and are looking to be influenced across a broader spectrum of channels. Progressive financial services leaders understand the importance of standing by a strong set of values and exploring partnerships with social media influencers to start a dialogue with their following about home buying or budgeting.
Change 2: Customers Contact Financial Services Providers Much Later in the Process
In the past, financial services providers were often the first-point-of-call when customers came to inquire about solutions to meet a goal or a need, and with that came a sense of comfort, confidence and control for financial services leaders. However, this confidence is now dissolving owing to changes in next-gen buying behaviors.
Gen Z* and Gen Y* customers spend more time conducting independent research than older generations (Figure 1), with both financial services and skincare products. What is driving this behaviour is a ‘customer first’ / ‘me first’ mindset. Financial services leaders are increasingly noticing next-gen customers displaying a ‘I decide how I work with my provider, on my terms’ kind of mindset.
Customers nowadays are also overwhelmed with information from providers trying to get in contact with them about new products and services. Have financial services providers gone too far? Might this have pushed customers over the edge; causing them to put their foot down and decide to dictate the terms of the relationship with providers? And here’s a broader thought: financial services firms have spent years trying to install a focal point of their organizational culture – focus on the customer, not leading with bank products and services. Has that now been installed? And forcefully so by the customer? Is this ‘customer focus’ now backfiring on FS firms?
Financial services leaders must acknowledge this shift and more importantly re-think the role they now play in the buying journey. Younger next generation customers require time and space for themselves in their discover journey with providers. Progressive financial services leaders understand the light role they now play in this journey; providing customers with a clear path to information and decision-making tools, should the customer want to use them.
*Next generation customer – individuals born between 1995-2010 (Gen Z, Centennials) and between 1980-1994 (Gen Y, Millennials) that are either mass market retail banking customers with investible assets between US$0-US$100,000, mass affluent customers with investible assets between US$100,000-US$1M or HNW individuals with investible assets between US$1M and above.
*Gen Z – individuals born between 1995-2010
*Gen Y – individuals born between 1980-1994