Source: Direct Marketing Association
While four out of ten people now use comparison websites to learn about financial products, brands need to go way beyond simply offering a good deal to get consumers' attention, according to research published today by the Direct Marketing Association (DMA).
Despite the growing popularity of all types of website, most people (58 per cent) say that they do not buy products just because the rates are the best in the market. Reputation, recommendation and trusted-brand status are considered to be so important that customers use up to six different methods to learn more about their short-listed brands.
As well as comparison websites, between 30 per cent and 40 per cent of customers use the financial pages of newspapers, friend and family recommendations, independent and brand websites and direct mail literature from banks and building societies before making a decision. When stating what influenced brand selection, consumers chose most brands based on previous experience of the company with the exception of the AA where more customers chose the company based on its reputation than on previous experience and Asda where trust was rated as more important than previous experience.
The third DMA Financial Services Tracking Study was conducted by fast.MAP throughout December 2009 and January 2010 among a panel of 1,600 consumers whose demographics echo those of the UK. The research recorded consumers' changing attitudes to banks, insurance companies and investment businesses and the services they provide.
"A relative lack of enthusiasm for 'the most competitive rates in the market' will be heartening news for many suppliers because it indicates consumers are seeking a reliable deal, rather than merely chasing the cheapest price," says David Cole, managing director of fast.MAP.
Prerequisites before buying financial products have remained almost unchanged since the financial tracker was launched. The research indicates that three quarters of customers agree that a clear, easy to use website is important while over half rate personal recommendation.
The report also highlights consumers' antipathy towards the financial services industry, with 71 per cent of respondents stating that they did not trust the industry. Coommenting on the findings, Robert Keitch, chief of membership and brand, DMA, states:
"It is not surprising that in such a climate of mistrust consumers are turning to several sources of information before they make a decision about a financial brand. Restoring consumer trust is crucial to financial companies as they face the daunting challenge of competing to get their message noticed by an increasingly sceptical public."
Findings from the report also point to diminishing customer service reputations among almost all of the big brand banks and insurance companies tracked for the study. Only Abbey (Santander), Nationwide and Alliance & Leicester maintained or increased their reputation for customer service. The Cooperative Bank, which was included in the study for the first time, was ranked second behind the Nationwide which tops the table for a good reputation for customer service.