When pitching banking products like checking accounts, credit cards and mortgages to consumers, financial marketers often load up their ads with information that tries to address every conceivable hot-button or concern. Granted, some is mandated by compliance and regulatory matters; most is voluntary.
The more information provided, the theory seems to go, the better the chances of persuading someone. Although it’s a common approach that many financial marketers often take with their ads, it doesn’t work.
Researchers at Harvard say consumers are drowning in too much information. According to Patrick Spenner and Karen Freeman writing in the Harvard Business Review, these ill-conceived tactics actually push consumers away rather than draw them in or help them make a decision.
In a study encompassing more than 7,000 consumers and interviews with hundreds of marketing executives, the researchers examined the path to purchase — from initial need and advertising all the way through to the sale — to determine what caused some to buy, or recommend products to others, or do nothing.
Exploring more than 40 variables including price, perceptions of a brand and how often consumers interacted with the brand, the study concluded that the single biggest driver was “decision simplicity”— the ease with which someone can gather trustworthy information about a product and efficiently weigh their purchase decision with confidence.
Before creating any advertising or marketing message, it’s important to determine where the buyer is in the purchasing process. Are they just starting their journey? Or are they ready to buy? Are they a first-time buyer or repeat customer? Then craft personalized messages that nudge them down the buying path.
As a broad rule, first-time buyers need a general, simplistic approach. Repeat buyers tend to want specific information. They are familiar with the product and are more likely to zero in on the details. This is where bankers are more fortunate than most retailers: they have access to customers’ account histories, which offers them a wealth of personalizing data — e.g., new or repeat purchasers are easily identified.
If the buyer is in the early stages, consider sending them to a third-party, credible review site where your product ranks highly and the comments are useful. Third-party reviews can cut through the confusing advertising noise coming from competing products, making product selection more manageable and less stressful. That’s what we do at Liberty Bank, leveraging our positive Yelp reviews early in the process and again later in the game to help consumers affirm they are making the correct decision.
Early in the process, it’s best for marketers to couch financial products in non-financial terms. Details about interest rate ceilings and fees and detailed rundowns of comparative products can confuse and complicate decision-making. While a matrix of all checking accounts and features may provide lots of information, it doesn’t provide much guidance, leaving the consumer as confused as ever about the “best” choice. Consumers are significantly more inclined to purchase when simple information is tailored to the individual’s needs.
Financial marketers can also determine a prospect’s position on the buying path by analyzing the search terms that brought them to their website. Someone who searches general terms like “applying for a mortgage” is at an earlier stage than someone searching for “rates on 10-year ARMs”. The first prospect would best be directed to web content for new homeowners — either on your website or a recognized authority. More advanced buyers could be linked to a weekly rate monitor, a comparison on rates and terms or invited to chat with a loan officer. Similarly, search terms such as “setting up an IRA account” would indicate a new shopper compared to the more sophisticated “withdrawal limits for IRA accounts.
The marketer’s ultimate goal is to help guide consumers toward a purchasing decision and feel confident about their choice. They must provide tools that permit customers to identify and weigh features that are most relevant to them. Instead of listing account features, for instance, consider making recommendations for four lifestyles and allow the consumer to choose the one best suited for them.