Stimulating Savings – perspectives to help build your savings bookBy Georgina Woodley
How can we encourage Australians to save? This is a question we’ve heard many times from financial institutions struggling to increase their reserves. Three key insights help unpack the answer. Fundamentally financial institutions need to shift the dialogue away from product speak to language that consumers understand.
Insight 1: The mindset of savers is fundamentally different to non-savers
“Without savings I would find life very depressing and isolating. I would feel isolated from the things I do”
Understanding the differences will enable you to connect more effectively in your communications to these different audiences with messages that speak to their way of thinking.
Savers want to save. They see saving as providing a balance to everyday finances compared with a seemingly unbalanced and out of control financial world. Saving puts them in control of their destiny. It enables them to plan their lives and provides freedom and independence to purchase and enjoy life.
Non-savers see saving as detracting from their life. Savings drains their resources and restricts the sense of freedom to live life today. In spending, they see the same benefits of saving by NOT saving in as much as they enjoy the rewards of their income now rather than later.
Where most communications fail is in assuming that everyone saves, that it’s easy to save and that saving is important. Accordingly communications fail to ‘speak’ to the true consumer mindset.
Insight 2: Consumers don’t really know the savings ‘vocab’
“There is too much terminology and all people want to know is ‘what’s in it for me?’. Nobody actually gives you an answer. Yes, they give you a table with different interest rates but how many people are going to be bothered to work it out in terms of what it means to them?”
A bank that changes the vocab it has with respect to saving will win the hearts and minds of consumers. The savings literature is littered with lots of product vocab that consumers don’t understand and often don’t want to understand. It confuses them. What consumers really want to know is how the product can help them achieve their particular goals.
Insight 3: Savers want to know more about what a savings product can do for them rather than its specific ingredients
“They try to baffle you with ‘this and that’, and interest rates. They don’t explain the difference, whether it’s gross, capped or net and it’s just a foreign language. It’s done very quickly and they are talking above you all the time. What I need are simple terms; it puts people off”
Most financial institutions place too much emphasis on the specific ingredients of a savings product and not what it can do for the consumer. Simply, you will be able to ‘connect’ to consumers more effectively if your communications show how your savings products can meet a saver’s needs first rather than a description giving them lots of product ingredients.
So what are the implications?
Implication 1: The benefits of saving need to be presented to savers and non-savers differently
Savers need messages showing the real opportunities savings can provide, particularly those that control their future. Non-savers will respect language that suggests savings will help them enjoy life now, and how they can have more sooner.
Implication 2: the vocabulary of savings products needs to be simplified and tied more to the end consumer benefit
Financial institutions need to be really specific about who a particular savings product would be suited to, to help the consumer in their choice of product. The benefits of the product need to be presented to the consumer, more so than the features of the product. For example, this savings product would suit someone with an irregular income who wants to save for small treats (presents, a treat for themselves, a short break). Savings accounts should be suited to lifestyle or life events. A whole series of lifestyle products could be developed to tie to consumer life events, for example, new parents expecting their first child, young adults going on their first overseas adventure.