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Written by: Mark Gillen | Econnexx
How Do Consumers Choose a Financial Service or Product?
Do you know why consumers pick your competitor's products over yours?
Or why they like some of your services and not others?
With competition for financial services and products fiercer than ever, and consumers a lot more cautious, you need to know exactly what your customer is looking for.
As you attempt to attract them your way, here are a few statistics to help you understand how financial consumers make their purchasing decisions.
1. Opening a bank or building society account
Between 60% and 80% of people will make the decision to open a bank or building society account on their own. About 10% will compare products before choosing while 10% research information before making a decision. Only about 5% seek professional advice.
2. Taking out a mortgage
Up to 40% of the people who take a mortgage seek professional advice before they make their choice. Most well off retired people will make the decision on their own but still take professional advice, compare products or research information about the subject. Those consumers who are hard pressed are the most motivated to seek professional help.
3. Taking out a credit card
For consumers who have had a credit card in the past 30% to 50% made the decision on their own with the majority choosing to compare products, research, or seek professional advice.
4. Taking out a car or home insurance
Most people who take out a car or home insurance make the decision on their own. Unsurprisingly, a large number also prefer to compare products (up to 40%) or conduct researches (up to 20%) before making a decision.
5. Taking out a life insurance policy, income protection, or critical illness coverage
A majority of those who have had the chance to decide on taking out a life insurance policy, income protection, or critical illness coverage made the decision on their own. Up to 30% take professional advice and 10% to 20% compare or research products.
6. Figuring out what to do with savings
Similarly, when it comes to savings, people prefer to make choices on their own. Leading the queue, as you would expect, are those retired and on a budget. However, 5% to 20% of individuals still find product comparison, researching and professional advice helpful.
7. Putting money into a pension plan
Most of those who have had the chance to decide whether or not to put money into a pension plan make the decision themselves. A good number (5% to 20%) will seek professional advice. Alarmingly, very few (no more than 5%) bother comparing options or researching information before making a decision.
8. Applying for a loan
Whether or not to apply for a loan is another decision people would rather make alone. Up to 15% say they compare products with another whilst 10% research and between 5% and 10% take professional advice before making a decision.
9. Paying off debt and credit commitments
If they are not making a decision themselves, people will rather take professional advice when looking to pay off debt and credit commitments rather than decide with their partner. Between 5% and 10% compare products or research information before deciding.
We Make Financial Decisions Alone
When it comes to buying financial products or services it seems that most of us like to make important decisions ourselves or with the help of a financial planner. We prefer not to make joint decisions with our partners.
Market Your Financial Products Intelligently
Times have changed; financial services firms who understand how potential customers are researching and deciding what products to buy will steal a march on their competitors.
Knowing what research terms customers may be using in search engines like Google will allow firms to use the right terminology on their websites and to get found online.