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Under the influence

There used to be a time, not so long ago, when young boys doffed their caps as their headmaster passed by, when the bank manager was held in such high regard that it was inconceivable to question his authority and when politicians were revered as the custodians of a civilised society.

There also used to be that enviable epoch when the consumer believed all he or she saw on television and a comprehensive ad campaign could change the habits of a generation. But this has all changed.

As Michael Sugden of advertising agency VCCP advertising explains: “We all used to defer to a higher authority, one composed of our leaders in both class and wealth. Our elders, too, were seen as a source of knowledge to be listened to and followed. In the age of deference, everything so was much simpler – a small band of professionals and ‘betters’ were lionised as the spokespeople for a generation, their views espoused and sanctified as gospel.”

However, the consumer no longer feels the need to reference its behaviour against a small band of individuals and has slowly changed the shape of the ‘authoritative’ pyramid it so longingly coveted. There is an ever-increasing chasm of trust between the historical mandarins and today’s consumer. Today, the trust in the aforementioned has wavered considerably and in many cases vanished altogether and every brand now needs to consider what the trust deficit means to it.

For instance, a study undertaken by YouGov on behalf of Teamspirit found that only half of consumers claimed to trust banks and building societies and that just 5 per cent trust investment companies and 8 per cent insurance companies. This is not good news for the financial institutions, nor is it good news for the advertising agencies because they have to find an alternative to just banging on about their product to an uncaring, fractious and non-believing public.

So, why has the trust landscape altered so radically over the last 40 years or so and is it possible to redress the balance or is a new order of reference points taking shape? The research, in part, has led to the conclusion that trust can, in part, be rebuilt by adopting a different model of communication – the Influence Model. This is based far less on what you say about yourself and far more on what others say about you. It is about reference and influence through credible third parties.

Research by VCCP confirms that the Influence Model hinges on the strong belief that we are influenced by a series and continuous stream of persuasive reference sources rather than one single branded message.

Information and experiences are used by the modern consumer before they make a decision in this complex, low-trust environment. Sources of influence might include other customers, employees, intermediaries, friends and family, third-part endorsement, experts, TV personalities, the media and brand experience.

In fact, brands such as ING Direct understand this and harness the power of recommendation in their brand communications – most recently highlighting that 96 per cent of their mortgage customers would recommend them to their friends. Effectively, their customers in turn become their most effective and credible brand advocates.

The reference points that the consumer now seeks out are dominated by the people on the street – their peers – and lots less by the stalwarts of a bygone society – doctors, financial service providers, bank managers and other professionals.

For instance, the opinions of Fern and Philip are more likely to carry weight and influence as to the suitability of a pension plan than a financial adviser. It is not that trust has dissolved but just the sectors and individuals of society that we place most trust in have.

For instance, the Teamspirit survey concluded that while over 60 per cent of marketing budgets of financial services are spent on advertising and direct mail, they account for under 20 per cent of influence. However, at the other extreme is PR and sponsorship which accounts for only about 15 per cent of spend but a staggering 50 per cent of influence.

And this is one of the fundamental problems facing the financial institutions for people no longer defer in making brand choices but refer to those closest to home.

Ben Stephens, managing director of SFW, which works for a number of financial clients, says: “The opinions of friends, family and others that surround a person hold immense sway and unless brands can identify the disparate groups that make alliances based on kinship, they will face an ever increasing discrepancy between their roots to market and the consumer’s root to choice.”

The social search engine of the consumer is their quickest route to the most credible source. Michael Sugden of VCCP says: “Students open bank accounts based on the collective experience of a handful of their friends and their family, their mortgage is likely to be placed from a search of the internet offerings and the decision as to choice of IFA for any money left over after paying their student debts is probably going to be referred to them by a friend or because they read about them in an influential paper or magazine. Research has also shown that financial journalists, who are specialists in their field, are considered particularly influential in guiding choice.”

Teamspirit also asked customers who or what had influenced their choice when they last bought a financial services product. Regarding buying a pension, the majority cited their employer or an IFA as those most likely to influence their decision. But the biggest chunk of influence by some margin is now newspaper articles – the personal finance pages in particular – and published league tables giving independent comparative information. Influence by friends and family, and also IFAs, featured strongly, but paid-for media content had a much lower claimed effect. The latter is of some concern given the traditional patterns of media spend in this sector.

Mark Evans, managing director of Vivid Lime, a digital direct agency that specialises in the financial sector, says: “The financial services industry, like many others, needs to be smarter at understanding when and how to develop a dialogue with all their audiences and to understand the nature of the relationships they want. No company has a bottomless pit of money and with the proliferation of media and the continuing downward pressure on profits, there is an obvious need for companies to re-evaluate their marketing mix.”

At a time when trust between customers and the whole financial service industry is somewhat shaky, the influence model could become the bedrock from which to build an effective communications strategy, particularly as the new agenda limits the weight attributed to certain traditional roots to market and challenges the balance and interdependence between public relations, advertising, direct marketing and customer relationship management.

Maximising the power of influence for financial services brands through a more effective media mix is probably the biggest marketing opportunity around. But the challenge is to introduce fresh ideas and discard outdated models that continue to cloud the communications picture.

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