Recent research from the FCA has underlined how consumers are prone to errors when choosing financial products and services.
This is for a whole bunch of reasons driven in the main by their inherent complexity (for most consumers) compounded by intangibility. Faced with complexity, the research concludes, consumers can simplify decisions in ways that lead to errors, such as focussing only on headline rates.
The report goes on to suggest that in order identify and correct mistakes we need to be able to detect behavioural bias, which makes a nice change from the constant chatter about the need for various forms of ‘simplification’.
Even if this was achievable (and there’s scant evidence despite several industry attempts) making things less complex is no less likely to drive more rational behaviour. How we feel about a reS. product or brand is often far more powerful than what we think.
There is little point fighting basic human nature and marketers are better off recognising that while every brand is a story it is a story about the consumer, not about the brand. More than ever, we express ourselves through what we buy (and what we don’t). Our purchases are extensions of our personality, or the personality we’d like to project.
Subtle but profound shifts in power are taking place every day. One from Trendwatch that got my attention was that consumers are increasingly attracted to unproven and unknown brands the way they were once attracted to established brands in the past. In fact, ‘established’ is now often just another word for tired if not tainted.
This rather turns things on their head. The traditional concept of ‘brands’ rests on the idea that consumers need recognizable, trusted symbols, honed over many years, to help them navigate the wealth of available choices. However this idea is being swept aside by the emergence of ‘instant trust’, a trend most relevant in mature economies, where trust in big business has never been lower. Only 28 per cent trust big business in the UK.
This should raise alarm bells for both advisers and providers alike looking to sweep up the mass unadvised with various direct propositions. So-called ‘clean slate brands’ with simple, lean operations, transparent supply chains and clean design are easily understood and trusted by consumers. And with scandal after scandal (from financial products to horse meat) being blamed on excess ‘complexity’, who can blame them?
But newness alone won’t cut it. “Great marketers don’t make stuff, they make meaning” (Seth Godin).