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The question of what ‘marketing’ in an age of digital disruption looks like is a burning one for many financial services organisations, perhaps nowhere more so than in the superannuation industry. Here, Andrew Baker, Managing Director, Tria Investment Partners, counsels staying open to change rather than sticking with offers whose best days are in the past.
One of the biggest challenges facing any industry, and particularly its marketers, is trying to communicate the benefits of an offer whose best days are in the past.
Consider the lot of travel agents in the age of Travelocity. Record companies in the iTunes age. Or even Kodak in the days of not only the digital camera, but the camera phone.
Generally the problem is not a lack of marketing budget. It’s that the customers have stopped listening, captivated by a new, better, faster, cheaper way of obtaining the benefits that the old product delivered. The old product still works, but has been disrupted by something completely different and hard to respond to. In such a situation, sometimes no amount of marketing budget will help.
The internet and related technologies of the digital revolution have devastated intermediated and collective business models by giving customers direct access to information and the markets they are seeking to participate in, whether that’s the market for air tickets, or the sharemarket. Customers used to have to band together to get a good deal, such as via group travel bookings, or managed funds. That no longer holds true.
We are fortunate to work in an industry where customers are forced to participate via their 9.5% SG contribution. However, while they are forced to participate in super, the customer is by no means forced to play ball with the industry, and indeed, is increasingly less inclined to do so.
Keep in mind that super funds and managed investments are also intermediaries offering collective solutions. The customer is increasingly able to go around them thanks to the SMSF structure, and easy-to-use technology which provides direct access to most of the investment markets they need – online deposits, online broking, and so on.
Roughly 5% of super members have now abandoned the wealth management industry in favour of SMSFs. Doesn’t sound so bad? Unfortunately that particular 5% has over 30% of total super assets, so that is a pretty bad 5% to lose. And in a typical year, another 50,000 Australians join them, taking around $16 billion with them.
What is a marketing professional working for a super fund to do? It may be that SMSFs are over-sold or even mis-sold, but they are a fit with the global trend away from collective solutions, and swimming against the market tide is generally a losing strategy.
The challenge is compounded by the compulsory nature of super; quite a few marketing professionals, especially in the not-for-profit segments, have never had to compete hard for inflows, and are at a loss at how to respond to an unfamiliar challenge.
Part of the answer is get clear about where the value proposition of the collective solution still works, to enunciate it clearly, and to target it at member segments for which it is still relevant. This will be the great majority of members for many years yet.
But for many marketers I know, that is not enough! They want to take on the disruptive challenge from SMSFs – and win. These die-hards have a worthy but arduous road ahead. Building competing offers is perhaps the least of the problem. The real challenge is taking their often skeptical board and senior management on the journey from absolute conviction in the rightness of their collective solution, to the pragmatism that although this may be the case, it just doesn’t matter if the member stops listening.
Andrew Baker is the founder and managing director of Tria Investment Partners, a leading boutique consulting firm providing strategy, implementation, and product services to the wealth and asset management industries since 2004.
