1. Will there ever be a new ‘normal’?

Just two in five customers currently see themselves returning to their previous everyday behaviours and the consumer trends of 2019, according to Ipsos MORI¹. Behaviour trends that solidified over 2020, such as shopping ‘consciously’, buying locally and embracing digital commerce, are predicted to remain in place in 2021, according to Accenture².

At the same time, consumers may be forced to make trade-offs in their purchasing decisions, such as sacrificing sustainability against health and income needs. EY’s Future Consumer Index³ shows that the 2020 typologies of ‘keep cutting’ to preserve funds and ‘staying frugal’ have been falling, but the ‘anxious consumer’ archetype remains.

Unknowns remain as to how Brexit will impact consumer behaviour. Rising prices due to tariffs and logistics resulting from leaving the EU⁴ may prompt a savvier consumer with cost-effectiveness front of mind. Discount brands are already preparing for a rise in cautious consumers who seek variety, convenience and cost a lower price⁵.

At the same time, there remains a desire for ‘pleasurable experiences through consumption’⁶ in times of recession, where premium brands play an emotionally comforting role.

Brands need to be agile and adaptive. Brands can tier offerings by needs scale, from essentials to treats, to pick the right marketing moment and align to the different consumer typologies. Premium brands can still position themselves as ‘affordable indulgences’⁷ that bring moments of joy.

Where consumers still seek ethical or sustainable products and services but have to keep a close eye on budgets, marketers should consider meeting these information needs through upfront messaging that reduces the need for in-depth consumer research and creates greater levels of convenience for shoppers. Websites continue to be a critical step in the purchase journey, so brands should be well-positioned with explanatory and informative content.

2. Metrics change-up

Brands are encouraged to move away from ‘return on ad spend’ metrics to assessing success by whether it is considered an incomplete data point – a larger range of metrics will be helpful to brands, including lifetime value, share of category and share of voice⁸. KPMG also predicts 2021 will have a stronger focus on increasing customer lifetime value instead of channel per profitability⁹.

Deloitte’s Global Marketing Trends C-suite Survey found that in these tough times businesses continue to prioritise efficiency and productivity over human-centric initiatives (customer engagement and increasing impact on society)¹⁰. At the same time, consumers are expecting ‘more’ from the brands they use, and this efficiency mindset can be incongruent to customer purchase decisions subject to human experiences (values, emotions, actions and trust)¹¹.

Customers are increasingly seeing through tactics such as loyalty programmes designed to make them spend rather than rewarding loyalty – resulting in ‘mercenary customers’¹² who are ready to switch brands for the right price.

What this means for marketers:

Customer-centric marketing is likely to help brands gain an edge over their competitors in acquisition and retention. Marketers of all sectors need to go where the customers are and identify the touchpoints that are likely to occur on each journey to extract value, build loyalty and better serve them – customer data platforms can bring clarity of those journeys and therefore greater relevance in marketing. Successful loyalty programmes for FS focus on emotional connections and improving LTV by acting in a customer’s interests, and goals for financially responsible behaviours. Marketers – especially those in FS – need to build on any trust gains over 2020, further personalising messaging and responding to distinctive consumer demands.

3. Purpose vs promises

Customers are still looking for brands to have a purpose that aligns with their own values. For example, 46% of consumers in Britain say they would be more likely to spend money at a business that supports local charities, according to Deloitte research¹³.

Over 2020, almost four in five people could cite a time when a brand responded positively to the pandemic, with one in five agreeing it led to increased loyalty to that brand¹⁴ – companies acting in self-interest could see a decrease in custom.

2021 could see more brands moving their focus away from customer demographics to values through transparent messaging¹⁵.

Marketers must not forget the practicalities, however: being able to deliver on promises results in customers being 2.4x more likely to repeat a purchase, and when brands are routinely reliable, customers are 2x more likely to recommend them to a friend¹⁶.

What this means for marketers:

Brands seeking to lead with purpose should be wary of muddying the waters through complex internal decisions between departments. Alignment is needed between brand identity and stakeholder commitments, and all departments need to work towards the same purpose. For marketers, who may face competing priority requests from sales, boards, frontline staff and more, this means assessing messaging, strategy and assets using one question: does this serve or promote our purpose?

At the same time, marketers can’t forget the fundamentals – where purpose is still in development or not fully embedded within an organisation, focus should be on what the organisation delivers well, and consistently. Marketers can also make use of consumer participation and user-generated content – not much else can match the real passion and transparency of original consumer content in a marketing strategy.

4. Forgotten generations

Marketers need to rethink where their demographic focus lies – Mintel has found that the pandemic increased marketing focus on Gen Z and millennials due to the surge in ecommerce, streaming and online activities (Netflix now outvalues ExxonMobil), while neglecting older generations who are entangled with messaging on care homes and keeping safe¹⁷. Campaigns will often focus on issues such as loneliness over ‘vitality and affluence’¹⁸.

Western European companies ‘underestimate senior consumers at [their] peril’, as this audience is more likely to be in paid-for homes, to have secure jobs and to hold ever-increasing spending power¹⁹, making them a valuable group for sales and marketing.

The current economic downturn is disproportionately hitting younger generations in unemployment and on lower wages, further reducing spending power for this age group²⁰. In contrast, the UK’s Office for National Statistics Wealth and Assets Survey showed that 22% of households with a person over 65 years have a wealth of £1m or more, rising to 31% of households led by 55-64 year olds²¹.

What this means for marketers:

For financial marketers, repositioning demographic focus can mean reassessing how messaging around digital banking, spending, saving, sustainability and investing is positioned to tap into this powerful market. Brands of all types that market to older generations should think carefully about the image they are projecting in their marketing, by ensuring inclusivity of messaging and choosing words carefully.

5. Support where it’s needed most

The UK also has a raft of financially vulnerable customers, standing at 43%²² and predicted to rise over 2021 as a result of the pandemic and further influenced by Brexit price rises. The EY ITEM Club Forecast suggests that economic recovery could take 18 months longer than expected and only reach Q4 2019 levels in late 2024²³.

All forecasts point towards the need to build financial resilience²⁴, which will include increasing or improving marketing efforts. Pandemic funding support delivered by or through banks will run out in 2021, forcing FS brands onto a ‘reputational cliff edge’.²⁵ A strong drive towards increasing trust and emotional connections is needed.

There is an additional issue at hand, in that the FCA estimates six million customers are overpaying for services by £1.2bn – made up of punishing loyalty fees – especially in the insurance sector. Haggling for the best prices increases mistrust of brands, and these loyalty ‘penalties’ are being tackled by the FCA²⁶. FS firms will need to put extra effort into acquisition to counteract lost revenues.

What this means for marketers:

The challenge ahead is in building consumer confidence, while acknowledging the impacts being felt in terms of unemployment and income reduction. Marketers need to help businesses and consumers decode the environment and bring financial wellness to the top of the agenda – analysing customer behaviour to minimise default risks and prompting with solutions at key moments is imperative.

Where FS brands are facilitating credit to consumers and small businesses while supporting household savings, marketers will need to produce increased messaging and financial tools that speak to these needs. Sympathy, understanding and empowering customers is needed most of all.