Just over a month ago, we were ending 2021 and heading into 2022. Hopes were high that 2022 would bring solutions to our pandemic life and get us back on track. And in the start of 2022, we have seen things begin to shift in both good and bad directions: people are talking about Covid-19 being endemic rather than pandemic, the Olympics are moving ahead (but the presence of spectators is still undetermined), and the stock market seems to be reflecting our concerns about how this has all unfolded.
As of this writing, the Dow Jones Industrial Average is down 6%, unemployment is dropping, and the Fed is talking about raising interest rates. There is a lot of uncertainty in the air about how 2022 will unfold. What is interesting to me is the resilience of the younger half of our adult population and how they have been able to stay optimistic despite the fact that this pandemic has hit their career-starting and education years square in the teeth.
According to an Big Village Pulse of the American Consumer study at the end of 2021, Millennials (25-40 years old) were the most optimistic about the prospects for 2022, followed by Gen Z (18-24) – and these are the people who are in the thick of paying off debts, building their careers, and paying for life (think houses, babies, cars…).
At the same time, looking at this measure alone, it’s not hard to notice that less than half of our adult compatriots feel that the economy will improve this year. So how do we keep our heads held high and carry on?
Consumers Are Living with Uncertainty
Having researched how people make financial decisions for more than two decades, I can say that there is a general recognition today that a person needs to make financial decisions with two main things in mind: 1) the ground is moving beneath our feet so you will likely need to make financial decisions with imperfect or incomplete information, and 2) even if you don’t know what you are doing, you have to do something. These can mean different things to different people, but I have seen these currents pushing consumers of all ages to keep going and making decisions for their financial situation for years, and today is no different.
How to Help Young Consumers Navigate through Changing Times
So, what can you do as a provider to help customers of all ages – but especially those Gen Z and Millennials who are making many of the most dramatic decisions of life with such a high degree of uncertainty – navigate through this changing time? There are a few key things that stand out.
1. Be Transparent with Your Consumers
This applies to everything – your pricing, your product or service offering, risks – because consumers’ main struggle is how to harness all the different moving influencers on their finances today and make informed decisions. The more confidence they have in their understanding of your offering, the more likely they will be willing to try you out.
Consumers need honestly – time after time I have heard them say (in focus groups, interviews or surveys) that their bank/credit card/insurance policy has hidden fees that they did not know about when they signed up, or they were surprised by a charge/lack of coverage. Whether the details were provided to them in their account documents or not, the end result is a well-formed distrust of financial institutions that has to be overcome.
2. Simplify
People always look for ways to turn financial decision into simple decisions (because whether or not we in the industry think they are simple, consumers may feel differently). Particularly in a time when many of the elements for consideration are moving targets (interest rates, stock prices, economic growth, unemployment), helping consumers understand your product or service in their personal context without having to get a business degree is key.
This is both about how the offering is communicated as well as how it is constructed. Offerings with too many exceptions, options, or limitations – no matter whether they are mathematically better offering for the consumer or not – will cause frustration. The intersection of complex offerings and simplified communication can be where the need for transparency became such an issue. If you have to hide details or gloss over key elements of the offering in order to make it simple to communicate, you will likely not deliver on the need for transparency.
3. Walk Consumers Through It
The good news for companies today is that consumers really do like interacting with their finances using remote channels (think websites and apps). This means a scalable and cost-effective way to serve tons of customers is on trend. However, there are issues or situations that are best conducted with a live person, and consumers expect to be able to connect in these cases. In my research I have heard consumers say “this was just too important to me to do online and I wanted to make sure it was done, so I did it in the branch”, and “If I have a problem, I want to talk with someone to make sure that it does not fall into a black hole”. It’s about the need to feel things are being taken care of.
The good news is that in many of these cases, the interactions provide companies with opportunities to engage with customers and strengthen their relationships.
4. Change With Consumers
Think of this in both the short run (providing updates and materials that reflect current events or issues) and long run (adjust your content, offerings, and service models to reflect their evolving life stage or situation). Nearly every company has an understanding of the shifting needs of their customers as they age, but the good ones know how to evolve their relationships on the fly as their customer move from one profile to the next. Think of the shift of a customer renting an apartment to buying their first home and what that can do to their budgeting needs, education about home financing and home repair/maintenance – but this shift would not be known to a bank holding their checking account or credit card unless it was smart enough to look for new payments to mortgage companies, a spike of Home Depot purchases, or other database shifts. Being ready to shift along with your customers will keep their attention.
With new advancements in database analysis, AI, and other new ways of identifying more about customers than they tell you, companies are remiss if they don’t begin to explore ways to predict, and react to, shifts in their customer’s situations.
Navigating a Shifting Landscape for Consumers
While most American adults are feeling a certain level of uncertainty right now, this can provide financial companies with an opportunity to bond with their customers by helping them navigate it. Consumers have information overload combined with the uncertainty in whom to trust to get good guidance on their choices. Many (especially younger consumers) are turning to their friends and family, social media and the internet to get help making decision. The more you can help them by presenting simply stated, relevant information when they need it, the more they will keep coming back to you.
Written by Margaret Rorick, SVP at Big Village Insights.
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