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In September 2012 the UK Payments Council released a report stating that in the year prior to May 2012, only 2.5% of consumers surveyed had switched bank.

Not just that, but 88% hadn’t even considered switching. 

Not necessarily a surprising statistic, banking is a system with a lot of inertia on behalf of the customer and a lot of friction on behalf of the banks. 

It is a similar situation when you get to energy suppliers.

UK inflation rose by 11.2% between 2007 and 2012 but when you compare this with the average annual domestic standard electricity bill, in cash terms you see a rise of 30.6%. Customers are obviously getting a bad deal and yet switching to a better one is still a rare occurrence.

At first direct, we conducted our own research into switching current accounts. 37.9% of those surveyed said they wouldn't consider switching accounts in the next two years. Only 3.9% stated they definitely would switch. 

Even more surprising is that 1.1% would prefer to have plastic surgery than switch account and 0.9% said they would rather switch religion. 

This begs the question, how can so many of us find ourselves in such a state of inertia? 

More importantly, what can marketers do to try and counteract this.

In 2011 former Energy Sectary, Chris Huhne complained that consumers “spend less time shopping around for a bill that's on average more than £1,000 a year than they would shop around for a £25 toaster." Not a completely inaccurate statement but I’m not sure that’s the reason. 

The problem is friction

Banking innovator Brett King is someone who recognises this problem and regularly speaks on how banks need to become ‘frictionless’.

He has written entire books on the subject and suggests ‘banking has the potential to be rapidly disrupted by players who simply target the friction with greater simplicity and ease of use.’ This is true but over-simplistic.

Marketers need to have a much fuller picture of the real behaviours behind this issue.

Once company that is taking a unique approach to affecting these behaviours is Unilever.

In 2011 the company faced challenges with its carbon footprint. As this is directly related to how consumers use its products, Unilever needed to change the behaviour of its customers and make them more eco friendly. 

Unilever mixed its marketing experience with expert advice from academics and physiologists to develop ‘Five Levers for Change’ and inspire sustainable living. They five levers are:

  • Make it understood.
  • Make it easy.
  • Make it desirable.
  • Make it rewarding.
  • Make it a habit.

At first direct we have taken a broadly similar approach with a number of initiatives, which, to a greater or lesser extent, align to these levers. 

First and foremost our whole brand is about talking to people in a way that makes products easier to understand. Our digital and PR strategy is designed to make it easier to find us and our dedicated Easyswitch team aims to take as much of the burden of switching away from the customer. So that covers off easy. 

The next three levers are less easy to delineate but in essence the approach revolves around creating emotional touchpoints with customers, such as creating trust as we did with our “£100 if you like us, £200 if you don’t” campaign.

The point of all this is that contrary to popular belief, the financial services market is not one driven solely by price and convenience (I remember someone telling me that when “comparethemarket.com” started using the meerkats ad campaign they went from fifth to first in the market place without changing the quality of deals it could offer).

People won’t go through a process like switching bank or energy supplier because they feel like they should, there needs to be some kind of emotional payoff. They need to want to switch.

Once, as marketers, we have managed to instil that, all we need to do is to make sure the systems get out people’s way.

Lisa Wood

Published 4 April, 2013 by Lisa Wood

Lisa Wood is Head of Marketing at first direct and a contributor to Econsultancy.

5 more posts from this author

Comments (1)

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Phil Reed

Interesting insight. There was a recent Global Reviews report which looked at why people choose (or switch) current account providers. Brand reputation, brand familiarity and service were much more important factors than deals/offers. Supports the view that emotion can play a greater role in such decisions than price.

over 3 years ago

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