The changing face of the customer

For brokers who are now looking to better connect with their customers - or attract new ones - it's important to be able to identify the changing trends and attitude of consumers.

CUSTOMER TRENDS AND CHANGING ATTITUDES

Leading demographer and commentator Bernard Salt says customer attitudes have been redefined over the past two years.

He says what could once be accurately described as rampant consumerism and flagrant spending behaviours has now turned to caution and fiscal responsibility.

"An element of guilt has crept into consumer spending, and people have changed the way in which they invest their money, focusing more on safer ventures and long term gains," Mr Salt says.

GENERATION X

Generation X consumers are those in their 30s and 40s, generally with families and financial responsibilities.

They may still be repaying their tertiary education debts, as well managing the needs of their families.

Mr Salt says this makes Gen X consumers particularly sensitive to financial pressures, and a good broker would understand that.

"For people in their 30s and 40s, it's the peak season for marital troubles, like separation and divorce," he says.

"Due to martial breakdowns, brokers may have a client with a payout of money looking to invest, or a client who is looking to downsize their home and consolidate their debts."

Mr Salt says for this reason it's important for brokers to understand that different people have different needs and goals - even if they are in a relationship.

"There's been a big push towards individual decision making in recent years, so brokers shouldn't simply assume just because a couple is married that they have the same financial goals. A good broker would assess the individual needs of the couple," he says.

GENERATION Y

As Generation Y make up a huge portion of the first home buyer market, Mr Salt says it's important for brokers to properly understand the changing face of this young demographic - and that means removing common presumptions.

"Many people think Gen Y are so self-absorbed in the present that they are uninterested in long-term investment, but I don't believe that's true," he says.

"Generation Y are becoming more conservative about their finances like their Gen X predecessors, so for brokers who have dismissed the thought of chatting to Gen X clients about long-term financial solutions... I'd urge them to reconsider."

There are growing market trends that may help brokers effectively tap into the Gen X and Gen Y spheres.

Mobile internet is rapidly being used as an easy and convenient way that customers carry out transactions, a new global survey from KPMG has found.

Compared with less than two years ago, the global percentage of respondents who have used their mobile device for banking has more than doubled from 19 to 46 per cent, goods and services transactions have gone from 10 to 28 per cent.

KPMG director Sean Collins says Australia has been at the heart of this new development, with consumers much more likely to be heavy users of mobile online services than the rest of the world.

"We think this is down to differences in infrastructure," he says.

"Countries that have not invested as heavily in wired technology are leapfrogging this stage and going directly to wireless mobile."

KPMG market research of the Gen X and Gen Y segment has also unveiled a trend regarding consumer attitudes to mobile advertising.

While consumers continue to show a strong resistance to mobile advertising marketing, nearly half of surveyed consumers said they'd only accept ads on their mobile phones if they got something in return, such as free music or a video clip.

This finding, as an example, highlights how brokers can engage their customers through connecting with them via the mediums they use and trust.

Viral marketing has also been hugely successful in the Gen X and Gen Y sectors, for these reasons - the ability to share a video clip or skit to friends, family and colleagues, while indirectly marketing a product or service.

In the past year, more than half of the 38 per cent of consumers globally that watched video clips on their mobile phones said they were pleased with the experience, according to KPMG.

It's this move toward internet use that has also seen a jump in activity in the online mortgage channel.

According to RFI's recent market trends report, the number of people who applied online for a mortgage over the last two years rose by 10 per cent.

With a push in the popularity of online use it's not surprising that online mortgage and advertising presents opportunities for brokers, particularly in the Gen X and Gen Y segments.

BABY BOOMERS

When it comes to retirees in today's world, there's an important thing to recognise - they're not ready to retire.

Mr Salt says it's unlikely we'll see baby boomers hang up their gloves anytime soon, as they will continue to remain in the workforce on a flexible basis, always earning some sort of an income.

"This means that brokers who are looking to effectively address the needs of this market need to first understand that any solution offered will need to be flexible, so the client has an opportunity to continue their lifestyle, while having the agility to adapt to change."

Mr Salt says it's about having insight. "Acknowledge the contribution that baby boomers make to the community and show respect and understanding," he says.

KEY LESSONS FOR BROKERS

As different market segments provide different opportunities for brokers, brokers would benefit from looking outside the box when dealing with new clients.

Oracle lending Solutions director Angelo Benedetti has seen the current difficultly for first homebuyers to get into the market as an opportunity to offer help in this regard.

"I believe if you can assist first home buyers, you can potentially have a client-for-life and definitely repeat business," he says.

"If you are an established broker with a good database, then your client's children, nieces and nephews are likely to also become first home buyer clients," he says.

And KPMG's Bernard Salt agrees

"The biggest tip I can give to brokers is to listen to their clients: listen to what they say as well as read what they don't say. Look at their circumstances, and the context in which they live."

"And form a view: always be recalibrating in your mind about a consumer's needs and circumstances, and be willing to change your perceptions," he says.

Understanding the client has never been more important.

Consumers are increasingly turning to mortgage brokers for a far broader range of services than just mortgages alone and this represents both an opportunity to build deeper client relationships as well as generate significant additional revenue.

There are many influences that have shaped consumer preferences and the clearer picture you have of what consumers want and why the better positioned you'll be to capitalise on opportunities.

A lesson from the banks

Retail Finance Intelligence's (RFI) director Alan Shields shares his observations on customer buying habits in light of the company's latest research findings on Australia's banking institutions

RFi's latest survey of customer sentiment across Australia's banks has revealed a lot about customer needs and desires in today's world.

And these findings can help brokers understand where opportunities lie in targeting and marketing to customers.

The company's Banking4u rankings asked over 20,000 people which lender they preferred and the contributing factors that led to that decision, in order to gauge customer sentiment.

RFI measured consumer appeal across a range of financial products, including home loans. The findings revealed that consumer appeal is not about simply getting the best deal.

THE REAL DEAL

According to the survey's findings, a client's long term objectives are just as important as their short term goals.

The Banking4u results revealed that savvy consumers are not only looking for a good deal, but they also want to invest their money with an institution that has the potential for genuine long term growth.

Mr Shields says ING DIRECT is a prime example of a lender who has achieved long term value for its customers.

"ING DIRECT doesn't have the highest rates in the market, but it is competitive and always achieves solid customer experience scores in our research," he says.

Brokers can take from this the underlying idea of long term growth in demonstrating to their clients that their business is well established and will be around for the long term.

LOCAL PERCEPTION

The RFI survey also found that institutions like Bendigo and Adelaide Bank scored highly across all facets of customer appeal because the bank prides itself on having a good local presence.

"Bendigo and Adelaide Bank fits the consumers' idea of what a bank should be," Mr Shields says.

"It is a community bank, staffed by people with clear links to the individual communities in which they operate."

A broker's marketing technique can also have a significant impact on customer perceptions.

Mortgage brokers are already equipped with the power to capitalise on good customer service and attract customers, as this lies at the core of their business. Mortgage broking is about building personal relationships and those brokers with the skills and capabilities to capatilise on their customer interactions are those that truly excel.

As such, brokers are perfectly positioned to hone in on their local market through community campaigns.

"The Banking4u results are a signal consumers are looking for brands that will put them first and treat them fairly, and in turn these customers will recommend the institutions to their friends," Mr Shields says.