I have been spending some time with pensions professionals who are grappling with how to make pensions work better for the whole population. There is clearly a problem for many of us. Many people will not have adequate provision for income in their old age. This kind of customer problem presents an opportunity for the industry to do some better persuasion and better marketing. But it also offers an opportunity to create better products.
I have noticed that the debate about better pensions highlights two different ways you can approach trying to solve a problem for your customers.
The first is to try and persuade people to behave differently
The focus here is how to get people to buy what you provide or sell. This is what many business leaders are trying to do in different industries. It is an important activity to get growth. This seems to be the main focus in pensions.
Much of the pensions industry discussion is about getting people to take pensions more seriously. It is about getting people to save in a responsible manner. This is manifest through the government’s auto enrolment scheme; by advocating the provision of independent advice via IFA’s; via the development of training and financial education for people.
The implication of this approach is that people are behaving irrationally. We just need to change our ways. We are not looking after ourselves and need educating and coercing into investing so we have a pension. Then we need advice to take income from a pension fund in a responsible way rather than blowing it all away on holidays. Then we will have a better retirement. This financial education and advice sounds very worthy and well intentioned.
Now I can see that much of this analysis and the need for different behaviours is true. Many people are headed for a poor retirement as a result of their inaction. But I would argue it is blinkered to concentrate only on trying to persuade people to behave differently. Most of my experience says that trying to educate people to behave differently is very hard, it is an uphill slog with few rewards.
Alternatively, it can be much easier to create something that people actually want, that they see as solving a real problem for them. That way they will be attracted to the solution rather than feeling badgered into it. So …
The second way is to create better products
Is the pensions problem just that people are behaving badly? Or maybe the products on offer could be better? Maybe the problem is not just that people are behaving stupidly, but that the products and services that are available just do not meet the real needs of ordinary people all that well and that the industry could also help people by developing better products? It is clear from the National Association of Pension Funds’ Workplace Pensions Survey October 2013 that there is a perception amongst many ordinary people that pensions cannot provide for their future. There is a lack of trust.
In my experience, when there is a lack of trust then educating or marketing alone will be very hard work and may not be effective. We need better products.
What are better products?
Well “better” usually means things like
- easy to understand – so you know what you are buying
- easy to access – online often does this, or being in the right shops
- deal direct with the customer, no intermediaries – intermediaries often add cost and slow things down, they need paying and do not have the same priorities as the customer (think of travel agents)
- better value for money –
- solves a real problem for a customer – (Tesco click and collect service)
- does not exploit the laziness or ignorance of the customer (utilities often do exploit this)
- takes care of the customer (First Direct)
Online solutions often deliver a lot of these elements which is why there is so much growth in online products and services.
An good example of an industry transformed by better products is to try and remember the short haul airline industry before Easyjet, Southwest Air and Ryan Air. The airline industry has been transformed by these game changers. Look at how much better it is for customers today. Easyjet and RyanAir were Game Changers.
An easy mistake to make is to think your industry is more complex and more difficult than the industries where game changers have created change and that better simpler products are not possible.
The pensions industry knows it has unique challenges and is more complex than the airline industry was. That may well be true. But the top executives of traditional national airline carriers British Airways, Lufthansa, American Airlines all thought their business was complex and did not really innovate until the low cost carriers arrived with better products.
Come to our event on 29th May
We are running an event next week that looks at how the most successful leaders have created better products and services to deliver real real game changers in different industries. The event is called Game Changers and is on 29th May at 1400 at Campus London in Bonhill St Shoreditch (see details here)
One of our headline speakers is Mike Harris who is the original financial services game changer. Mike created First Direct and the Egg card internet banking business. Mike will talk about what it takes to be a game changer. Mike will share some insights on how to do this.
Another speaker is John Scriven from South Bank University, Marketing Science and the Ehrenberg Institute. John has some surprising and ground breaking insights under the title How brands grow – what marketers don’t know? John will share insights that are used by many of the worlds top companies on how to present better products to customers.
More information about the event is here www.gamechangers1.eventbrite.co.uk. Tickets are free. It is just 3 hours during the afternoon. there will be some debate around the case studies and examples.
If you have any thoughts or comments on this please add them to this article which is posted in the GameChangersUK linkedin group. This is an online group that will continue the debate.