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DIY Investors Live in a Constant State of Uncertainty and That’s OK
A client recently commented to me that self-directed investors are more challenging to serve. Representing only one-third of all affluent investors, these do-it-yourselfers neither work with traditional financial advisors nor use advice from other sources including distributors and asset managers. A look at investor sentiment during the market volatility in Q1 2018 sheds some light on key differences in the self-directed investor’s mindset compared with the traditionally advised (those currently working with a financial advisor).
Overall, affluent investors started 2018 with optimism and hope in the current investing environment. Yet concern about inflation and the impact of trade sanctions began in late January. Financial advisors, asset managers and distributors all dusted off and updated their market volatility messaging and outreach in anticipation of negative market action. Following February’s 10% correction in the S&P 500 Index and the VIX reaching a peak of 37 for only the second time in the past five years, investors ended the first quarter with far less optimism. In fact, the top-cited emotion in March was uncertainty along with a significant increase in fear. Continue reading
In an historic town hall held this week in Atlanta, all five Commissioners from the Securities and Exchange Commission sat mere feet from the general public and spent more than the planned two hours educating through a mix of prepared content and Q&A. The same commitment to investor protection that leads to the SEC being well-known for regulation also drives its emphasis on teaching. Though our work at Market Strategies and that of our clients largely rests in the private for-profit sector, we all share the same goal of communicating so that the target audience will listen and understand. From that perspective, we can take away a number of lessons from the way the SEC’s message was delivered…
New products and technologies are changing how customers interact with their energy provider and have opened up opportunities to offer additional products and services designed to drive engagement, trust and revenue. The utility of the future will need to engage with customers through value-added products and services that go beyond simply providing reliable service, but how do utilities pivot from operating as a regulated monopoly to becoming innovative and inspired product marketers in a competitive landscape?
The good news for utilities is that they have abundant resources and capital to support new-product development. The challenge, however, is that they are accustomed to putting those resources to use within a very structured, regulated environment that is not well-suited to the free-thinking and “willingness to fail” ethos often required to successfully generate ideas and turn those ideas into new products and services. Simply put, innovation as well as product or service development requires a culture and skill set that many utilities lack.
Utilities should keep in mind three principles as they work to evolve into innovators and product marketers.
New Market Strategies study reveals consumer attitudes on “fast” and “slow” lanes
Many industries are closely watching the future of net neutrality. Just last month, the Senate voted to preserve net neutrality, blocking a Federal Communications Commission plan to undo rules set during the Obama era. But short of any eleventh-hour political victories, net neutrality is set to end on June 11.
Industries such as telecommunications, technology and media have a stake in this issue. One of the more contentious aspects of net neutrality is what experts call “fast lanes” and “slow lanes.” Without net neutrality regulations, internet service providers (ISPs) could give certain content and streaming services faster connections, while slowing down other sites. It’s so controversial that even our own in-house telecom experts couldn’t agree on the issue.
While the future of net neutrality still hangs in the balance, it’s important for telecoms to understand consumer attitudes and preferences regarding this issue now. To that end, the telecom research division of Market Strategies International conducted a study to explore the potential consequences for both ISPs and streaming services. Our findings provide guidance on next steps for ISPs as politicians and consumers debate the future of net neutrality.
Addressing Hidden Needs in a Mature Insurance Marketplace
A recent TechCrunch article spotlights Lemonade, an insurance upstart that is boldly reimagining the customer experience. The young firm has already made waves with its use of cloud technology and artificial intelligence to sell insurance, and now it is going a step further by crowdsourcing a full rewrite of its insurance policy from scratch, with the goal of devising documents that consumers can actually understand.
Lemonade has correctly identified a critical pain point for insurance consumers—the underlying product is begging for innovation. Traditional policy documents are inscrutable and full of legalese and were never written with customers in mind. The policy is a great place to start the insurance product revolution, but does Lemonade go far enough?
With the Electronic Entertainment Expo (E3) coming up in a few days, the gaming community is eagerly anticipating what companies have in store. This year, many eyes will be on Microsoft, who has been secretive on what it plans to reveal. Their shift from the E3 show floor to the Microsoft Theatre at LA Live, just across the LA Convention Center, has heightened the intrigue.
Many people in the gaming community are hopeful that Microsoft’s move to its own space is a sign that the company has big things to share during its E3 press conference. Reading through pre-E3 online commentary, we find a community seeking a refresh of the Xbox brand, which seems to be falling behind in the current generation of game consoles. Reception for its latest console, Xbox One X, is tepid, even if it has the most powerful technical specifications.
So far, Sony’s PS4 has outsold Xbox One two-to-one.
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The defined contribution (DC) plan market is increasingly dynamic with a wide array of industry forces, priorities and innovations in play. In the wake of on-and-off industry reform and legislation along with a continual stream of fee-related litigation, DC plan sponsors are being courted with the latest solutions designed to propel participant engagement, foster financial wellness and, ultimately, increase participant retirement readiness. Yet many are still struggling with the perennial challenges of managing plan costs and navigating the myriad of fees associated with offering their employees a competitive 401(k) plan.
As the DC industry modernizes and becomes more efficient, the struggle with plan fees continues to hover over many organizations, exposing a disconnect between plan providers and plan sponsors. While Micro plans remain the most fee-sensitive segment, Small-Mid plan sponsors appear to be experiencing the most angst and are poised to take more definitive action this year, reporting an increase in likelihood of launching a formal 401(k) plan review or switching DC plan providers. In contrast, Large-Mega plans, which command higher rates of negotiating power, enjoy the freedom to think more holistically about participant needs and are better-positioned to harness the latest innovations.
“And when you speak of me, speak well.”
As utilities seek to evolve their customer management performance goals beyond traditional customer satisfaction metrics, utilities are evaluating updated measures and management approaches that better reflect success in the transforming utility market—one of those is the Net Promoter Score, or NPS. The NPS metric is based on a question regarding the likelihood of a customer to recommend the company to others. The scale is 0–10 and based on the percentage of those posting a rating of 9–10 (Promoters) minus the percentage of those rating 0–6 (Detractors), and then multiplying the result by 100. The Utility Trusted Brand & Customer Engagement™: Residential (UTBCE) study has the most robust database to help utilities measure, benchmark and manage NPS. The study has been tracking NPS quarterly since 2016 and provides data-based analysis, modeling and insights to help utilities perform well on this metric.
The Core of the NPS Debate
For both the utility and the customer, there is confusion regarding why a customer would be compelled to “recommend” their regulated utility. If they want utility service, they use the utility. How can a monopoly motivate customers to recommend it? And, what is the value to the utility?
For many global companies, brand evolution is a natural part of running the business. As consumer attitudes and lifestyles change, so must brands if they want to continue to deliver value to their customers.
But in an effort to remain relevant, companies too often hinge their brand identities on current events and passing trends rather than thoughtfully forging a path forward. In this pursuit, many companies forget to first examine their place in the hearts and minds of customers. That’s a mistake because the stakes are high if you don’t get brand evolution right. This is a lesson Tropicana learned the hard way when, in 2009, it decided to drastically change the design of its packaging—a move that resulted in swift consumer backlash and a 20% sales drop.
Packaging is just one small part of your brand identity, but Tropicana’s misstep is a cautionary tale on the potentially risky consequences of making drastic changes to your brand without engaging with your customers first. In changing markets, it’s important to be nimble, but it’s even more crucial to step lightly and purposefully to maintain a healthy brand and avoid alienating existing customers.
We get it—evolving a well-recognized global brand is hard. Staying true to your brand while keeping up with the evolving habits and preferences of consumers is a tricky balance. But why do some companies pull off this transformation successfully while others confuse their customers and lose sales in the process? Examining three brands that are currently in transition can help answer this question.
It is not a secret that energy utilities need to focus on strengthening customer relationships through brand and product efforts as brands like Tesla, Apple and Google are increasingly building consumer mindshare in the energy space. The good news is that utilities can reap dividends almost immediately by tapping into consumer demand for new energy technologies via a utility marketplace. Our energy industry research shows that utility marketplaces are the number one way utilities can improve their reputation and brand. In addition, marketplaces allow utilities to support demand-side management programs, improve customer experience and develop new revenue streams.