eConceptLab White Paper

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What if Apple® Created a Financial Service? Leveraging Google and Facebook Advertising to Design Consumer Innovation

Dr. Dirk Lorré

Consumer psychologist [email protected]

Benoit Gaillard

Digital Marketing Entrepreneur wsibusinessperformance.com

Abstract: In this whitepaper we present an efficient way to research what consumers really want for their money. We have learnt from consumers that “The Number" is the most engaging way to talk about financial services. “The Number” is the amount of resources (financial and other) that people think they need to feel safe for the rest of their life. Understanding how people see "their Number" brings a fresh and actionable way to design and communicate financial services. We developed our own proprietary connector research tool, eConceptLab.com, making use of simple Google and Facebook ads. Connectors are small sentences/visuals like the ones used in Google or Facebook ads that generate interest and create a mental frame of expectations about a product or service. They are, in this sense, a great door-‐opener to help sell in a relevant way. Keywords: Concept Lab, online advertising, Google and Facebook, Internet consumer research, Address stated behaviour

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What if Apple® Created a Financial Service? Yes, what if Apple really did this? Without a doubt, consumers would love it! They would most likely stand in queue for hours to be the first to participate. The reason? Apple has a track record of inspiring innovations that really touch the hearts of people. What would be the Apple way to approach such an innovation? We know that they would start with the customer and not with the technology. Despite the repeated use of this sentence, it is still valid. In the time that companies used new data storage techniques to make MP3 players, Apple invented iPod and iTunes. And the reason they were so successful is that they connected to music lovers, to people who buy a lot of music. Knowing that music lovers cherish their collection of records and CDs, they offered the iTunes service (which lets you transfer your CD collection into a database, offering playlists and also coupling the visuals of the covers to match the songs). Making Connections From what we have seen as consultants and as customers, the financial services industry is still far away from this type thinking. Yes, more consumer research is being used now than it was before, but companies still talk use the approach of asking consumers “What do you think about the benefits of this product?” The real question, however, is what are the customers’ concerns, hopes and expectations about money? We need to ask “Why do people need financial planning?” And we are referring here to the real consumer need, not the need of the financial institution. If you are a bank, you would like to know everything about your customers (especially the money they have in other banks.) But that is your need as a financial institution, not the need of your customer. You need to “connect” to what the customer needs. As a concept development company, here’s what we would do − If you ask us to design a financial planning concept, we will not start with the benefits you want to sell or the “offer” you want to promote. Instead, we will start by asking “How do you connect to customers about financial planning?”

The approach of “connection” is a very simple one: a connector is the most simple, short and efficient stimulus that triggers the relevance of what you are trying to sell in the life of the customer. Or, in the context of financial planning, it is what you can say to make people consider a financial planning product. What’s a Connector? Let’s explain the “connector” concept with the example of a door-‐to-‐door salesman. You ring the doorbell, someone opens, and you can say only one thing…what you say then will either catch this person’s interest or result in a door slam. This is how we begin a concept co-‐creation workshop. You can do the test for yourself to confirm that it is not by promoting a benefit (or worse, an offer) that you connect with people. In order to connect, you have to be relevant. What you say must be something your audience can immediately relate to and it must offer a solution to a strong need. In the research industry, we often talk about “insight”. Now how do you check if an insight is indeed an insight? For instance, “People want the highest possible yield on their investment”. Is this truly an insight? Just because you put this question in a poll or survey and the majority of respondents said “Yes” does not make it a good insight. Think about it, why would anyone say “No” in response to your question? Why would anybody want to appear stupid? That’s why we talk about connectors rather than insights. A connector is operational − if people show interest, they are connected. In a qualitative group discussion session, you can judge the interest level by the energy displayed in response to a statement. Though they are very interesting, organizing group discussions is expensive and time consuming. eConceptLab.com − how to sift what works from what doesn’t work

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Let us demonstrate how we can screen good connectors via Google and Facebook ads: we call this our eConceptLab.com. If a connector connects your product in a relevant way to your customer, it is similar to a surfer clicking an online ad. This is the beauty of modern technology. A simple Click-‐Through -‐Rate (CTR) is a perfect indication of whether or not people are connected. If I click on an ad, it is because I’m interested and I want to know more about the offer. People giving you time is one of the best measures of the level of interest. And because surfing is not an experimental situation (like filling in a questionnaire or attending a group discussion), CTR is very reliable and valid. This makes CTR a perfect measure for connection. So the first step of the process is very simple: We make a long list of potential connections: “How do you make someone consider a financial planning service?”

-‐ Maybe we have to refer to the stock market going down (and your savings evaporating)

-‐ Maybe we have to dwell on the idea of outliving your savings -‐ Maybe we have to consider the cost of retirement -‐ Maybe….

We do this brainstorming about potential ways to connect together with our client. It is a foundational step and the one where we become aware that we do not really know a lot about what keeps our customers busy, or the way they think. It is also a moment of humility, of recognition and realization. You may work for a big company and a well known brand, but in the life of your customer, you and your category represent only a tiny part. When looking for connectors, it is interesting to use some simple consumer psychology. You can connect to problems (or fears), solutions, opportunity; and you can connect to the person as an individual or as a member of the group. We often use the Censydiam model to look for different connections in different need state area’s.

Normally we check connectors qualitatively, with our bulls eye customers. The nice thing about this new method is that we can do it online, with ads. So each connection idea is translated into a Google Search ad. To determine who will see the ads, we selected a set of keywords related to our field of research: financial planning, retirement, saving money, investing, etc. Whenever a consumer searched for such a keyword, our ads were validated as “connecting statements”. All the ads were launched via Google Adwords. Fig 1: shows how an ad might look to a surfer….

As soon as the advertising campaign is rolled out, you can immediately see the clicks coming in; thousands of consumers get to see your ad from as many countries as you wish to target. The Google way to promote relevant ads (i.e. the ones that people click through) is actually supporting our methodology quickly separating the statements that connect from those that don’t. Table 1: List of connecting statements and their CTR, and number of impressions. Connector Connector CRT Imprs What is your number?

How much do you need to live comfortably the rest of your life? 1,40% 45353

Learn about your How much do you need to live 1,05% 3232

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number comfortably the rest of your life? Calculate your number


Stock market is down

Impact on the rest of your life? Learn about your Number 0,89% 12592


Does it impact your plans? Learn about your Number 0,89% 27863

Planning retirement Is money enough to stop working? Downshift for better lifestyle 0,74% 945


Are you doing better than the market? Learn about your Number 0,72% 8595


What are your friends advising? Learn about your Number 0,63% 2878

Lucky are those who inherit Plan for the rest of your life. 0,59% 3713 How much is my net worth?

Calculate your Number to safely plan the rest of your life 0,57% 7740

Do you expect inheritance?

Family is always here to support. Plan the rest of your life 0,56% 6473

Downshift for better life

Planning retirement beyond money? Time for you? Time to do what? 0,55% 542

How much is my net worth?

I count my friends, not my money. Plan for the rest of your life 0,53% 1522

How much is rich?

Calculate how much you need to live comfortably the rest of your life 0,50% 801

How much is my net worth?

Who cares? Focus on what you earn and spend 0,49% 4089


Pass it on to your kids. Plan the rest of your life 0,48% 2717

Cost of elderly care?

Your parents helped you, help them. How much do you need for the rest of your life? 0,48% 2936


Who will take care of you if you have to take care of your parents? 0,48% 2078

Outlive your savings?

You may grow older than you expect to live. Plan the rest of your life. 0,47% 6114


Don't plan on it. Finance the rest of your life safely. 0,36% 4753

Me, me, me ...

Planning retirement is all about me. How much do you need for the rest of your life? 0,33% 600

How much to retire?


Save for golden years

In your roaring thirties? How much do you need for the rest of your life? 0,32% 316


I know I will have to take care of my parents. Plan the rest of your life 0,27% 1130

Can money buy happiness?

Beyond financial planning. What do you need for the rest of your life? 0,26% 387


Lifestyle defines life expectancy. Learn about your Number 0,24% 1667


I don't worry about how long I may live. Plan the rest of your life. 0,17% 1179

How much is my net worth? Benchmark it with peers 0,12% 849 This exercise clearly shows winning connecting statements. In this case it is “What is your number? How much do you need to live comfortably for the rest of your life?“ With a CTR of 1,4% this is a very strong connecting phrase. We got the idea for this connecting statement from a book by Lee Eisenberg called “The Number”i. If you are work in the financial sector and you are interested in the psychology of your customers, we definitely recommend you read this book. Drawing Insights The next step after finding a good connection is finding insights. We have to understand why a phrase is connecting well. For the details, I would refer you again to Eisenberg’s book. But in short, the big issue with financial planning is to know if you have saved enough to stay dry the rest of your life. It is the dilemma between saving and spending. If you are

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sure you have enough, you can spend (or donate to your children), but if you feel insecure, you will tend to save. This balance between saving and spending is very well known on a macro-‐economic level. For example, China wants to install social security to fight the high saving rate of its middle class and thus stimulate the internal economy. But we do not know a lot of financial services that try to seek clarity about “the individual number”. We immediately see a lot of opportunities though, such as:

• giving people an overview of what they have (financial wealth and real estate together)

• proposing benchmarks of other people’s number • assuring big but rare risks • helping customers estimate how much they will need to live

comfortably as they downshift • suggesting ways to estimate how much people will need to live

well through their senior years when they become dependent • helping to calculate how much you need to take care of your

parents or if your kids come back home You see, it is not so much about making consumers experts in building the most efficient portfolio but rather a holistic understanding of financial planning and related life choices. And overall, what people want is simplicity, a keen overview and personal relevance. The question is, is this what the financial sector has been selling? It’s never too late to start. Once a good connection is found, we can start digging deeper. One aspect is tweaking the connector and finding the right language. Should we say “what is your number” or “calculate your number”? Google ads give the answer. “Calculate” is slightly less effective, perhaps because it sounds more complicated. Remember, our insight is that people are looking for a simple answer… Targeted Connections

For the development of concepts, we can isolate specific target groups. For financial planning you may find that professionals in the 55+ age group are very important. Selecting this target group with Google search is not possible (here the selection goes via the search items.) But on social networks it is perfectly possible to select using basic demographics like age. So we did run an experimental campaign on LinkedIn, focusing on 55+ professionals. This helped us to tweak the connector and to better study the psychology behind it. If we add “Me, me, me” (a sort of outcry of individuality), our number campaign works better. For us this was a reinforcement of what we suspected. The concept of “the number” is a very individual, even egoistic given. People want to know their number, not the number in general. They want to know where they are and about their individual situation. Visuals as connectors! Another advantage of the eConceptLab technique is the opportunity to research visuals. We know that visuals connect effectively, but it is much more difficult to research their impact. Consumers don’t see our strategy, they see execution. So researching the actual execution is very critical to ensure it connects. When it comes to complex products and services (like financial services) it becomes very difficult to understand the visual language. That’s probably why the financial sector is known to use dull and very flat pictures in their communication. Here too, Google offers some help. Google Images is like an instant tool to conduct visual semiotic analysis. If you type the word “retirement” into the Google Image search window, immediately you get an overview of the visual language that is currently used. You will find typical images like feet up on a beach chair in front of the ocean, the nest with 401K eggs, a smiling elderly couple enjoying a candlelit dinner, etc. This can be instantly researched too as shown in table 2 below. Table 2: CTR for the same connector with different visuals

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VISUAL ADS CTR

GOOGLE SEARCH

CTR FACEBOOK PLACEMENT

0.61% 0.049%

0.39% 0.022%

0.93% 0.061%

1.01% 0,03%

0.61% 0.061%

0.21% 0.052%

Apparently the famous “feet up in the air” does not work with our number concept. While the beautiful lady (almost like a photo you find on dating sites) does work very well! eConceptLab offers tremendous possibilities to fine-‐tune and research the connector further. But more importantly, we can work with the people that click on our ads, because they need a concept landing page. Just like youngsters making a temporary Facebook page to invite people to a party, we make temporary Internet and Facebook pages. In our experiment we started with a general “financial planning” page, but as soon as we narrowed down our connector to “the number”, we made special “number” landing pages. The really interesting part was that we were able to further research the people we attracted in the first place. Target Audience Profiling On one page we designed a small psychological profiling tool where people could find out their attitude towards the number. The page is still up: http://bit.ly/qrddO4 , so you can find about your own attitude.

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In Fig. 2 you see the result of our simple (only 9 questions) profiling exercise.

Not surprisingly, the majority of people that landed with “the number” connector are safety seekers (assurers). The amazing part is that 38% of the people who landed on our page did respond to the profiling questions and spent +/-‐ 4 minutes doing so. This demonstrates the quality of the engagement you could achieve with this research methodology. On Facebook, the cooperation of people who click through is even bigger. The nice thing about Facebook is the “Like” button, a good indication that you brought people in for the right reason. In our sample, 78% of the people who were brought in did “like” us (without our content being hidden behind the “like” wall!). With the people who are now fans of “the number” Facebook page, we can hope to create a financial service based on the psychology of the number. We could introduce ideas on our wall − ideas about how to give people insights about their number. Each idea that is public on our wall will pop up on their Facebook page; that is the way to co-‐create new products and services with their potential users. eConceptLab.com makes it possible to work both unbranded and branded. We prefer to start unbranded, but once your company has decided which service to develop, we can move the landing pages under your brand name, if you wish to do so. This is interesting to do, but it

also shows how the world, under pressure of new technologies, has become hyper-‐transparent, and our processes (including innovation) still need to adapt to this new world. Conclusion We perceive the financial services industry as one of the most challenging ones in terms of crafting engaging communication and services. We believe that consumer-‐centric concept development is critical to change the way the industry communicates and innovates. To catch up, we should be more connected to the customer. Innovation should start from good connection with customers. Being connected means, looking at money like customers do, speaking the language of the customer. With eConceptLab.com, we have demonstrated a new way to find good connections to customers via Google and Facebook ads and landing pages. We have offered some initial examples about how customers might be connected to “their Number”. We have proven the actionable worth of this new research methodology through researching the “Number”.

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i Lee Eisenberg, The Number : A Completely Different Way to Think About the Rest of Your Life, free press, 2006

Economy & Finance

eConceptLab White Paper