09/02/2024
Consumer Motivation refers to the driving factors that direct customers to make purchases and financial decisions. It can be influenced by a number of factors such as simple necessity, well-crafted marketing campaigns, social or peer influence or simply just endorsements. Every single consumer has their own variety of reasons for spending in their own unique way, and it’s important for businesses to understand exactly why that is so they can tailor their approach correctly.
Businesses need to understand their consumers motivations as it influences the way they market their products and services and gives a clearer idea on projected sales/income. It also gives better context to data, be it positive or negative. If a company is experiencing a sudden upturn or downturn in profits/sales, understanding the motivations behind it can help successfully navigate the change in direction instead of blindly facing it. It also helps businesses correctly tailor their approach to their current audience as well as their potential customers. This helps improve customer satisfaction.
Many cultures and communities across the globe have unique approaches to, as well as varied opinions on, finances and money in general. It’s important for business to tailor their approach and way of working around these depending on who their audience is. Some cultures will have a more reserved, minimalistic approach to areas such as money and debt, whereas others will be more accepting of and even sometimes encourage more risk-heavy spending, credit card loans and debt. Certain cultural events may encourage people to spend in ways they previously haven’t or normally wouldn’t, and it’s important to keep an eye on these shifts so financial firms know what to expect.
Especially in a post-pandemic world, many people are much less risk-heavy with their finances, being more conservative with their spending as prices rise and the cost of living becomes a bigger hurdle. Major shifts in consumer behaviour have given rise to different requirements as well as more focused priorities, making it key for businesses to re-evaluate their strategies in order to continue providing for consumers over the coming years. What people choose to do with their money a decade ago has changed dramatically, and the buyer’s journey is no longer the linear process it once was, making it even more challenging for brands to understand their audiences’ motivations clearly.
No matter how varied our backgrounds are, all humans have what’s known as “cognitive biases”. These are automatic and unconscious psychological mechanisms wired into our thinking, that are intended to speed up and improve the effectiveness of our own decision-making. We all automatically drift towards decisions, facts, and opinions that we believe are the correct choice, even if the data doesn’t show it. These biases drive our attractions or repulsion to certain financial decisions, for instance some people may be more driven to take out sizeable loans without fear, whereas other people may automatically be put off by the idea of debt.
By understanding the mindset of their consumers and what their motivations are, financial firms can work with their customers instead of against them. This allows brands to build long term, secure relationships with their customer base by showing they understand what is expected of them, that they align with their audiences’ values and are ready to respond to, as well as act on both negative and positive feedback regarding their services and performance.
RiF created the Retail Consumer Interests Study (RCI) in 2013 alongside a group of leading global asset management firms. Created in direct response to the Financial Conduct Authority’s (FCA) implementation of its Retail Distribution Review, the study is designed to provide asset managers with a deeper understanding of end consumer motivation when investing.
Eleven years on this study has continually evolved to meet the needs of asset managers and continues to support any new FCA requirements, most recently UK Consumer Duty, which requires that asset managers “act to deliver good outcomes for retail customers”. The research offers a unique and valuable insight into private investing, such as the motivation of the self-directed investor, product selection process, private investor expertise and client satisfaction.
RiF has been serving the financial sector for well over a decade, with a focus on delivering reliable actionable insight that improves overall performance, helping you achieve your objectives. Our aim is to give businesses within the financial sector clear data, support and guidance around finance, retail consumer insights and decision making.
