Here at ETFmatic, we believe that to fulfil customer demands a company must:
- Identify and understand its target audience;
- Supply a product or service that its audience wants, at a price its audience is willing and able to pay; and,
- Effectively communicate its offer to the target audience.
While completing point (1) is relatively straightforward – through market segment studies, qualitative interviews, customer base analysis and digital metrics – there is real debate within the industry around how to fulfil points (2) and (3).
In regard to point (2), we’ve noticed investors are increasingly selecting passive over active investment products, having had caught on to the fact that less than 25 percent of active fund managers outperform their passive counterparts over 10 years due to significantly higher fees and volatile returns.
We’ve also noticed that investors are increasingly conscious of the social and environmental consequences of the decisions that governments and companies make. This has increased demand for ESG and other ethical products. Investors can now punish companies for child labor practices, human rights abuses, negative environmental impacts, poor governance, and a lack of gender equality. Combine this with an increase in regulatory drivers since the GFC and a deeper understanding of climate change consequences and the associated risk-to-performance, and we begin to see the need for investment models that will better address investors’ concerns.
We have also observed investors increasingly adopt “smart beta” investment strategies in which the investors themselves or the fund managers assign weightings to sub asset classes by means other than standard market capitalisation. We think this is because the ETF industry has become more popular and sophisticated, leading to the creation and adoption of passive strategies with more creative methodologies.
In regard to point (3), we have recently noticed an increase in client expectations for an omnichannel customer service. By ‘omnichannel’ we refer to customers wanting to source information or assistance both personally (over the phone or in person) and digitally (online). Such expectations have been reflected across all ages and demographics due to a change in societal values along with the introduction of new technologies. Millennials already constitute the largest segment in the workplace with approximately 50 percent of the global working population. This suggests that a significant majority of these workers have a preference toward receiving customer service from the comfort of their location of choice via chatbot, video calling, instant messaging, encrypted file or screen sharing.
Furthermore, contrary to popular belief, we argue that HNW clients’ customer service expectations aren’t all that different. Traditional private banks and wealth managers continue to provide their clients with a personal and luxurious service, but our qualitative research has indicated that these investors no longer want Michelin star lunch meetings or invitations to exclusive retreats. They simply want relevant information, in a format that is quick to access and easy to interpret.
The increased dependency on technology in investors’ personal lives, through the use of social media platforms and instant messaging services, has them expecting the same quality of interface from their financial services provider–a modern, intuitive and streamlined user experience. With the digital space growing with more and more competition, modern consumers won’t return to your application if your user experience is average.
A huge proportion of the target audience no longer watches television or reads newspapers or magazines. They expect to discover your brands or products online via social media platforms, google searches, online forums and blog articles. Companies can make themselves more discoverable through Search Engine Optimisation strategies, inbound marketing and paid advertising. Additionally, companies can personalise their correspondence with existing clients whom they intend to cross or up sell.
In conclusion, customer expectations are evolving at a rate which is arguably much faster than ever before. Be sure to regularly ask your target audience for feedback and, where necessary, implement the changes that will keep your business one step ahead of its competitors.