The Mind of Low- to Moderate-Income Savers
The credit union industry and D2D Fund share a common interest: better understanding the mind-set of low- to moderate-income (LMI) consumers regarding personal finances and financial services. For credit unions, attracting LMI customers is important to their mission of “meeting the credit and savings needs of consumers, especially persons of modest means” and an important part of what distinguishes them from other depository institutions. As a nonprofit organization devoted to helping low-income families address their financial service needs--especially the need for saving opportunities--D2D knows it must understand these consumers’ thoughts, feelings, and attitudes about personal finance in order to serve them effectively.
Like most Americans, LMI families find it difficult to save money. For many, day-to-day needs like housing, food, and commuting to work consume the vast majority of their incomes. The threat of financial crisis--brought on, for example, by a job loss, illness, or essential car repair--hangs over them and colors their daily financial choices. A lack of savings undermines their efforts to build a more promising future for themselves.
This reality raises important questions relevant to the credit union
- How can LMI families be helped and encouraged to save? Depository institutions have a key role to play, as both a provider of savings products and a source for personal finance information. Among depositories, credit unions are unique in being nonprofit, consumer-owned, and tax-exempt--and in their mission to serve the savings and credit needs of persons of modest means.
- How might credit unions best reach potential LMI savers? As the primary means by which institutions reach out to customers, marketing is almost certainly part of the answer--not only the amount of marketing conducted, but the degree to which it is tailored to this market segment.
D2D explores LMI receptivity to savings product marketing using a cutting-edge marketing research tool, the Zaltman Metaphor Elicitation Technique (ZMET). ZMET is an innovative research methodology that elicits insights about human decision making through metaphors and storytelling. Using a sophisticated interview technique, researchers encourage consumers to create stories and identify images about their feelings related to a topic of study. From these stories emerge metaphors, messages, and imagery that professional marketers use to build brands and products (e.g., “Chevy, Like a Rock”). The ZMET tool can deepen our understanding of how to increase saving activity among LMI households. As a result, the two ZMET studies D2D has undertaken focused on how LMI consumers approach (1) money and savings, and (2) their children’s financial futures.
During the summer and fall of 2007, D2D reviewed existing promotional practices of credit unions in light of its ZMET findings in order to generate insights about how savings campaigns and advertising collateral might more effectively appeal to LMI households. As part of this research, D2D collected marketing materials from 22 credit unions in an effort to develop a snapshot of the industry in terms of imagery and messaging. Key findings from this work include:
- Credit unions use a limited range of metaphors in their current marketing materials. D2D identifies only two major categories and four minor themes; in contrast, researchers have identified more than 15 core metaphoric categories that evoke emotion across cultures.
- Many of the metaphors used by credit unions evoke limited emotional response. Since emotions often drive the subconscious human decision-making process, evoking emotion in marketing material is crucial to engaging current and potential credit union members.
The ZMET and credit union analysis was presented in October 2007 to the Filene Research Council for feedback. This research brief summarizes the analysis that was presented and includes feedback from that meeting. The next step of this ongoing work is a marketing campaign pilot test that marries the expertise of credit union marketing professionals with the findings of D2D’s research as summarized here. In 2008, Filene and D2D will embark on this phase of work with a handful of credit union partners looking to experiment with the messaging and images they use to promote savings products.