Jeff Judy

Jeff's Thoughts - August 6, 2008

Financial Literacy III: Call a Friend in Marketing

Ask your marketing and sales side to talk about your customers, and they'll describe a heterogeneous collection of different needs and desires. They "slice-n-dice" your customers and prospects into sharply defined market segments, based on their age, life situations, current financial status, and similar characteristics, and then they attack each of those segments with focused marketing tools.

When it comes to financial literacy, then, why do we treat customers and prospects as a homogeneous lump, a monolithic block of people who all need to learn the same things, in the same sequence?

In recent issues, I have been reflecting on the lack of segmentation in the financial literacy "market." Although there are many, many resources out there recommending and delivering the content of financial literacy, we give little help to our customers in knowing which sections of that content apply to their individual cases.

It's a matter of "First things first!" of course. The problem is, what should come first -- or, we might say, what should come next -- should probably be different for someone entering college than for someone facing retirement, and different for someone starting up a business than for someone thinking about succession.

Now, I believe that you want to educate your customers, and that you accept the idea (discussed in Jeff's Thoughts recently) that as you help your customers learn more about handling financial issues, you open the door to more comfortable conversations about your products and services that will be mutually beneficial.

I also understand that you may not have time to work out a system for segmenting your customer population according to their financial literacy needs. You'll probably want some help to do that, someone who can take an objective view and can apply the time and focus to work out the details.

Of course, you can outsource that task, to someone like me, frankly. But as a first step, save some time and money by leveraging the knoweldge you already have about your customers.

Your organization has already done (or purchased) the work to ensure that you don't sell a home equity line of credit to a recent college graduate in his or her first apartment. You don't start out with money market products to get those first few dollars into a savings account. And you know that couples on the verge of retirement have a number of options that need differentiation to achieve the best result for everyone.

So piggyback on the work that has already been done. Accept the segmentation that is already part of your marketing and sales efforts, and ask the question, "What does the customer need to understand to have a conversation about this product?"

Instead of educating the customer with a "one size fits all" literacy program in the hopes that it will lead to effective product/service conversations, work back from the products and services. Identify the market segments for your major product lines, and then identify the basic literacy needs -- and just the basics -- for each of those products.

You'll jumpstart your customer education efforts and eliminate a lot of wasted time if you take advantage of knowledge that is already floating around your organization. And you'll save your customers a lot of frustration, when they don't have to wrestle with concepts that they don't need, and are not receptive to, at the moment.

Customers don't have the time to learn everything about their finances, just so they'll be prepared to talk to you about your products and services. Focusing your financial literacy programs by segment, on a "just in time" approach to educating prospects and customers, will lead to better customer conversations, sooner, and quickly make you stand out from competitors who are still taking the "monolithic block" approach to encouraging financial literacy.