Despite Australian superannuation funds focusing large proportions of their marketing spend on TV advertising, CoreData’s 2014 Member Growth Report reveals that while it’s effective in raising awareness, it’s among members’ least preferred communication channels.
Email preferred communication channel.
The research, which canvassed the views of 858 Australians, found that there is a mismatch in the communication channels utilised by super funds and member preferences.
Members most commonly say that they have seen super fund communications and marketing through TV advertising in the past 12 months (51.2%).
However, when asked to rank their preferred super communication and marketing channels, TV advertising ranks second last behind sponsorship for sporting teams or entertainment events, with an average ranking score of 1.1 out of 10.
Kristen Turnbull, Head of Financial Services at CoreData says, “Splashing your brand on the TV might be cutting through to members in terms of awareness but it is not an engaging communication tool for members, who would much prefer to hear from their fund via email.”
These findings suggest that super funds need to think beyond TV advertising and sponsorships in order grow their membership base as well as lift the industry’s profile – something on which more than seven in 10 (70.6%) respondents believe the industry should be focusing.
Ms Turnbull says, “Apart from tailoring their communication and marketing strategies to the channel preferences of their members, funds should consider putting a face to their name by providing economic and investment commentary on the news, just like banks and other financial institutions do. This is something that close to two in three (65.1%) respondents would like to see from super funds.”
Retail members least satisfied, most at risk of switching
The research identified the demographic and behavioural characteristics of super fund members that are most at risk of switching to another fund and classifies members as Devoted, Fond, Indifferent and Estranged.
Overall, the majority (51.6%) of respondents are classified as Indifferent or Estranged and are a switching risk to their fund, in line with 2013 (51.8%).
Retail fund members are the most at risk of switching (64.8%), while SMSF members are the least at risk of switching (38.1%), reflecting the findings that retail members are the least likely to be satisfied with their fund overall (52.1%).
Low fees and high returns continue to drive choice
Consistent with last year, strong investment returns and low fees are the two most common choice drivers for super fund members, with an average ranking score of 9.4 and 8.4 out of 10 respectively, in line with 9.3 and 8.3 respectively in 2013. The appeal of high returns and low fees is the strongest for Estranged members (9.6 and 9.9 respectively).
Mergers could risk member attrition
Mergers as a growth avenue will need to be carefully managed by funds so as not to cause member attrition, with close to two in three (65.6%) respondents in APRA-regulated funds saying they would not like any merger activity for their fund, on par with 2013 (64.4%).
“Super funds need to focus on personalised communication and engagement strategies that demonstrate the value of their offer. For some funds, merger activity may be inevitable given that those who decide not to merge must justify their decision and demonstrate their future viability to APRA, however the benefits to members needs to be thoughtfully communicated with a particular focus on economies of scale and scope”, says Ms Turnbull.
