Edition: March / May 2017
Savings institutions are inclined to be too modest in competing for discretionary incomes. Same old, same old techniques should be rethought.
Credibility is the casualty in the modern-day outpourings of “fake news” and “alternative facts”. From US president Donald Trump down – and there is a long way down – people believe what they choose to believe. They acquiesce in the proliferation of unfounded beliefs, then act on them.
That words have consequences is demonstrated uncomfortably close to home. “Save” is the currency of financial institutions’ marketing. It’s meaning has become confused. Equally dangerous is when “retirement” and “pension” connote procrastination and lethargy
Were it otherwise, SA’s record for long-term household savings wouldn’t be so dismal and the prospects for adequate old-age provision so dismal. From the millions of rand annually spent on institutional exhortations, much falls on rocky ground because of terminology that’s ambiguous or downright dull. Advertisers should start to reinvent the words they use, perhaps simultaneously also challenge through advertising regulators the misuse of words by competitors for consumers’ rands.
A prime example is “save”, exceedingly popular in the parlance of retailers. Their advertising resonates with encouragement to save by buying before prices increase, to save by buying two items for the price of one, to save by buying at a special discount temporarily on offer etcetera etcetera. Never mind which purchased items are surplus to requirements, and don’t bother about pension plans which aren’t.
Just rush, on an induced impulse, for the perceived bargains. They’re fundamentally unlike the grudge purchases of actual savings that delay instant gratification, that stimulate debt accumulation at the expense of capital accrual.
Who cares about the power of compound interest? Haven’t heard of it! Might have been told something at school, where financial education should begin, but what the hell. One can worry about such things later, always later, until it’s too late.
Retailers are getting away with the murder of language, and savings institutions are allowing them to get away with it. They use the same words to describe utterly different concepts. In only one context can “save” be correct.
Saving is the antithesis of spending. It’s no more possible to save by spending than to live by dying, to sit by standing or to fight corruption by taking bribes.
In the dictionary meaning, to save is to “store up for future use”. In the retailers’ meaning, and usually in the shoppers’ understanding, money saved equates to money spent on an item bought more cheaply at one time or place than another; not to money stored for future use.
Forgive consumers the confusion. It’s not of their making. What it does, however, is give retailers an overwhelming advantage. Consumers can easily understand price comparisons which, to be fair, they cannot do as easily on financial products. Also, in the nature of choices, the temptation for quick satisfaction far outweighs an apprehension over distant timeframes.
The marketing competition is metaphorically between apples and pears, not helped by words that pitch two unlike categories into the same battle. For either retailers or institutions, “save” must fall.
For both to keep it is to ignore a cause of peoples’ lack of engagement with savings and debt management. The less they’re understood, the more menacing the omens for individual households and the national economy.
Obviously, there must be successful initiatives to promote consumer financial education. An adaptation of marketing messages, consistent with the good-practice code of the Advertising Standards Authority on the use of “save”, would help to advance it.
Another thing about these messages. The savings institutions might do themselves and their target audience a favour by questioning whether their advertising is designed rather to capture market share than to extend market size. If they were more effective in the latter, then perhaps the savings pool would be looking a lot more buoyant.
Some random thoughts:
Yet an abundance of messages about savings, pensions and retirement remain stuck in an obsolete paradigm. A new reality should be reflected. There’s sufficient creativity to achieve it from advertising agencies amply rewarded.