Choice brings power to the people

Superannuation has always been a service industry with a focus that is first and foremost on fund members.

However, with the opportunities that choice of fund has granted to members, the fight between funds for market share is hotter than ever and, according to Bill McMillin, chief executive officer and fund secretary of TWU Super, the role of member communication seems set to expand.

“Member communication is more than just informing members now,” said McMillin. “Today, the issue is engaging members and getting them interested in the subject.

“Flyers, brochures and pamphlets have been shown to have a very limited effect,” continued McMillin. “So funds have got to look at different ways of getting their message through.”

This realisation, according to McMillin, was the premise upon which TWU Super based the strategies to use electronic messaging to communicate with members for which it picked up an award at the recent Conference of Major Superannuation Funds (CMSF).

“When looking at more effective and innovative ways of communicating, we talked to our members a lot about electronic communications,” said McMillin. “We discovered that as little as 30 per cent of that membership made use of email. However, being a fund servicing the transport industry, the vast majority of our members use mobile phones and short message service (SMS) as a way of staying in touch with family and conducting business.”

McMillin said though messages delivered via SMS are limited in size, it is a perfect way to give members limited account information and reminders and teasers to encourage further fund contact.

Alison McIvor, general manager of marketing and communications for CMSF Print Communications Award winner Australian Super, also sees the role of member communication expanding as the superannuation industry gains more public focus.

McIvor said there wasn’t much that was out of bounds in terms of communicating with fund memberships, provided you have permission from customers.

“The main issue is to determine the right mix of the message and the medium,” she said. “There will always be a place for mass branding communication, particularly for large funds, in addition to well targeted and relevant personal communication.”

So, in a time when superannuation advertising across all forms of media is commonplace, the pertinent question seems to be what prevents funds from having adequate member communications strategies? Is it a fear that providing greater information to current members risks losing those members to other funds, or is it something else?

Maryanne Scroggie, communications manager for Just Super, winner of two CMSF Communications Awards, recommends an open and transparent relationship with fund members.

“At Just Super, we aspire to arm each member with sufficient information to empower them to make smart decisions relating to their retirement savings,” she said. “Naturally, by providing this information or running campaigns relating to choice of fund or consolidation, members may switch funds, but we don’t believe fear of this should impact the information funds provide to members.”

McIvor points out that, in general, the things preventing funds from having adequate member communication strategies are resources in terms of people and/or funding.

“However, with respect to the provision of information encouraging members to switch, at Australian Super our sole focus is on helping members save more for their retirement,” said McIvor. “If a member takes enough of an interest in their super to weigh up their options and they find a product that suits their needs better and will genuinely help them have more in retirement, then that’s a good outcome for them.

“As marketers, we are confident that, for most people, there is no better product,” added McIvor. “So, we need to reinforce to members what Australian Super offer and how it compares to other funds.

“The danger in not communicating with members and explaining the benefits of your product is that someone else will be talking to them about their product.”

Unfortunately, while superannuation is now front-of-mind for many Australians, financial literacy remains a problem. Surely, communicating well with members serves little purpose if the information being provided is poorly understood?

McMillin said education had to be a part of a fund’s wider communication strategies.

“There’s no question that education is a large part of the communications task,” he said. “The Federal Government has been making good attempts at education, but the reality is that it is fairly limited in what it can do, so funds have an obligation here.”

McMillin added that funds have to be careful not to reach the stage where they are obsessed with member education.

“You’ve got to look to the grey line in the middle between communications and education,” he said. “Ideally, I’m sure all funds would like to see the Government’s Financial Literacy Foundation integrated into education systems, such that in a couple of generations young Australians have an understanding of these concepts. Obviously, this would lessen funds’ obligations to education, but we’re not there yet.

“In a perfect world, we would be able to sit down with every member one-on-one and educate them. Unfortunately, it just ain’t so.”

McMillin is not alone in his belief that education and communications must be combined moving forward. Scroggie said Just Super had also recognised the benefits in better integration.

“By combining communication and education, funds can meet members’ needs more effectively and efficiently,” she said. “As consumers become more savvy, partly as a result of the media attention devoted to superannuation recently, their expectations in this area are growing. Funds must meet these expectations in order to remain competitive.

“Member are turning to their funds not only to provide products and services, but also as a trusted source of education and information, clarifying issues affecting their retirement savings.”

If member education levels are one barrier to effective communication, McMillin identifies the other as the issue of engaging members with the superannuation subject matter.

Scroggie sees a more holistic approach as appropriate.

“We aim to demonstrate our appreciation that superannuation is just one building block of a member’s financial security,” she said.

“Ensuring messages are tailored to the audience is important too,” added Scroggie. “Taking the time to understand your membership through research is invaluable to developing effective approaches to engagement. We look closely at the attributes of membership segments by industry, age and so on, to determine the information that will be most relevant and, therefore, engaging to them.”

Alternatively, McIvor argues that engagement is less a barrier and more a reality of account balances.

“Generally, the more money members have accumulated and, consequently, the closer to retirement they are, the more engaged they become,” she said. “But we are seeing signs that this is starting to change, with more members wanting information.

“There has been a huge amount of publicity around the Government changes to super; all of Australian Super’s member contact points have increased. More members are accessing the website, the customer service centre and attending our seminars,” added McIvor. “Members are realising that super is something they can’t afford to ignore.”

But the reality of a superannuation industry in which customers can choose the fund that best suits them is member retention is an issue. And though choice of fund may not have had as large an impact as was anticipated two years ago, many funds have lost members, and poor member communication is often the prime cause.

McMillin said he certainly saw poor member communication relating to poor member retention growing as in issue within the industry.

“The simple answer is funds cannot afford not to communicate with their members and [need to] communicate effectively,” he said. “You need to keep in touch and keep your brand in front of members’ eyes.”

However, the reasons behind member losses are not always agreed upon. It is McIvor’s assessment that poor communication is rarely the prime motivator behind a member moving on.

“The reasons for members leaving are varied,” she said. “And I’m not sure communications and marketing are entirely to blame.

“At Australian Super, we conduct an annual member satisfaction survey, and the biggest impact on satisfaction is investment returns. Members are becoming more focused on performance, which is a good thing.

“However, we do know that when members switch jobs it is a critical decision making time for them, as they are asked to choose a fund with their new employer,” added McIvor. “It is here that the level of loyalty has a big impact.”

McIvor said in addition, helping members feel empowered to make a decision was crucial.

“Many members feel they will just go with their new employer’s default fund, as they think choosing a fund will be a problem and they don’t want to cause problems with a new employer,” she said. “Funds have an increasing role to play here in particular, continually communicating and reinforcing to their members the benefits of their fund and giving members enough reasons to stay and to choose when asked.”

By contrast, it seems not all fund members see investment returns as their fund’s key service. Scroggie said Just Super’s research had shown that the most significant driver of member satisfaction was a member’s relationship with the fund, even more so than investment performance.

“Therefore, we see the quality of our communications and marketing, or the relationship we foster with our members, as being vital to member retention,” she said.

Looking to the future, the consensus amongst fund executives, communications and marketing managers seems to be that customisation in member communications is key. McMillin believes that it all boils down to how much imagination you have and how much support you have from your administrator.

“This year, we plan on separating our membership into groups based on age, account balances and so on,” he said. “That way, we will be better able to tailor what messages we send to accompany account statements and other information.

“For instance, if an older member has a small account balance, then the inference is that they must have other accounts elsewhere and they are a prime target for rollover information. In the case of a younger member, pertinent information would be projections for their super balance, salary sacrifice options and so on.”

Scroggie also believes customisation to be important.

“Our research shows that different groups of members have very different needs,” she said. “These groups may be defined by a range of different factors like age, industry and gender.

“Some of our most effective campaigns have been those targeted at particular segments because of the ability to present information we know is relevant to that segment. And the actions members take as a result of these targeted campaigns are the ones that tend to make a real difference to their final retirement account balance.”

For McIvor, personalisation, not just customisation, is possible.

“At Australian Super, we believe the key to successful member engagement is to communicate with members about the things that interest them in a way that relates to them and at a time that suits them. One size does not fit all, and that is the challenge.”