Independent trustee Michelle Cracknell was the winner of the PMI's third student essay competition. In her paper, she explains how data managed by schemes and providers to administer pensions could be used to better segment and target member communications to improve engagement.
The information sent by schemes/providers to members has improved enormously over the last few years; it is written in plain language; it has pictures and may even have videos. But schemes/providers are telling the members the things they think are important for the member to know. They may be important for the members to know, but are the members listening? Telling members things the schemes/providers think they should know is not communicating; it is broadcasting.
Communication is a two-way process where each side listens to the other. The best way to get members to listen is to listen to them. This can be done through the data. For example, if the scheme/provider learns that a member has had a child (as they are taking a contribution holiday), it provides a platform to communicate to that member about matters that are relevant when someone has had a child, such as the ability to nominate to whom death benefits are paid.
The question should not be how schemes/providers improve engagement but how they can be more engaging. There are three ways schemes/providers can be engaging.
- Communicate with members on the things that matter to them.
- Find out more about the members so that the scheme/provider can help them with the things that matter to them.
- Deliver value to the members by communicating on things that matter to them right now so they share more about themselves.
These factors use data that schemes/providers have and help them improve the data they have, enabling them to deliver segmented communications that members value. This is how it can work.
What matters to members
The data managed by schemes is rich with life moments. Schemes often know when a member has moved home, got married, given birth to a child or got divorced. Yet schemes/providers rarely use this data. Instead, they spend money on expensive communications that count down to a retirement date that is not relevant to a high proportion of the members. The reaction of members to this type of communication is not engagement. In fact, it can lead to the wrong or no action; some members take benefits, even if they do not need to and the rest of members will ignore it.
A more effective way of communicating is to contact members when something is happening in their lives, at times called "teachable moments". Teachable moments or life moments such as moving house, getting a job or starting a family often impact the member's financial position, including their pension. For example, when a member gets divorced, he or she will request a valuation from the scheme/provider which may result in money being paid in or out of the scheme. Divorce has a major impact on people's financial position and their retirement yet schemes/providers do nothing to engage with the members at this time. Schemes and providers could provide real help by giving the member the questions they should be asking themselves or others to better understand how to rebuild their pension to achieve their retirement objectives. They should actively help people at these known life moments because this is what matters to the members.
Finding out more about the members
Of course, there are life moments that happen to a member, particularly a deferred member, that the scheme/provider is not aware of but it could really help the scheme/provider and the member if they knew more about the impact of such an event on their pension. This would require members to share personal data with the scheme/provider. Members, and people in general, will only share personal data if they understand the context and trust the recipient. If schemes/providers are going to build up the data to better segment and target member communications, it needs to establish trust with its membership. Asking "Are you married?" or "What other pensions do you have?" to members without context or trust will, at best, fail to get the data and, at worst, upset the members. It is therefore important for schemes/providers to build the trust with the members so that they are ready to share information with the scheme. The equation of trust is:
Source: Defining Trust by Charles Green
What does this mean in practice for a scheme or provider? The quality of the scheme's data is at the heart of credibility, reliability and intimacy:
- Credibility - A scheme/provider should build credibility by investing some money in making the data as best it can.
- Reliability - Schemes/providers should look at the time it takes to respond to members' questions and, most importantly, not leave members with "dead ends" - if the scheme/provider cannot help, signpost the members to organisations that may be able to help.
- Intimacy - Schemes/providers should allow members to decide what and when they share their personal data with the scheme; the more control the members are given, the more likely they are to share. It also goes without saying that schemes/providers have been entrusted with sensitive personal data and therefore the scheme/provider should protect it.
- Self-orientation - Schemes can be selfless by offering help and guidance on areas that are not directly related to pensions but impact on their members' overall financial wellbeing.
Having created a trusted and sharing relationship with its members, schemes/providers can find out more about its members giving the ability to target communications.
Source: Aligning Consumer & Marketing Outcomes in Pensions by Life Moments
Adding value to the member
The virtuous circle is that using the data to provide targeted and relevant communication where the member sees the value leads to a two-way flow of information, resulting in richer and more accurate data. This will enable schemes to be managed more efficiently and for members to achieve better outcomes. Here is an example of where data was used to add value to football fans.
As well as being relevant by sending out small volumes of communication to segmented members, schemes/providers need to communicate with members again and again and again in order to add value. As the American author and motivational speaker Zig Ziglar says: "Repetition is the mother of learning, the father of action, which makes it the architect of accomplishment." The reality is that every communication with members costs money; more communications to multiple segments, multiple times will increase costs. Electronic contact details are essential in order to communicate frequently as this type of communication can be sent at a fraction of the costs. Most employers know the personal telephone numbers and email addresses of their employees but many schemes only have the work email in the data it holds on its members. Can there be a more joined up approach on enrolment into the pension scheme between HR and the scheme's administrator? Can the administrator be prompted to ask for personal email addresses every time a member contacts them?
Budget could be saved on boiler plate communications such as the annual benefit statement, where the open rate is never likely to be over 30% of the members and much of the information can be accessed online at any time. There should be a critical examination on all other communication spending; how much should be spent on further enhancements to the website that is rarely visited and videos that are not being watched? Building interesting content does not drive engagement. Schemes/providers should spend more of the budget on nudging members at their life moments; it is about prioritising context over content. Schemes/providers should apportion at least 80% of their budget on the nudge and the rest on the content rather than the other way. In fact, most schemes/providers already have built the content so by redirecting the budget to effective nudges, the existing content will be accessed more and valued.
The simple message to schemes/providers is, as Dale Carnegie notes: "Being interested has more worth than being interesting."
- Engage with members on the things that matter to them, which is usually linked to their life moments rather than spending the communication budget on pushing out information on the things that the scheme/provider thinks that the member should know.
- Grow trust with members by investing in making the data as good as it can be and ensuring that the service provided to members is credible and reliable.
- Deliver relevant communication to members at their life moments where they see the value and are therefore are more willing to invest the time in sharing more information.
- Communicating with members needs to be repeated again and again and again so electronic contact details are essential.
- Communication budgets should be focussed on making the data as good as it can be and by building nudges for members rather than content.
Schemes/providers should focus on nudges at life moments to segment and target its members. Communicating at life moments is helping members on the things that matter to them and hence the member will engage. Engaging communications targeted at life moments improves engagement.
Michelle Cracknell is an independent trustee who has recently completed the PMI's Award in Pension Trusteeship
The Pensions Management Institute's next student essay competition is now underway. The topic is ‘Covid-19 has changed the way people and companies in the pensions industry are working. Will these become permanent changes in working practice, operational delivery and communication, or will old habits and methods return? What can we learn from current practices and what does the speed of change since restrictions were imposed, tell us?'. The deadline to submit is 26 June. Further information can be found on the PMI website.