New Movers Provide Bank Marketing Risk and Opportunity
When it comes to lifestage marketing events, targeting the new mover has always represented a significant opportunity. Historically, consumers who move tend to significantly increase spending in a variety of categories while also changing where they shop, eat, buy personal services and even bank.
But, with new home sales in 2011 being 80 percent below the peak in 2005 (making the number of existing and new home sales the lowest in almost two decades), should bank marketers still invest in this target audience? Do consumers still spend at the same rate as in the past? Is this target audience even scaleable?
- Consumer brand loyalty is tested during a move, with new movers being twice as likely to change brands or service providers than non-movers.
- New movers have an interest in changing and/or upgrading services such as banking, credit cards and insurance after a move.
- Direct mail continues to be a highly valued channel for receiving information during a move, and is even highly valued by Gen Y consumers.
New Movers and Home Purchasers are Not Synonymous
According to the U.S. Census Bureau, roughly 17% of Americans move each year, representing more than 53 million people. Those who move tend to be younger, with the distance of the move also being greater for younger demographic segments. The only exception being those households reaching retirement (around age 65) who also are more likely to move.
Research shows that while the economy is showing signs of slow and steady recovery, the volume of home sales continues to lag behind the highs achieved in the past. As a result, the ratio of renters on the move versus new homeowners continues to favor renters as it did in 2011. While this trend is not necessarily surprising given the scope of the housing market difficulties, marketers need to understand the difference between these two segments of movers as it relates to demographics, loyalty and purchasing behavior. The good news is that both new movers and home purchasers appear to be on the upswing.
The bad news is that as many as 33% of the people who move do not report their new address to the USPS (the central compiler of the National Change of Address (NCOA) file. As a result, targeting new movers (or even keeping a house file current) requires compiling multiple list sources including utility connections, phone changes, county records, etc.
Do Households on the Move Remain Brand Loyal?
Research shows that even when a household moves a short distance, marketers can’t assume purchasing patterns will remain the same. According to the research done by Epsilon, brand loyalty is tested during a move, with the frequency of changing providers/brands being twice as likely for a new mover compared to a non-mover (some categories of services have a much higher propensity of change).
As shown below, some of the lowest levels of loyalty were in the category of professional services, where the difference in likelihood of changing brands between movers and non-movers were greatest for home insurance (3:1), auto insurance (2:1), credit cards (2:1), and banking accounts (3:1).
While a move, by itself, may not prompt a change in providers, it does appear to put loyalty to a specific brand or provider in play which indicates a defection risk for current customers and acquisition opportunity for prospects in a trade area.
- Be the first in the mailbox (or on the computer, phone or newspaper box) after a household moves to avoid clutter and benefit from early decisions
- Develop a system of immediate processing of prospects/customers to provide the foundation for being the first to reach the new mover in your category
- Measure the incremental impact of the program against your alternative acquisition/retention initiatives
For the majority of my clients, a new mover program is the foundation of their acquisition efforts, generating one of the strongest returns on investment and a steady flow of new households at a time when market growth is at a premium. In addition, a physical convenience is becoming less important for households, more and more of my clients are looking for ways to identify current customers who may be preparing for (or have just completed) a move to protect this household from attrition.
According to Don Hinman, SVP of Data Strategy at Epsilon, “An average household moves every five years on average and spends approximately $9,000 on a broad array of goods and services. By understanding at a deep level where new movers are spending and what opportunities are available to gain share of wallet, brands can create more effective, targeted campaigns to reach consumers during this transition.”
