Analysis: It's About Building Relationships

The smartest strategy is to understand the needs of your potential customers and to earn their trust

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In creating MyRetirementShop.com, Axa Equitable focused on the needs and wants of its customers relating to all aspects of their lives, not merely financial ones, according to Chief Innovation Officer Barbara Goodstein. "We didn't see this as being about pushing product," she says.

That was a smart move, in the view of Teresa Epperson, a partner at Mercatus, a strategy consulting firm focused on the retail financial services marketplace. "With respect to the AXA site, the strategy of providing offerings and services that help the financial institutions develop stronger relationships with clients is a good one," Epperson says.

According to Mercatus' own proprietary research as well as a landmark retirement study done with the Bank Administration Institute, today's pre-retirees and retirees have a very strong solutions/relationship orientation vs. a product/transaction orientation. MyRetirementShop.com's focus on helping users find solutions on everything from help with home repairs to figuring out whether it makes sense to start collecting Social Security sooner rather than later means the site is playing to the needs and desires of its audience.

She says that Mercatus' research has found there are three important dynamics emerging in the retirement marketplace and that Axa Equitable would be wise to heed them: the need to establish relevance and suitability in retirement; the need to build trust with customers; and the need to provide customers with ways to engage with the provider and their retirement assets so they feel in control and confident. "The challenge is to do so in a way that meets customers' current expectations around transparency and trust and ultimately leads to sales."

The key to suitability and relevance is ensuring that providers are 1) communicating to customers that they are in the retirement business and 2) providing access to retirement-related tools and information and resources.

The Economics of Trust

Trust is built by being clear and transparent around pricing and fees, says Epperson, and providing customers with "moments of truth" as they engage so they believe someone is looking our for their best interests. "In Mercatus' recent Franchise Health Study we observed share of wallet capture jumped from 20% to 40% when trust moved from 1 (the lowest score) to 5 (the highest)," Epperson points out. "It has always been intuitive that of course if customers trust you, they will do more business with you. Our data draw a very clear line between trust and economic impact."

Finally, the key to engagement is ensuring that customers can have easy access to guidance and a real-time view of their retirement assets. Mercatus' qualitative and quantitative research indicates that pre-retirees and retirees are extremely interested in monitoring and staying close to their retirement assets and are doing so online.

"We found that 41% of consumers 63-70 years of age are checking their accounts at least once a week—and over a quarter say they do it daily," Epperson says. Yet she also says because this segment is so heterogeneous, "one size doesn't fit all," so any site that hopes to appeals to these consumers has to have a wide variety of offerings.

The other thing she advises Axa and Goodstein to think about: the power of social networking. "Look for social media and social networking as the next evolutionary step," she predicts. "Sites like Wesabe.com, if repointed at this retiree and preretiree segment, could be powerful competition."