To help you navigate the uncertainty of the COVID-19 pandemic and its impact on financial businesses here in Australia, we've researched and created an update of what’s been happening in financial markets, what other brands are doing and strategies you may want to consider during this time.

Financial market summary

The number of COVID-19 cases globally is now approaching 1 million and increasing exponentially. It is a frightening time for all as we head into a global recession, not knowing what is going to happen or what long-lasting damage it will leave behind. The financial markets have fallen at an extremely fast rate, leaving investors feeling shocked and anxious. Many have been refinancing their loans, trying to get more credit or switching their investment types. As a result, call centres have been inundated, customers have to wait hours before being able to speak to someone and technology is buckling under the pressure – sparking further anxiety.

Businesses are just as anxious, with many trying to make sure they have cash on hand or can access more credit to make it through the next few months. Many employees have been laid off and leave without pay is on the increase so companies can stay afloat during this time.

The demand for liquidity is strong, and cash is certainly king in this environment. In an effort to avoid a repeat of the global financial crisis, central banks are throwing everything they’ve got at this, flooding credit markets with liquidity to ensure they continue to function and companies have access to funding. In addition, the RBA cash rate has been dropped to 0.25%, providing some comfort and strong forward guidance, but this is not without ramifications.

Working to calm investor sentiment

Investors’ fear of losing money could be extremely detrimental in the long term, as many will be tempted to switch between investments, leading to even more losses. The effect of market volatility on superannuation means retirees are very concerned about their future and how much more money they are going to lose. Therefore, communication is key during this time. Financial organisations need to present the facts based on what we currently know – even when this includes elements of uncertainty – so clients can make educated decisions about their investments at every step. In short, the most important message is that investors should not be doing too much before we have a better understanding of the situation and its impact on investments in the long term. And admitting that there are still so many unknowns, as this is not something we have experienced before.

A review of financial organisations’ responses

Looking at responses to the pandemic shows there is a small group of superannuation, investment management and financial planning providers who are at the forefront of communicating to their clients in a timely, understanding and informative way. These responses highlight the importance of communicating with clients as soon as possible to show you understand their concern, are checking in to see if they’re OK and seeing what you can to help them during this time. Financial services providers can help customers understand that they shouldn’t make any rash decisions, as none of us knows what the financial impact of COVID-19 will be. So it’s prudent to wait until we understand the situation more fully and can make more informed decisions.

While we may not have all the answers, it is clear that many companies across the financial sector are way behind in communicating meaningfully with their members. They may have addressed the issue in a piecemeal fashion – for example on their homepage – but have had no direct correspondence with their base, which can understandably make investors feel frustrated.

At times like this, it is imperative to communicate in a whole new way. The social and economic impacts of COVID-19 mean people are taking it very personally. It’s a very different situation to the GFC, when Australia was in a good financial position and unemployment was not greatly affected. Whereas the impacts of the current pandemic will last a very long time and recovery will be slow. Many jobs will be lost, many businesses will close, property prices will drop and a large percentage will be wiped off super fund balances.

For the younger generation up to the baby boomers, we have never experienced anything like this in our lives. We don’t know what’s going to happen – and the thing is nobody does – as this an unprecedented event in modern times.

That’s why this is the perfect time to put customer interest first – to show understanding, compassion and leadership, and engage meaningfully with your customers. Companies that care about building a better relationship with customers and keeping them informed will make a difference to their lives during this time. And these brands will come off very favourably.

An issue I’m very concerned about is people dipping into their super fund based on the government plans to allow people to withdraw their money, which could have a significant impact on their long-term security.

I am surprised that many super funds have not said more or taken a position on this, especially when the average super balance is under 50K. More leadership is definitely needed in this industry. Super funds have been charged with looking after large sums of money and many people could lose a considerable proportion of their lifetime savings.

Marketing recommendations for financial services providers

As uncertainty escalates and even governments struggle with their strategies, this is your brand’s chance to show compassion and understanding during a very difficult time. Honesty and integrity is key – it is OK to admit you don’t know the answers and that losses have occurred, but make sure you show flexibility, adaptability and an understanding of your customers’ concerns. This is a time to position your thought leadership as a business – whether it’s via your CEO, key investment manager or other expert opinions. It’s essential that the leaders of your organisation are visible.

Rather than a one-off announcement of your how your business will be operating from now on, ongoing engagement is essential. You need to keep investors, borrowers, members, partners and other stakeholders engaged and informed of the relevant facts. An effective way to do this is by developing a content plan to engage customers across a variety of channels, mixing written content such as eDMs, DM and online content with things like videos and webinars.

We need to show that we are all in this together.

Advertising by major brands

In the past few weeks, many brands have shelved campaigns if the content would seem insensitive or inappropriate for the current times. While the business losses this could cause may not compare to the personal risks individuals are facing, it’s still not ideal. But with so much uncertainty, brands are questioning whether they should even advertise at all. And if so, what should they advertise and what should they avoid? Do consumers want them to address the coronavirus? Do brands have a role in the fight to flatten the curve?

Let’s look at some big brands around the world.

Guinness

In one of the first coronavirus-related ads to be aired, the Guinness St Patrick’s Day ad promotes unity, resilience and the strength of the human spirit while highlighting the company’s initiative to give back to the community. The ad acknowledged the unusual circumstances surrounding this year’s St. Patrick’s Day (while never actually mentioning coronavirus), and encouraged people to raise each other up.

Research conducted by Ace Metrix, which is among the first to explore consumers' emotional reactions to coronavirus-related ads, showed the ad scored very positively for likeability, relatability and information delivered. Seven out of every ten beer drinkers surveyed showed increased intent to purchase and many said it was their favourite beer ad of all time.

The research shows that brands can make a connection with messages that are understanding and supportive. According to survey responses, 75% of consumers also said brands should step up and help out during the pandemic. It also found that ads addressing the situation should demonstrate actions, not just words, and that good storytelling worked wonders. Some brands have already pivoted their strategies to show more empathy with their customers and communicate their concern about the situation, while others are trying to figure out if and how to advertise at a time when the country has come to a standstill and people are going into isolation.

Hyundai and Toyota

Hyundai and Toyota quickly updated their planned ads to show support for their employees and customers. Like Ford, Hyundai is promoting a financial relief program that lets customers who become unemployed or sick from the pandemic miss up to six months of payments on new car purchases.

Other brands mobilising to help with the crisis

When ingenuity, adaptability and shared effort means everything, many global fashion, beauty and car companies are turning their efforts to provide hands-on help with the big issues, and earning some well-deserved publicity in the process. For example, Saint Laurent, Balenciaga, Gucci and other fashion brands are developing face masks for healthcare workers.

Similarly, companies like L’Oreal and LVMH (the Louis Vuitton group) are using their production factories to manufacture much-needed hand sanitiser for hospitals, nursing homes and pharmacies across Europe. While Ford is working with 3M and GE to make ventilators and respirators.

The common theme across all of these initiatives is that when brands show that they understand what’s important and take action (rather than just talking about the issues), the goodwill they inspire is priceless. Every one of these communications is supported by positive action on the organisation’s behalf to benefit their customers, their employees or the broader community. As with any business, your brand would be nothing without your customers. Your customers have supported you for many years, and now it’s your turn to support them – and others in the community – in their time of need.

Making your marketing decisions easier in hard times

I hope you have found this article helpful, and that it gives you some ideas on how to support your customers more effectively during this incredibly difficult time. The role you play as a business in the coming weeks and months will make a big difference in the long run.

If your marketing team needs support or you’d like to chat to me about your communications strategy during this critical time, please don’t hesitate to give Margot at Pure a call on 0418 421 043.