The financial services industry is renowned for screaming about price deals to attract new patrons, while the budgets allocated to keeping its current customers happy have traditionally paled by comparison.
However, last week's news that Scottish Widows is to treble its marketing spend next year and shift the focus of its promotional activity toward existing customers appears to be indicative of a wider trend in the industry (Marketing, 6 September).
Several factors are driving this change. As product competition hots up, financial brands are finally coming to realise that there is some truth in the marketing adage that it is cheaper to retain a customer than acquire one.
The credit-card market, for example, is pulling away from eye-catching '0% balance transfer fee' headline offers in favour of adding charges for carrying out the transactions, thereby putting off account promiscuity.
In parallel with this shift is a rising tide of research indicating that consumers are tiring of changing credit card or insurance provider solely on the basis of low interest rates or premiums. The promise of good service or added value has become far more enticing, as consumers have started to take a more long-term view about the deals on offer.
Credit cards providing cash back and other rewards have become more popular than those touting the traditional 0% deal', according to research by Morgan Stanley. It claims that 17% of UK cardholders have a card with an attendant 0% offer, compared with 21% who have one that offers cash back.
Furthermore, a report carried out by YouGov earlier this year, for financial advisory firm Deloitte, found that poor service, rather than an attractive rate of interest, is the predominant trigger for consumers switching between high-street banks.
An acquisition-centric strategy is 'unsustainable' in the current climate, according to Scottish Widows director of customer and brand marketing Mike Hoban. 'Customers have more choice than ever and we are all chasing the same ones,' he says. 'It is far easier and more effective to hold on to existing customers.'
One way Scottish Widows plans to do this is by 'reminding' customers that they have made the right choice in signing up with it. 'In our market (of insurance and pensions), we are asking people to make long-term decisions 20 or 30 years ahead of receiving the benefit,' says Hoban. 'That's a big challenge in a world where demands for their attention, time and expenditure are constantly increasing.'
Hoban is a staunch advocate of using TV advertising to jog customers' memories, but a campaign kicking off next month will also comprise direct mail, a relaunched website, point-of-sale activity in parent company Lloyds TSB's branches and an outbound telemarketing programme.
High-street banks are also devoting more attention to customer retention. Sue Hayes, director of product marketing at Abbey, says she saw this strategy work in her previous role as head of banking products at HBOS.
'If you ask people to stay and reinforce the benefits of what they're getting from you, many do,' she adds. 'Sometimes they forget what they have got with you, so you need to show them. You also need to look at what competitors are offering and come up with counter-offers.'
Retention marketing is on the agenda at board level at Abbey. When Hayes joined the bank at the end of last year, she created a 14-strong dedicated customer-retention team and embarked on 20 retention marketing pilot projects, which she now plans to roll out.
'The evidence shows customer satisfaction increases if you demonstrate that you are looking after them,' says Hayes. 'We are looking at broadening our offer further with special offers for existing customers.'
Her ultimate aim is to measure the success of these campaigns through customer attrition rates, levels of cross-selling and customer satisfaction.
Abbey is not alone in embracing retention marketing. Building society Nationwide argues that its mutual status enables it to place a stronger focus on long-term strategies than its rivals, which are under pressure to woo the City in the shape of quick-win customer acquisitions. 'Our approach is to acquire people by demonstrating that we are able to provide them with better long-term deals and service,' says its head of brand marketing, Peter Gandolfi.
He claims that retention strategies are becoming more important because customers are increasingly sceptical of the 'gloss and style' prevalent in financial services advertising. 'Brands need to demonstrate their substance. Our ads strike a chord because they are about principles, values and the right way of doing business,' he adds.
However, other financial marketers believe the benefits of retention have been overstated. Neil Scaife, who is set to become marketing director of Post Office Financial Services this week, argues that a successful marketing strategy must be built on acquisition.
'I am not suggesting that retention is unimportant,' he says. 'But you are more likely to grow your brand by focusing on acquisition; penetration is what grows a brand, not repeat purchase.'
He also insists the contention that retention is cheaper than acquisition has never been substantiated.
Of course, no brand can afford to ignore the need to acquire customers, as without them they could not grow. This has led the industry to adopt a catch-all approach, according to Clark McKay and Walpole's managing director, Martin Nieri. 'Financial brands are attempting to cover both in one hit, by trying to acquire with a deep, warm message, rather than just saying "this product is cheap",' he says.
The challenge, then, is to hit a tone that will warm up customers, rather than provoking their cynicism and a cold shoulder.