Dutch pension fund ABP has carried out specially commissioned neuromarketing research to make its communications to members more effective.
Neuromarketing is the study of how people react subconsciously and emotionally to external stimuli, such as written information or pictures, by monitoring brain activity.
It also measures emotional responses, so can be a useful tool in giving advertising or marketing messages more impact.
Joyce Vonken, marketing intelligence specialist at ABP’s administration agency APG, said: “Around 95% of decisions people make are made subconsciously. We wanted to know how pension fund communication influences people’s subconscious emotions and associations, how effective the communication is and how we can improve it.
“Everything is changing in pensions, so we want members to be aware about it, recognise whether they need to take action, and what to do.”
Besides changes in pension rules made by regulators, there are a number of legal practicalities which members should be reminded of, said Vonken.
For example, in the Netherlands, when two people move in together, they need to nominate their partner as their pension beneficiary by agreeing a living-together contract and registering the partner in the pension plan. Otherwise, the partner will not have a claim on any benefits if the member dies.
Similarly, when people change jobs and, consequently, their pension fund, they can choose to transfer the accrued value at their previous pension fund to their new pension fund.
The work was carried out by a research agency with 40 volunteers, a relatively high number for neurological research.
Volunteers were placed in a scanner and given 118 statements about pensions, each together with a picture.
Individual statements were shown only for a brief time, to focus on the individual’s subconscious reaction.
The scan showed which parts of the brain showed activity while assimilating which piece of information. Positive emotional reactions included desire, expectation and trust, while negative responses included fear, anger and disgust.
The research found that people will only take action (read information, nominate someone or become a subscriber to the newsletter, say) when the balance of emotions is positive and when people perceive the stimuli they see as appealing.
“In general,” Vonken said, “the results showed that, in their communications with members, pension funds have to focus on positive associations with pensions.
“For instance, rather than warn how important saving for a pension is, we should emphasise how people who save can enjoy their pension later on.”
The concept of pensions as a whole was perceived negatively by the research subjects.
However, the fact there is a uniform pension overview (UPO) – an annual statement of expected retirement income and death benefits, which all Dutch pension funds send to members in standardised form – was perceived favourably.
ABP says this may be because it is personally applicable, uniform and regular.
People find information about their own pension relevant, said Vonken, but sometimes they need extra motivation to actually do something about it.
The extra motivation can be based on positive associations with pensions and retirement and the right wording and imaging.
The research also highlighted the effects on people’s subconscious of intrinsic motivation – such as feeling good about being well prepared for the future right now by subscribing to the newsletter – and extrinsic motivation – for instance, inducements such as offering the chance to win an iPad to members who subscribe to the newsletter of their pension fund.
The results showed that the right intrinsic motivation was as effective as extrinsic motivation because it gave people a sense of wellbeing.
Extrinsic motivations are also likely to wear off over time.
And, according to Vonken, a lot of small changes can make a big difference.
For instance, the subject line in an email newsletter can increase the number of people who read it and go to the pension fund’s website, thus getting informed.
“ABP and the pension fund industry believe it’s their job to make people more aware of their finances,” said Vonken.
“We can help them become aware of it and support them with information, as a result of which they might take the necessary actions to make sure they are well prepared for their retirement.”
ABP’s marketing and communications teams are now being trained to convert the research results into practical improvements to their campaigns.
Besides the substance of information, the presentation and layout of documents can also play a role, especially in terms of making the UPO more relevant to members.
ABP is currently working on this aspect of the research as well.