Marketing/Advertisting: Home Movers

// www.callcredit.co.uk/homemove // White Paper // 1

Home movers – an overlooked marketing opportunity?

White Paper

By Paul Kennedy

Head of Consulting Callcredit Marketing Solutions

Movers spend on average £5,000 on move-related goods and services in the pre and post move period and in most cases spend more on home improvement and furnishings in the first six months of moving than in the next five years

// White Paper// 01 // www.callcredit.co.uk/homemove


© 2012 Callcredit Information Group Ltd. All rights reserved

For many households across the UK, a large portion of monthly spend goes on necessities – such as mortgage payments, utilities and insurance – which are particularly under the spotlight for anyone about to move home. Might there be a better deal elsewhere? How easy is it to switch provider?

Back in the day, the norm was to turn to existing suppliers to provide quotes or even just renew their services when prompted by letter or phone call. The days of sticking with the same provider for the long haul however are gone – not just because of comparison sites and other intermediaries but also the rapid rise of peer to peer networking. The new norm has seen the emergence of the ‘empowered consumer’ characterised by investigating alternative options to locate the best deals and compare the market. This is especially so in the case of a major life event such as moving home.

For many, the practicalities associated with moving home create their own stresses. The home move process is costly and movers are faced with a barrage of decisions and problems. In fact 39% of all pre movers said that financial issues were their main worries at that timei. The costii of moving for a

non-first time buyer can exceed 25% of average annual earnings before tax. A survey by Propertyfinder showed that the average cost of moving house has more than tripled over the last 10 years, to nearly £9,500. And that’s not the end of it. Further research from the Royal Mail suggests that movers spend on average £5,000 on move-related goods and services in the pre and post move period and in most cases spend more on home improvement and furnishings in the first six months of moving than in the next five yearsiii.

The days of sticking with the same provider for the long haul however are gone


In addition to selecting a mortgage and setting up life insurance there’s household related services such as utilities, telecoms, pay TV and home insurance to be juggled. Decisions may need to be made about extra financing via loan or credit card, whether to maintain the same current account or just move everything to one provider.

At a time when so many additional costs need to be budgeted for, there can be little doubt that the process of moving home is seen by many consumers as a great time to review many of their long standing arrangements. Analysis by a major UK mortgage company revealed that over 66% of their customers switched to a competitor product during the home move. To make matters worse, the existing provider usually does not have the opportunity to engage with their customers to retain the business.

And whilst the loss of an unprofitable customer may not be lamented, it is likely to be the most profitable, less risky customers and those who enjoy higher levels of equity, that are most incentivised to move.

For brands, the marketing process can be straight forward and although the price for acting may be significant, the penalty for inaction is significantly higher.

Recent analysis confirms that Callcredit’s Home Move data could independently identify over 40% of all of a lenders 2011 mortgage closures before they closed their account

A major UK mortgage company revealed that over 66% of their customers switched to a competitor product during the home move.



The latest data available from the Office for National Statisticsiv indicates that about 2 million households have moved to their current home within the previous 12 months. This represents almost 10% of households across the UK. In growth terms, banks are seeing an above average increase in uptake of mortgage products. Data from the British Banking Association indicates that the annual growth of 1.3% in banks’ net mortgage lending continues to outstrip annual growth of 0.8% across the whole lending market in 2011.

In addition to mortgage related areas of spend during a home move, consumers typically incur significant additional costs associated with making improvements and repairs and making their house a home by adding new fittings and furnishings. This makes the whole home moving affair worth over a billion pounds every year.

To further reinforce the business case, property transactions have recently reached their highest level for 18 months driven in particular by the surge in first time buyers ahead of the stamp duty exemption deadline. There is also evidence of a rise in overall pricesv – the

first time since September 2010 and evidence that lending by mutuals is on the risevi. No doubt, the recently announcedvii Government backed 95% ‘FirstBuy’ mortgages will also further drive volumes in those segments of the market which have reasonable credit records, propelling the overall value of the home move market even higher.

This all points to a market that’s growing steadily. But what’s it worth in actual terms? Looking just at the retention aspect of the mover segment, Callcredit estimates across six product areas point to an annual market value of about £600 million lost through churn and a profit opportunity of about £115 million, all retainable through Callcredit’s Home Mover Alerts file.

The market is big, even in today’s economy

This makes the whole home moving affair worth over a billion pounds every year


Mortgages* Electricity/gas Telecoms Pay TV Home insurance Life assurance

Example no. monthly household moves 102,000 141,000 141,000 141,000 141,000 102,000

Est avg churn during home move (%) 60% 75% 65% 65% 65% 60%

Avg churn during home move (volume) 61,200 105,750 91,650 91,650 91,650 61,200

Avg monthly spend per account (£) £500 £100 £45 £20 £20 £12

Monthly Value of estimated churn (£) £30,600,000 £10,575,000 £4,124,250 £1,833,000 £1,833,000 £734,400

Annual Value of estimated churn (£) £367,200,000 £126,900,000 £49,491,000 £21,996,000 £21,996,000 £8,812,800

PRODUCT AREA

Callcredit estimates across six product areas point to an

annual market value of about £600 million lost through

churn and a profit opportunity of about £115 million, all

retainable through Callcredit’s Home Mover Alerts file

Figure 1: Analysis of home move churn by market

* Largest 5 providers Source: Callcredit analysis of sales and rentals and market research (various)


The home move process is well a defined one for most people and at each stage there are commonly occurring needs – depicted on the below timeline.

Decisions about all kinds of spend are made at different points along the home move timeline:

• mortgagearrangementshavetobefinalised before the sale is complete

• changingutilityprovidersandsettingupinsurance policies is often put off till much closer to the move date.

The process for those people renting and those buying may be different yet a similar pattern of expenditure often remains.

For organisations providing just one of the above example services, it is worth focusing in on that specific part of the move cycle where decisions are most likely to be made. On the other hand, for organisations that can provide a range of services, there is an opportunity to create an overall programme to sell in a bundle of services.


Product and service needs vary dramatically across the home move cycle

Mortgage

Loans

Home Improvements Furniture Decorators / Plumbers / Electricians

Credit Cards

Insurance Renewals

For Sale To Let Sold/Let Improve

Under Offer Valuation Move

Life Assurance / Home Insurance

Utilities Paid TV / Phone / Internet

Figure 2: The home move timeline


Home mover marketing is therefore an opportunity not to be missed

Moving house is often cited as one of the most stressful and disruptive things in life, ranking just below death of a loved one or divorce. This was before the credit crunch – so maybe it has now moved closer to the top of the list?

It doesn’t take a genius to point out that the savvy marketers out there will be exploiting the opportunity by adding a home move element to their existing marketing programmes, across the full piece, from retention and acquisition through to cross-sell and upsell.

So why do brands overlook the opportunity to simply run their customer database against the universe of movers to identify those customers who may be in the market for switching? Especially when in current market conditions the typical number of households Callcredit can track in the move process across the yearviii is over 1.7 million either through sale or rental.

Marketers should exploit the opportunity by adding a home move element to existing marketing programmes – for customers and prospects.

the typical number of households Callcredit can track in the move process across the yearviii is over 1.7 million either through sale or rental

The savvy marketers out there will be exploiting the opportunity by adding a home move element to their existing marketing programmes


In such a competitive market, when marketing budgets are being continually stretched, it’s clear that identifying potential movers is even more essential in gaining return from a customer when balanced against the cost to acquire, serve and nurture to the next best product in the customer’s journey. How is it that a number of the UK’s largest consumer brands seem to be ignoring existing customers in the scramble for new ones? Why aren’t they making their marketing budgets work harder to achieve better return on investment?

Callcredit’s recent experience indicates that the most common reasons for ignoring this opportunity include:

• Lackof‘bandwidth’orinternalresourcesto run such a programme

• Lackofaninfrastructuretoundertakesuch marketing, particularly in relation to the speed at which such a campaign needs to be turned around

• Andfinally,lackofawarenessofthetruestatistics and a cost benefit analysis of the opportunities lost.

It is a difficult conundrum for marketers to deal with, and so many choose the simple option and focus on new customer acquisition, hoping the resulting tenure and loyalty of the new customers will outweigh the value of defecting customers at the other end of the spectrum. But it is a big risk to hope that the CEO never gets to find out that the opportunity for retention was overlooked due to either a lack of understanding, an inability to switch resources or simply an aversion to finding a partner that could make the preservation of profitable customers a reality.


It is a big risk to hope that the CEO never gets to find out that the opportunity for retention was overlooked.

Alerts

Sold Let

To letT

hrea

tImprove

Improve

Mar

keti

ng

oppo

rtun

ity

Customer retention

Pre-move

Und

er o

ffer

Account closure

For sale

Homemove data

Home mover marketing

Key life event

Move date

Chu

rn

Switch providers

Valuation

TriggerCustomer acquisition


For marketers, moving home represents a great and actionable communication trigger; the perfect chance to suggest relevant support in a considered and timely manner, offering their customers alleviation from some of the worries and decisions that they inevitably have to make. This paper makes the case for this being a valuable opportunity which is often overlooked and in most cases, underexploited.

Disruption however is both an opportunity and a threat for many service providers, depending on the relationship they have with the potential mover.

Home move as a threat:

Lets go back to mortgage products as an example – if a household moves to a new location, they may not choose to approach their existing lender for the additional finance required, but instead arrange funds elsewhere, only notifying their existing mortgage provider by way of settling the account. If this is the first notice that a provider has of a customer’s intention to end the agreement, there is little opportunity to retain the business. This is borne out by recent analysis of the Big 5 Banks mortgage books which were matched to our Home Move files. Of all of the customers we spotted at the sold stage in September

2011, over 60% had closed their mortgage account with their existing lender and moved to another lender within 3 monthsix. If on the other hand the lender had advance notice of the house going on the market, they would have been be able to engage with the mortgage holder at the beginning of the process with an offer they couldn’t refuse, and turn the threat of attrition into the opportunity of renewal, and in most cases, a balance increase or an equity investment. The value associated with keeping an existing customer versus the cost of recruiting a new one is well understood by marketers. Indeed retention is more often a board level issue now than customer acquisition.

Home mover as an opportunity:

From an acquisition point of view, a home move is good news as it offers a short window of opportunity to offer the consumer a product or service that’s relevant at the time when they are looking to switch. Having the ability to address the customer when they are most open to switching offers presents an opportunity to increase typical response and conversion rates. However success is determined by relevance and timing is crucially of the essence.

The ability to identify consumers early on at each stage of the home move cycle means brands can proactively engage one-to-one

The ability to identify consumers early on at each stage of the home move cycle means brands can proactively engage one-to-one with pre and new movers through their preferred channel, promoting a product offer that’s most appealing to them. With home moves starting to peak over the coming months, it’s time to act. If you don’t, your competitors will and as the UK housing market picks up, the threat posed to your customer retention strategy could soon become difficult to reverse.


The experience of Callcredit’s planning team is that the creation of a well structured marketing programme with focused business objectives will allow both the opportunities and threats associated with the move to be capitalised upon. The diagram below sets out what a home move programme could look like for a multi-product financial services organisation, developing a strategy for retention, acquisition and cross-sale of new and

related products to existing and potential customers. By considering the value of existing customers, different channel strategies could be created to suit. Each element within the programme would then have an associated objective with associated messaging, targeting, products and price points as appropriate. A similar approach could be taken within other market sectors such as telecoms, retail, insurance or utilities.


Product / Segment

Customer Value / Non Customers

Callcredit Homemove Trigger

For Sale Under Offer Valuation Sold Move Post Move

Move - 90 days

Move - 71 days

Move - 60 days

Day 0 Move +

Mortgages Existing Customer - High Value

Direct Mail Outbound Telemarketing

Loan / Card offer

Existing Customer -

Medium ValueEmail Email Loan / Card

offer

Existing Customer - Low Value

Email Loan / Card offer

Non Customer

Email Email Loan / Card offer

Savings Matched to Customer

Email Email Loan / Card offer

CardsMatched to Customer

Email EmailCard Credit

Limit Increase?

Loan / Card offer

Non Customer

Card Acqusition

Card Acqusition

Loan / Card offer

Loans Matched to Customer

Email Enhance Loan

Non Customer

Email Loan Acquisition

General Insurance Non

Customer

Home Insurance DM / Email

Mortgages Retention

Mortgages Cross - sell

Mortgages Acquisition

No Activity

Other Activity

A well structured marketing programme with focused business objectives will allow both the opportunities and threats associated with the move to be capitalised upon

So don’t let home movers be an overlooked marketing opportunity in your organisation. Look to embed these major life event triggers into your customer retention, cold recruitment, cross-sell and upsell strategies and reap the rewards. Remember, the price for acting may be significant, the penalty for inaction will be significantly higher!

Figure 3: Example Home Move Communications Plan for a multi-product financial services brand

Callcredit Information Group Enabling Smarter Decisions

About Callcredit Information Group

Callcredit Information Group has a leading edge approach to using consumer information in credit referencing, marketing services, interactive solutions and consultative analytics. This enables our clients to cost-effectively identify, engage and convert more new customers and optimise existing customer revenues.

Callcredit offers intelligent solutions across the customer lifecycle as follows:

• Plan

• Acquire

• Verify

• Manage

• Collect

To find out more about Callcredit’s Homemove Triggers call 0845 60 60 609 visit www.callcredit.co.uk/homemove or email [email protected]


i Royal Mail YouGOv Omnibus Research Report, June 2010 (2,350 respondents)

ii Including estate agent fees, stamp duty, mortgage arrangement fees and legal fees

iii Royal Mail YouGOv Omnibus Research Report, June 2010 (2,350 respondents)

iv http://www.ons.gov.uk/ons/rel/social-trends-rd/social-trends/social-trends-41/social-trends-41---news-release---people-moving-home-hit-a-record-low-during-recession.pdf

v http://www.rics.org/site/scripts/press_article.aspx?categoryID=509&pressReleaseID=761

vi http://www.zoopla.co.uk/property-news/for-sale/lending-by-buildings-societies-and-mutuals-rises- again-801308408/

vii http://www.direct.gov.uk/en/Nl1/Newsroom/DG_197938

viii As identifiable through Callcredit’s Home Mover file

Documents

Marketing/Advertisting: Home Movers