Conjoint Analysis - Savings
In the current low interest rate environment, consumers have been struggling to find value from traditional instant access savings accounts, with returns of less than 1.5% per annum. Increasingly they have been forced to consider alternative options, including regular monthly savings accounts (offering much higher returns for the first year), or savings accounts which are conditional upon holding a premium current account product. Beyond this, the potentially higher returns from equity linked products are also attracting more attention, as evidenced in the higher percentage of stocks & shares ISAs compared with cash ISAs.
Understanding customer preferences is critical for organisations looking to maximise retention of customer balances or attract new funds.
Conjoint analysis is an established market research methodology which can provide a robust estimate of the strength of preferences between different choices. Traditional rating type questions are less sensitive when it comes to estimating the value which is placed on different attributes of a product. Conjoint analysis can provide such estimates, deriving them from responses to a series of pairwise choices made by the consumer. Each choice decision is simple and realistic, so results provide a meaningful measure of the underlying value placed on each attribute.
Estimates are derived at an individual level. This means that not only is it possible to compare the average value of each attribute, but one can also look at the profile of those customers who prefer one product specification over another.
In the savings market example, using conjoint methods meant that the strengths of preferences for different product features, rates, terms and conditions were calculated for each individual. Not only could differences then be compared for different demographics and segments, but also the source data could be used as the basis for segmentation analysis – identifying groups to whom different products, and new potential products, would have the strongest appeal. This directly helped in ensuring that the most relevant savings and investment propositions are targeted to different customer groups.
2020 Research has over 20 years’ experience of using conjoint analysis in the area of product development and service improvement. For more details of this study or to discuss other conjoint analysis applications, contact 2020 Research at firstname.lastname@example.org.