Balancing marketing with members’ best financial interest

Brand and marketing expenses by superannuation funds can be demonstrably linked to members’ best financial interest, as long as the appropriate framework is applied, according to Forethought research.

In light of the Australian Prudential Regulation Authority’s revised expectations, whereby the onus now fell on the trustee to quantitatively demonstrate how brand and marketing expenses was in the best financial interests of members (MFBI) and would deliver member return on investment (MROI), Forethought developed what it called the ARRMS framework.

The ARRMS framework consisted of a process whereby a fund must define their marketing purpose in the context of MBFI, evaluate and rank marketing efforts against an MROI metric, prioritise marketing activity, develop a measurement strategy based on key performance indicators and establish a monitoring program.

In its report, the marketing research consultancy said effective marketing which raised Brand Health (a forethought metric) led to market share growth, which delivered financial benefits of scale in the form of lower average costs to members and was therefore in their best interest.

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Source: Forethought

It said funds would need to link strategy with brand execution, requiring funds to implement both lead metrics (goal achievement likelihoods through surveys) and lag metrics (outcome tracking).

“Understanding the specific statistical relationship between input and outcome is the first step to being able to validate that marketing expenditure is indeed, undertaken in members’ best financial interest,” Forethought said in its report.

In a recent study, Forethought tracked Brand Health across six undisclosed industry superannuation brands from 2014-21.

Of the half that improved brand health, market share increased, while the others declined.

Forethought in collaboration with the Australian Institute of Superannuation Trustees (AIST) were expected to host a masterclass on the ARRMS framework in March.