• Just beyond the holidays lies the next big shopping event for people: tax refund season.
• Tax refunds can provide consumers with an opportunity to splurge on bigger ticket items.
• Wireless providers can be among the winners by reaching these individuals when they’re ready to spend.
In 2021, a majority of taxpayers received an average of $2,800 in tax refunds which, to some, felt like the holidays all over again. The pandemic changed some of the tax return ritual rules: more time to file, a bigger IRS backlog of refunds to process and delayed refund payouts. But when the money finally arrived, it provided a quick boost to discretionary spending and to retailers everywhere.
According to NRF’s 2021 Tax Return Study, some consumers planned to use their refund to pay down debt or save, but 10% wanted to indulge with a big purchase, 8% noted a “splurge” purchase and another 12% wanted to move forward with home improvements.
This appetite for splurges and big ticket purchases is likely to come around again for the 2021 tax season, especially as consumers continue to be optimistic about the future. And wireless providers could be among the winners if they capitalize on the market trends and this influx of funds.
Getting consumers to switch from postpaid to prepaid (or vice versa) is tough, but it’s an even more difficult challenge to get them to switch to a new carrier. Only about 13.8% of consumers plan on switching phones or providers within the next six months to a year, according to the October 2021 Prosper Insights & Analytics Monthly Consumer Survey. Still, capturing just 1% of switchers represents millions of potential new customers. So, the opportunity is real, and the desire for new devices and services is too. The challenge for the 2021 tax refund season is finding the best way to reach these consumers when they’re ready to spend.
Timing is everything — and April is the time
Engaging the prepaid and postpaid wireless subscriber audiences in the second quarter when refunds begin to arrive will be a challenge, given the expected noise in the marketplace at that time — March Madness, Easter, Mother’s Day and college graduations. But with a third of consumers traditionally filing taxes in February and another 26% filing in March, April 2022 will be a key month for wireless marketing.
Add in the fact that April also has two “mega pay” weeks (the 1st and the 29th) — times when a number of workers and benefit recipients get an extra paycheck — effective marketing could make the temptation to splurge even more attractive.
Effectively engage the mobile and wireless audience with an omnichannel approach
It may be tempting to assume that your Gen X customers can only be reached via social media and addressable TV advertising while you need to send mailers to baby boomers. It’s true that these demographic segments clearly have very different media preferences, but they both still consume print and digital channels, so to lean too heavily one way or the other in your media mix runs the risk of missing an opportunity to truly engage at a critical time. Instead, try a balance of some direct mail drops which saturate a particular geographic area and use an always-on digital display or dynamic mobile approach to reinforce the message and remind those switchers about your brand’s value during each campaign.
Delivering print mail inserts around an ideal radius of a retail location or at the neighborhood/sub-ZIP code level has also been shown to drive significant store traffic. Finally, with consumers’ renewed focus on thinking and acting locally (detailed in the 2022 Vericast Consumer Outlook) neighborhood-focused targeting is now even more critical.
Making the most of this marketing moment
The U.S. consumer already considers mobile devices and the related accessories and services as essential components of daily life. As such, this category represents a significant investment for many people. But this coming tax season may be exactly the time and opportunity for service providers to give consumers that extra nudge to make a switch or splurge on a new device.
Susan Maurer is client strategy director for Vericast, partnering with clients to drive revenue. She has over 20 years of experience working in verticals such as CPG, telecom, healthcare and finance, with a focus on using insights and strategy to help clients realize their consumer engagement objectives.