Financial services today, like so many other things, has become nothing more than commodities.
Despite the billions spent on marketing and branding every year, it is increasingly difficult to tell the difference between companies, their products and their services.
One of the main problems is most financial services companies communicate product differences and proudly call that branding. Marketing thinking is still heavily based on the concept of product branding — something that has been around for hundreds of years.
But is this style of brand thinking relevant for a dynamic services industry, one where deregulation has produced a highly competitive market, increasingly influenced by technological developments and shifting consumer sentiment?
Fifteen to 20 years ago, financial services was fairly simple — banks lent money, building societies financed mortgages and insurance companies provided insurance. There were fewer players, market segments were well defined, competition was minimal and rarely based on price.
In this climate, financial services remained product-focused, rather than customer-focused, and marketers made little or no effort at developing or managing a brand.
Financial brands were poorly differentiated, indeed, they were seen as fairly homogeneous, and few customers were able to describe how one provider differed from another.
The environment today is very different. Banks now offer mortgages and insurance policies, while building societies offer current accounts and credit cards. Such deregulation has driven diversification, which in turn has greatly increased levels of competition allowing companies already operating in one market to operate in all. Technological developments have opened up markets to a host of new entrants, further increasing the levels of competition.
And customers are no longer as subservient as they once were. If they are dissatisfied with their current provider, they are increasingly willing to look elsewhere.
New, improved products backed by mass advertising simply don’t work as well as they once did — it is increasingly clear that the marketing and advertising of service businesses is completely different from the marketing and advertising of packaged goods.
And yet, financial services companies still persist with the old product brand model — misunderstanding and so undervaluing the role and strength of brand management.
The time has come to shift branding from an obsessively managed narrow focus on product benefits to that of delivering the best total brand experience at the lowest possible total cost.
Brands should be distinctive. Every time a company touches a customer — office contact, mail, telephone contact, written communication, the Internet, advertising and the media — the customer gets a message about the company.
The focus has moved from a transaction to a relationship where the emphasis is on managing that relationship to best effect — at all stages of the relationship, the beginning, the middle and the end.
So it is essential financial services providers work much harder at communicating their ethos, their differentiation and what makes them stand out from the crowd.
Most financial services organisations think they have a strong brand simply because people recognise their name or logo.
This is a serious misconception, for although consumers can easily recall financial brands, they do not necessarily conjure up images of companies which are well-differentiated with distinct and appealing values.
A brand should differ from its competitors in relationship terms. Therefore, brand managers need to think about things like corporate ethos and how well the whole organisation communicates that ethos, both externally and internally. What are the brand’s personality traits and how succinctly can they be described?
Brands should be relevant. Brands need to satisfy a growing want or need in the marketplace and fit into customers’ lives in a rational and emotional way.
Brands should be held in high esteem.
A strong brand is trusted and respected. It speaks volumes about reputation. An easy analogy is to think of a brand as being very similar to a person, when you know a person’s reputation you can predict his or her behaviour — you know what to expect in any given situation. You trust and respect that person. A brand is no different and as such is a most valuable asset — it should be protected and managed.
A big problem is putting managers too junior in charge of brands, they often job hop too much, never staying around long enough to see the long-term effects of their decisions.
A brand is not a picture on a package, but a word in the mind.
For a company to have a successful brand, it should create a desired perception in the mind of the prospect that separates it from any other products in the marketplace.
Why? Because effective branding pre-sells the product or service to the user. And in a fast growing competitive marketplace increasingly dominated by technology, such as we have today, a brand has become a replacement for a personal and verbal endorsement. The power of a strong brand is its ability to influence purchasing behaviour.
The old mindset of brand management was an industrial one — seeing brand in mechanical terms — a specific set of parts such as name, logo, product attributes and advertising which would work if put together the right way.
The role of branding is shifting — brand building is the job of everyone in the organisation. It is a reflection of the corporate ethos, of shared values, of managing and guiding perceptions through stronger relationships.
Geoffrey Duguid is managing director of The Ball Group, investor relations and brand consultants.
