Building a Powerful Financial Services Brand

Anshul Kaushesh

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Planning brand building programs

Once a brand’s positioning platform has been clearly defined, the main challenge before financial services companies is to communicate this brand to the customers. Communication involves all points of contact between the brand and the audience, including product design, new products, and distribution strategy. A product story is usually communicated through advertisements, publicity and personal selling. It is often misunderstood that building brands is nothing more than advertising. In fact, brands can be built through variety of media, which include promotions, publicity, direct marketing, retail branches, the web, and sponsorships.

Advertisements

It is one of the most potent tools for building a strong brand. Financial services companies, which were hitherto protected from competition, did not feel a need to advertise. However, with the intensification of competition, they have become vulnerable to the attacks of more aggressive competitors who have inundated different media with their advertisements. Therefore, it has become imperative for other players to increase their advertising expenditure.

The most important component of a brand’s advertising campaign is the message conveyed to the customers. The questions that need to answered first are: what should be the message conveyed to the customers? What will the communication campaign focus on- product features or emotional benefits? The next important decision is the choice of the media to convey this message.

The choice of the message is primarily governed by the positioning strategy. For instance, if a bank has chosen to position itself on the customer service platform, the message should be centered on attributes such as convenience, fast and efficient service and friendly staff. In the Indian market, ICICI bank has adopted this positioning strategy and its advertisements depict a friendly and convenient bank that is also a one-stop shop for all financial products.

The media mix traditionally chosen by financial services firms has also undergone a significant change. Traditionally, print media used to feature predominantly in the media plan. Now the changing competitive scenario has necessitated the use of electronic media as well. Media like television and the Internet are being extensively used by financial services firms.

Promotions

Promotions, which were once considered appropriate only for consumer goods marketing, are increasingly being embraced by financial services marketers. Promotional tools like reduced fees, zero balance accounts, pre-approved loans are used to lure customers to try the product.

Publicity

The general role of publicity is similar to advertising, but publicity usually addresses a wider public than the firm’s customers. Press releases, news conferences and the offer of some exclusive features are different ways of seeking publicity. Publicity is more powerful in brand campaign because for customers and other stakeholders it is important to know that what others say about your brand. Inspite of the growing Internet blaze and new advertising trends, publicity works best in brand campaigns. Global marketing power houses-Microsoft, Intel, Dell, Compaq, Cisco, SAP and Sun Microsystems-were created in the pages of The Wall Street Journal, Business Week, Forbes and Fortune, by publicity, not by advertising.

Strong brands are created through brand building programs that are coherent and consistent. The message should be relevant and powerful and the media chosen should be able to reach the target audience effectively.

Organizing for brand building

For delivering the brand promise, it is essential to create an organization that includes the right skills and structure to execute the brand strategy. Citibank, for example, has recruited a number of people with brand-building skills, including William Campbell, formerly the marketer behind many of Philip Morris' successes.

It is not enough to create a brand management department and entrust the entire brand building responsibility to it. The brand image, especially in case of services, is primarily determined by the customer’s entire experience with the brand. In case of financial services, the employees play a crucial role in delivering the brand promise. Therefore, it is important to rally the entire organization behind the brand. All the employees must understand and believe in the brand promise and work towards delivering that promise. Internal communication is as important as external communication. Moreover, senior management commitment lends a lot of support and credibility to brand building programs and helps the brand message percolate through the entire organization. The organization must be aligned with the people, products and services, physical network and service level required to communicate and reinforce the brand message every time a customer comes in contact with the organization.

The staff represent the "face" of the corporate brand. They meet, greet and serve customers in a variety of different ways, face-to-face, on-line, via telephone and so on. Customer relationships depend on their attitude and their loyalty. If there is less loyalty between the employee and the employer, then the employee’s approach becomes transactional which threatens the longevity of customer relationships. To build a motivated team of employees who are committed to the brand promise, it is necessary for communication to flow horizontally and vertically to all staff levels. This process of communication should include the brand mission, philosophy and core values. The staff should be empowered to make decisions related to the level of customer service. This process is even more critical in enterprises that are going through some form of transformation- mergers, alliances, downsizing.

Monitoring and tracking the brand

Finally, for a brand to be effective in the marketplace, the brand should continue to reinvent itself with the changing customer needs and preferences. Once a brand-building program is implemented, the results should be constantly tracked to determine how the brand is performing in the marketplace.

Sometimes, due to the noise in the marketplace, the message that the marketer wants to convey to the customers might get distorted. Consequently, the customers might create a brand image that is different from what the marketer intended. Financial services marketers have to guard against this as it renders most of the brand building programs ineffective. An effective solution to this problem is to constantly track the brand image as perceived by the customers and compare it with the brand identity that the marketer wanted to convey. If there is any mismatch, corrective action should be taken immediately.

Moreover, in a marketplace where customer tastes, technology and competitive landscape, all are changing at a lightening fast pace, the primary challenge for marketers is to keep their brand relevant. This requires an understanding of the nature, impact and magnitude of these changes and then repositioning the brand to reflect these changes.

Experience Branding

As already discussed, most financial services firms equate branding with awareness and name recognition. This approach is the lowest common denominator of branding. It creates awareness but does not provide a compelling reason for customers to choose one brand over another. The next step is functional branding where product features are sufficiently differentiated and brand communications emphasize different product attributes. This position, however, is very difficult to defend as the competitors can easily copy the product features. Another approach is image branding where the focus is on creating an image that appeals to the aspirations of customers. But given the abstract nature of financial services this approach is very difficult to implement. In financial services industry, the most appropriate brand building approach is experience branding, i.e., orchestrating a superior customer experience through all the points of contact with the customer. This position, though difficult to achieve, can be a source of sustainable competitive advantage.

Experience branding is possible in financial services industry because the customer has frequent contact with the company. The image of the brand as perceived by the customer is primarily determined by his or her experience with the brand. A consistent and satisfying experience can create a strong brand. The effort of the company should be to provide a highly differentiated, consistent and positive experience across all the channels.

To ensure a reasonable return of investment, the level of customer service and therefore the customer experience, needs to be differentiated according to each customer’s profitability. A high net worth customer would expect and should be given fast, efficient and personalized service. Value added services like advisory services would be extremely important for such a customer. On the other hand, a transaction-oriented customer requires a no-frills, but fast and efficient service. Financial services companies need to analyze and segment their customers on the basis of their profitability and offer them differentiated levels of service.

Brand building on the web

Financial services companies are facing a considerable threat due to globalization and deregulation. These realities have forced them to identify new ways to offer value to their increasingly diverse and demanding customers. The Internet and other emerging technologies such as wireless hold a lot of promise for this industry. Many financial services firms have identified marketing their services online as a strategic imperative. According to one recent study, financial services companies across the globe will spend an estimated $200 billion on e-businesses in the next three years.

Though the usage of these technologies in India has been slow to take off due to a variety of reasons, the rate of adoption in other parts of the world is very high. Industry analysts estimate that 27 million Americans—one in 10—now do at least some of their banking online, up from 9 million a year earlier. European customers have also moved online. According to Jupiter Communications, Europeans will open a projected 34 million online banking accounts and 12 million online trading accounts by 2003.

This growing customer base is surely attractive but in addition to this online banking is lucrative because according to a Goldman Sachs study, it provides more revenue per customer and costs less per transaction than other methods of access. For example, Wells Fargo earns 1.5 times more revenue from online customers than it earns from other customers. Moreover, cost per online transaction is 86% of the offline transaction. According to a McKinsey & Co. estimate in 2002 online financial services will contribute 10 percent of the total $400 billion in gross revenue of the financial services industry.

Though the scenario in India is not so attractive at present, the future seems to hold a lot of promise. Therefore, the players in Indian market need to redouble their efforts to build an online brand. The principles of branding followed in the physical world are equally relevant in the virtual world. A strong brand is based on five key ingredients: a financially-optimal customer target; a powerful positioning; clear and consistent communication of the brand's "reason to buy" message; communication of the company's marketing message using an effective mix of promotional vehicles; and delivery on the brand's promise through exceptional products and services.

A strategic issue while branding on the web is whether traditional brands should merely extend themselves online or create an entirely new identity, as Bank One did when it adopted the name Wingspan for its online venture. Although there are divergent perspectives on this issue, the fact is that customers want a trusted, traditional name in banking. Therefore, for incumbent firms it makes sense to leverage their strong brand online.

Another critical issue is the alignment of offline and online brand image. Most companies see online and offline branding efforts as two separate initiatives which are often driven by different brand building strategies. This creates and inconsistency in the brand image across the physical and online channel. Both online and offline brand building programs should be a part of holistic brand building strategy which attempts to create a consistent and positive brand image across all the channels.

A strong brand is a strategic asset that provides tremendous leverage in the marketplace. A strong brand translates into price premium and also enhances the efficiency and effectiveness of marketing expenditure. Building a strong brand requires appropriate senior management commitment, carefully crafted positioning strategy and well-designed communication programs. Branding a financial services brand is more a “business science” than “marketing art”.

References:

Harry Totonis and Chris Acito , “Branding the bank: the next source of competitive advantage”, Booz, Allen Hamilton

“Global Financial Services: Paths to Differentiation”,  Cap Gemini Ernst and Young Report 2001

“Competing for your Customers for your customer: The future of retail Financial Services”, Deloitte Consulting Report 2001

“Competing for customers in an era of change”, IBM Report 2001

David A Aaker Building Strong Brands, The free Press, 1996

David Aaker, Brand leadership, The Free Press,  2000