Asset Based Lending
Chief Investment Officer
Commercial Loan Automation
BirdsEye Viewmaking branding work for you
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Making Branding Work For You
Branding has become a hot topic in banking. Banks of all sizes, including small ones, are investing much mental energy, thought and money in their brand. I find that ironic, since in almost all cases, when a bank gets acquired their brand is eliminated almost offhand, implying that there is no brand equity in the bank's name and logo. This begs the questions: is branding a wise investment for all banks, or only for the very largest?
There is another question associated with the branding issue. As I hear banks discussing their brand, they focus often on the look, the colors, the logo and the consistent application of "look" standards to ensure the brand "look" is applied appropriately everywhere. However, in a service industry, particularly one with such little product differentiation as banking, the people ARE the brand, not the logo or the color. While those are important identifiers in any branding initiative, they are much less relevant in service industries. Banks do not sell patented products, or hard goods. They sell, by and large, undifferentiated transaction, protection, asset accumulation and credit products where the primary difference is price, not features. There are exceptions to this statement, but it does apply to the majority of banks. The question is, why focus so much on the look, when the brand is created by repeated customer experience with bank employees?
The purpose of a brand is to ultimately create customer loyalty and be the first in the customer's mind when they consider the next purchase in your product offering. The typical steps to achieve this results are:
The value of a brand is so high when it achieves customer loyalty, that most companies work hard at solidifying their brand identity. Well-recognized brands like Coca Cola or American Express are worth billions of dollars, since they come with customer goodwill and future purchases. This is why banks look for establishing strong brand identity. They are looking for that customer retention beyond the industry's 18%-20% level (for checking accounts), since such retention improves today's and tomorrow's bottom line results.
The reason so many brands are left by the wayside when acquisitions occur is that, in many cases, they do not have enough loyalty to be worth keeping. Maintaining a brand is expensive in two ways: it is costly to produce separate stationary, signs, business cards etc. for a separate brand. In addition, it does not allow for full brand leverage when the holding company buys advertising, creates company-wide campaigns etc. A brand must be quite valuable to justify keeping after an acquisition. Most acquired banks can't make that claim.
What is special about those banks that have successfully developed their brand? Here are some thoughts, exemplified by two very different banks: Commerce of NJ and Frost of TX. Commerce is a new brand, 30 years old, the creation of a retail executive, and it stands for convenience. It is not location-specific. Frost is a 160+ year brand, and it is a Texas-branded bank. It stands for Texas values.
In both Commerce's and Frost's case, the brand is articulated very clearly and is supported by training, procedures, physical look, marketing initiatives and CEO blessing. As a result, both within and outside the company, the brand is identified easily and the Consideration element, the second step toward creating brand equity, is strong in their market. Some banks measure unaided awareness as an indication of brand recognition. They tout it as an indicator of their image campaign's success. Unfortunately, Recognition, which is easier to achieve since it can be bought through investments in advertising and merchandising, is only the first step in brand development, and is only valuable if the prospect takes the next step, which is Consideration. Both Frost and Commerce have moved to that phase and beyond, as indicated by their ability to attract new customers and achieve significant year-after-year growth, coupled with strong customer loyalty.
The Commerce and Frost branding strategies remind me of the Four Seasons and Ritz Carlton Hotels branding. The Ritz Carlton hotels all look alike, regardless to their location, both inside and outside. They are your home away from home, with consistent look and feel, identical customer greeting and service practices, and a motto that says it all, "Ladies and Gentlemen Serving Ladies and gentlemen". The Four Seasons hotels have a diametrically opposed physical presence strategy. Their hotels look extremely different, and reflect the local community of each hotel in design, materials, food, decor etc. They are all five star hotels, but they get their in a unique way in each and every hotel. Both strategies are successful, but they appeal to different customer sets.
The Frost and Commerce stories (like the hotel story) prove that there is no one path to a brand's success. It's hard to find two more different approaches to building brand identity. One, Commerce's, was determined before the bank was started, and has been the cornerstone of its strategy and success ever since, guiding branch openings, staffing decisions, physical configuration etc. At Frost, the brand evolved through years of existence, a strong family presence and the realization that the bank is committed to doing business a certain way, and will bring value primarily to customers who are looking for mutual commitment to/from the bank, relationship seekers, rather than transactors.
The way to cement a brand is by offering multiple images that reinforce the identity already created. This is why your Marketing Department insists on a compliance with their logo and other brand standards. However, as demonstrated by the two companies described above, it is the consistent reinforcement of the message through every possible means that cements the brand and makes it tangible for customers and prospects alike. The repeated confirmation of the brand promise by employees, facilities and advertising is the magic formula for success. At its heart, though, is the employees' understanding of what the brand stands for, and their commitment to execute on that each and every time they touch a customer, prospect, peer or shareholder.
The bottom line is: a brand is a promise that needs to be fulfilled every day, at every customer contact. The cornerstone of brand effectiveness is the consistency of the experience and fulfilled expectations time and time again. McDonald's, for example, delivers the same quality (I use the term loosely) in its food every time, no matter where you are around the world. The speed of service, the aroma of the French fries and the Big Mac are always the same. Customers who shop McDonald's do so because they know their expectations will be met. Banks need to deliver on the same promise in order to build brand identity that is truly worth its investment.