Why Banks Have to Learn Brand Management
Branding may be a relatively new concept for financial firms. But like all strategic assets, the brand needs good management too, contends brand specialist Stephen Root.
With brand jargon so prevalent today in business, it can be difficult to understand what a brand really means to a business. As Jeff Bezos points out, branding is closely tied to ideas of reputation, trust and quality. Firms such as BMW, Sony, FedEx and Starbucks are successful because they consistently deliver on the brand promises they make to customers. These firms realise the importance of their brands and carefully manage them as strategic assets over the long term.
As strategic assets, brands can make a powerful impact on business. Strong brands command premium prices and reduce customer acquisition costs. (Customers are more likely to make a repeat purchase of a product/service they have come to trust). Once a client has purchased a brand, he/she will not need to go through the entire decision-making process again, but instead will rely on past experience.
The benefits of strong brands affect employees as well. People are naturally attracted to firms with strong brands. This often translates to a better pool of talent applying for positions and greater employee retention over time.
While brands bring so many benefits to business, it is noteworthy that so few financial services firms commit to actively and consistently managing their brands. The results of the annual Interbrand survey in 2002 showed that only six (Citibank, Morgan Stanley, Merrill Lynch, JP Morgan, HSBC and Goldman Sachs) out of 75 of the most valuable global brands are bank brands.
In general, brand management poses several challenges in financial services:
• Brand management is a relatively new concept for the industry.
• Brand relevance is difficult to maintain with so many client types.
• Industry trends have made brand positioning more complex.
For many banks, the idea of managing a brand is a new one, and many firms have historically perceived brand management as more relevant to consumer goods. As a result, financial services firms are not likely to have strong brand management capabilities in-house.
Firms also face the challenge of staying relevant to the many different types of clients in the financial services world. They are faced with the task of balancing product/service client preferences as well as preferred ways of interacting with a financial services provider. However, financial services firms can transform this challenge into an opportunity to tailor a more comprehensive group of products/services to a specified client type.
The difficulty of positioning brands (deciding which part of “what a brand stands for” will be actively communicated to the target audience) in the face of industry trends presents a further challenge. The slew of mergers and acquisitions in the late 1990s required firms such as Citigroup and UBS to re-evaluate their brand positioning and thus the components of their brand portfolios – Citigroup maintained the Smith Barney name with an endorsement by Citigroup, while UBS retired the PaineWebber name.
Despite these obstacles, the empirical benefits to financial services firms warrant investment of their resources, through building or acquiring the skills needed to achieve proper brand management.
So what do your clients say about your firm when you are not there? With solid brand management plans and strong people in place, they will start to notice that your firm is delivering on the brand promises made to them, which will help grow your brand, give you competitive advantages and, ultimately, improve business performance.
Brand checklist for financial services firms
Given the opportunities to leverage brands in the financial services world, what are the basics to keep in mind when implementing brand management? This checklist provides a high-level view.
Do you know what you want your brand to stand for?
Ensure that you have established a set of goals for your brand that is based on how you want your clients to perceive you, how you want to differ from the competition, and how you want your brand to support your business.
Do the messages your clients receive reflect your brand?
Once you have set a strategy for your brand, identify the messages that will best communicate the brand’s promise and integrate the messages across various channels, such as advertising, media/investor relations and sponsorship.
Do the messages your employees receive reflect your brand?
After you have ensured that your client messaging is “on-brand”, verify that your employee communications – such as management letters, roadshows and intranet sites – consistently reflect your brand.
To what degree are the interactions with your clients guided by brand?
Assess your client interactions by firstly identifying all the points where your client interacts with the firm; assess each of these interactions with regard to the brand and determine what improvements are necessary.
Is brand incorporated in organisational decision-making?
Finally, check to see at what level senior management uses branding in long-term business planning and organisational development.
comments powered by Disqus
The fine print: All comments are reviewed before they are published, so your comment may not show up right away. We reserve the right to edit and remove comments at any time for any reason. Unprofessional language and spam will be rejected.