27. For the time being the trust challenge is not solved by differentiation but delivery Reputation in Financial Services 19
28. And the landscape of trust leadership will eventually be not about being different but about making a difference Reputation in Financial Services 20
Trust – opening storyAs a junior brand manager I was given the job of understanding why when we rebranded from Ulay to Olay globally I was asked to understand why core volume was down in the UK. Focusgroup of core Ulay buyers and I asked them how they felt about the brand and one lady said “I don’t trust it anymore”. Of course I probed further....and was told in no uncertain terms that this big US multinational coming in and changing just one letter of a brand name was suspicious and suspicion led to distrust. “Was it the same”, “was it as good”, “why?” were just some of the questions.This was my first lesson in the core purpose of brands which is as stores of trust and has led me on a journey over the past 15 years of building and studying the economic purpose of trust and brands. Whether that was investment banking with Deutsche Bank or selling credit cards with Capital One, my belief is that trust is central to marketing and at the centre of the current dilemma of financial services businesses. Over the past year I’ve completed an in depth study of trust from a human psychology, sociology and evolutionary perspective, as well as business point of view, which has allowed me to develop some insights into trust which I’d like to share with you today.
So the first thing to say is that trust is complex – whilst most of us will know what trust feels like describing it and trying to create models for it is difficult. Describe the chart somewhat....
Lack of trust is costing our industry billions....We will see what our new Chancellor comes up with this afternoon but it is likely that extra taxation on the banking sector in the UK will be many billions. In the US President Obama has proposed a £1.5m bailout levy on every £1bn of bank assets and that is over and above the fees already paid to the Federal Deposit Insurance Corporation. This is likely to be 100s of billions over the next few years. Add to that the costs of keeping people motivated, persuading consumers and customers and lobbying politicians – it all adds up to a massive cost to our industryOur industry, its brands and reputation, does not reduce transaction costs but increase them
Go to Howard Davies in this months Management Today
...but why does any of this matter to financial services?
CommoditsationDecreasing premium on relationshipsIncreasing transaction costs
Every marketing proposition process I’ve been involved with always assesses the BENEFIT that is being delivered as the primary focus. This is because many of these processes have come from FMCG categories as marketing in banking professionalised over the past 20 years. But buying a financial product and the industry itself is not similar to shampoos or skin creams. The biggest difference is that the long term RISK with financial products does not need to be manufactured. When you are marketing a shampoo you try desperately through advertising and product messaging to attach HIGHER ORDER Benefits to the product and brand.
The strategic goal of marketing in many businesses is to create a differentiated position in the market that gives you competitive advantage through cheaper cost of sales or price premium for example. Of the many principles that we could consider this is perhaps one of the most fundamental. Actually I’m not sure this has been proven effective for the main stream brands in financial services. If we look at our banks for example. A highly consolidated and inert market with very little to split apart the businesses products, performance or promise. Certainly not enough to encourage mass switching to occur except maybe in those more liquid and more easily gamed products like credit cards. After the disaster of the past few years I would observe that even more than usual our large financial services providers have hunkered down removing any obvious claims to be different and creating a melle of red, blue and green in the middle.I wonder whether actually there is an important insight that comes from this – that in highly consolidated markets where products are complex and risky, where human interaction is the key lever to get right, that actually the main difference between financial services brands and other categories is that....
What financial services brands have the opportunity to do is prosper not by being different but by making a difference. In highly competitive and high switching categories there is definite advantage to creating new ideas that better match and deliver against the consumer’s myriad needs. But the difference in financial services given their complex, impactful and long term nature is that aim shouldn’t be to create the new, new thing to gain share at the expense of customer loyalty but to focus on superior product reliability and partnership as a route to extracting competitive advantage and value. This is how our organisations and products can make a difference. As marketers, we may not be in the right job to get to the CEO spot, we might be wired a little differently from the mainstream in our organisations but given our products are difficult and risky, and are built through human relationships and service, we have myriad opportunities to build great brands which have lasting value for our organisations and customers. Whilst many of the principles are the same in building brands across all categories, the context and opportunities are different in financial services. Whether that makes them special and different is for each of us to decide.