Maintaining a high rate of interest
Editor's note: Kimberly Clay is director of marketing research and founding principal at Bancography. She can be reached at kimberly@bancography.com.
To find the truth behind a brand is to ask. You must understand and accept the responses. Once the results are accepted, strategies can be crafted and executed. Hopefully, your brand grows in the direction you want.
There are two groups that comprise the answer to a financial institution’s brand: the prospective client in the target market and the existing customer. A prospective customer might never have heard of you. This would not be worrisome if you were a niche provider, such as a private bank or affinity-based credit union. But if you have operated branches in the market for some time, this lack of awareness might be cause for concern.
Then there is the established client and understanding why they continue to be your customer. Have you changed over the tenure of your relationship and how? Will they want to remain an acquaintance or become a trusted partner? Is this a single-service customer or will they open multiple products and use many services? Is the relationship healthy and does it generate introductions or recommendations to others based on their opinion of you?
The brand truth is the amalgamation of the reality expressed by the prospective client and the existing bond with a longstanding client.
An institution’s brand is one of its most valuable intangible assets. Unfortunately, a misstep or hearsay could tarnish the brand beyond recognition. Scandals will quickly unravel years of building a reputation and telling a story. In these cases, the institution cannot leverage its brand for growth, as management is focused on damage control, which can be expensive and time-consuming.
A healthy and strong brand will survive miscues. Just like human nature, forgiveness accompanies loyalty. But at some point, a reputation or brand will not survive a reoccurring onslaught of problems.
Knowing where you stand versus where others perceive you is the key in managing a brand. Quite often a brand is advertised as one persona when in fact it is not. Marketing has been instructed to sell something that the front line is ill-equipped to deliver on, because sales training was not involved or product management and IT did not stress-test the systems. In this all-too-common situation, dollars and time are allocated for damage control.
A promotion backfires
A $100 billion bank introduced a new service that would process business loan applications in 24 hours. The bank launched a massive advertising campaign and it was so successful that the branches, lenders and underwriters were overrun with traffic they could not handle. In the first three months, less than half of the applications were processed in 24 hours due to this excess volume. Most of those applications were turned down, as the promotion attracted more high-risk applicants than the bank normally experienced.
Although the front line was aware of the promotion, they did not know the timing of mailings, commercials and radio. The contact center was not informed of the promotion; therefore, they could not handle the surge in volume and the ensuing questions or complaints. There was plenty of blame to be shared for the overzealousness of marketing and product management.
Bancography’s research illuminated the effects of business attrition on the consumer base, with a spike in consumer account closures. This was not surprising, as our data informs us that more than half of business owners maintain their personal accounts at the same institution. When there is business attrition, half of these business owners will move their personal relationships as well. In response, the bank initiated intensive product training for the front line, including the contact center. Once completed, the bank launched a new campaign, targeting businesses whose loan applications were more likely to be approved.
A brand lie
An institution’s brand message must also grow or evolve. All facets of the brand must align for the message to be clear; otherwise, it is a brand lie. Combating brand confusion requires extensive advertising investments, leaving few resources for product or service campaigns.
One example of a brand at odds with itself due to a disconnect between the brand’s identity and its promise resulted from an internal struggle over vision. A $2.5 billion affinity-based credit union that originally served only teachers obtained a community banking charter, which allowed it to expand its branch network and open its doors to all. Despite the board of directors’ support and approval of this change, they would not agree to update the name, logo or existing messaging. Regardless of this impasse, management proceeded to greenlight the marketing plan to promote the change in structure. All efforts failed to attract new members to the credit union. Bancography concluded that the confusion between the established name, suggesting exclusivity, and the reality that the credit union was now inclusive were not aligned; thus, the public did not understand.
Sometimes a brand will outgrow its name and logo, which can result in consumer uncertainty. For example, a brand with a geographic reference in its name or logo that expands its branch network outside that geography. Bancography first began working for a bank when it held $5 billion in assets and operated in one state. The state’s identity was at the forefront of the bank’s brand as a part of the bank’s name and as the silhouette in the logo. This client expanded into eight states in only 15 years. Now the brand sat at a crossroads, in that it outgrew its name and logo.
After Bancography evaluated the bank’s brand, the bank decided to keep the logo since it resonated well with current and prospective customers. However, results from Bancography’s study also revealed that the name of the state in which the bank originated did not resonate well in two of the newly expanded states. The bank decided to keep the logo and change the name, by using initials instead of the state name.
Managing a brand requires time, money, energy and effort. Evaluating the brand’s position is essential for building growth strategies before implementing advertising or expanding the distribution network. Measuring customer feedback is vital in maintaining a level of service quality that will fuel cross-sell, upsell and loyalty. These efforts are perpetual, rather than episodic. These are the methods used to comprehend the brand truth.
Outside factors
An institution should undergo periodic evaluations of its brand to assess its position in the marketplace. While your institution may not have introduced any new products or services or expanded its distribution network, the competition might have. Their developments could have affected perceptions, which would in turn influence your current customers’ opinion of you. Stated another way, your position could change because of outside factors not linked to your institution.
Say some of your competitors expand their branch networks and you maintain a stable network. The consumer may perceive your lack of branch expansion as a sign of apathy and now considers your network too small and less convenient. The market has evolved, while you have maintained the status quo.
As part of its growth strategy, an institution must evaluate its brand. Expanding your physical presence or developing an advertising campaign should occur in conjunction with measuring the marketplace’s current appetite for your brand, the competition and the industry.
One of Bancography’s credit union clients ($4.3 billion in assets) evaluates its branch network every three years. While measuring current branch performance, the credit union also evaluates its brand. One branch exceeded industry standards, while another lagged. Is the brand to be held accountable or the branch? Analyzing the results from both studies in tandem illuminated the reason for the disparity in performance. For this client, the disconnect did not lie with the branches; rather, the competitor mix influenced the branch performance. Some markets hosted more credit unions than others and credit unions tend to compete for the same subset of the banking population – those who are loyal only to credit unions. Therefore, since competition was much fiercer for the client’s branches in these markets, those branches did not perform as well as expected.
Where do you want to be?
To start the quantitative evaluation of your branch, first define your market based on your current branch network and where you want to be in two to three years. The latter represents your growth market. If you operate branches in a declining area or one where you intend to eventually exit, exclude that area. Focus on the areas with growth potential and where you want to expand in the immediate future.
An additional group to include in the study is existing customers or those with whom you have a relationship. The first reason for the existing-customer overlay is to ensure that there is enough representation from your institution for comparisons to the customers of the other competitors. This is vital if you are a smaller player in the market or the market has too many competitors. The second reason – and the most important motive – is to understand how the existing customer base perceives the brand relative to the prospects. We would like to believe that our own customers would identify our brand as top of mind (or as their primary financial institution), when sometimes that is not the case.
According to our research, approximately 60% of banking customers and 50% of credit union members who maintain a checking or money market account plus one other product consider that provider to be their primary financial institution. For those customers who did not identify their institution as their primary, who did they cite and why? Understanding the disconnect between those customers who should have mentioned your institution as their primary and those who did is the first step in comprehending the brand truth. Collapsing or lessening this disconnect, or the brand lie, will support inordinate amounts of opportunity.
Awareness or potential
The first two questions in the survey should focus on brand awareness or market potential. This percentage represents the most market share the institution could achieve if it converted everyone in the target market who is aware of the institution into a customer. The institutions specifically named by the respondents are their considered set. In other words, if these customers leave your institution, they may move their accounts to these other institutions.
All institutions experience attrition but without brand awareness to replenish these losses and support cross-sell, the institution’s customer base eventually will shrink.
Impact of awareness. Top of mind and secondary awareness are most important to advertising, for it is advertising’s job to affect brand awareness through resonance of the message. Regardless of how good your products and customer service are, no one will choose you if you are not in their considered set (or among the first four institutions that come to mind). When a consumer shops for a product or relationship, they must be aware of your institution. If there is no awareness, then it is impossible for your institution to be considered when an opportunity arises.
Before advertising and marketing react to their awareness levels, they must carefully interpret the results, as they can be both positive and negative. All press (positive and negative) will inflate awareness, so the researcher must be informed on current events, in case of anomalies that could adversely affect awareness; for example, a CEO caught embezzling money or involved in a personal scandal. Blocks of advertising in areas where the institution doesn’t have a presence will also falsely inflate awareness.
Current position. After determining the competitive landscape (brand awareness or market potential), it is time to uncover your institution’s current position in the market. The survey asks the respondent to name the one institution they deal with the most – thus identifying their primary institution or provider. Market share (primary market share) defines the percentage of the targeted group who consider the institution to be their principal for meeting their financial needs.
Most of the time the respondent will mention their primary provider as top of mind. But in the case when it is not, the researcher must find out why.
Market opportunity is calculated by subtracting market share from brand awareness (or market potential). Conversion of this opportunity would be the goal for the immediate future, which is typically two years in banking. Realistically, the institution will not be able to convert all the opportunities into market share; however, any penetration equates to real profits.
An institution with some market share but zero brand awareness indicates that not a single respondent mentioned it, other than those who maintain their primary relationship there. In banking, affinity-based credit unions typically have very little secondary awareness, due to their exclusivity. In this situation, retention and upsell are vital for survival, as there are limited or no opportunities to replenish lost relationships.
Penetration of existing customer base. However, the most important discovery is how that group of customers who were already known to have a relationship with us performed. In banking, performance is predicated on those customers owning multiple products. These customers receive statements, newsletters, e-mails and direct mail, so we would assume they would mention your institution in the five opportunities afforded by the survey in defining brand awareness (four) and market share (one).
Despite these many steady touchpoints, Bancography’s research indicates that 20% of bank customers and 25% of credit union members who maintain multiple products (with one being a deposit account) fail to mention their institution in the five opportunities allotted. These findings tend to make management uncomfortable, in that it unveils the truth behind cross-sell, penetration, loyalty, service quality, churn and attrition. Have marketing’s efforts fallen on deaf ears or is the front line merely servicing rather than building relationships? Fault typically lies with the latter.
When market share among the prospective customers has grown while internal market share as measured by the customer overlay is below average or has fallen, there is assuredly a churn or attrition issue. At this point, the institution is adding new customers just to replenish its losses, but it is not cost-effective to build an acquisition campaign when customers are leaving.
For those customers from the customer overlay who identified your institution as their primary provider, the other institutions they mentioned represent the primary competitors for these customers’ next financial need (or their considered set of financial institutions). These customers might already have a single product or service with one of these institutions, identifying it as a secondary or tertiary provider.
Querying the brand awareness and market share data by the customer overlay reveals ways we can boost our current customer base. The brand truth emerges after we uncover the gap between perception and reality.
Gears shift
At this juncture in the study, gears shift toward fully understanding the relationship or connection between the institution and those who identified it as their primary by asking why they currently utilize it for their needs. Not only will these findings differ by market but they will also vary by competitor.
The convenience of the locations will prove more important in densely populated areas or ones saturated with competitors. The longevity of a local institution tends to receive more mentions in smaller, established markets. For a credit union, rates and fees will most often be cited. Credit unions typically receive more mentions of service quality than banks.
The other factors are just as important when comprising the full persona of the brand. The weight of these factors could align with intuition; but how does it line up with the competition? Is your institution less convenient than others despite maintaining more branches?
Does your advertising lead with the age of your institution, yet the market overall does not care or seem to notice? The intent is to tout strength due to longevity. However, younger demographics may perceive the institution as old, stodgy and outdated.
Did a merger or acquisition surface as a motivator? If so, how long ago was the merger and is that relevant to exhaustion from the conversion? If the merger occurred a long time ago, the customer could be ready to move their relationship, as change is unsettling.
Was service quality not mentioned as the first or second utilization motivator for a credit union? Consumers expect credit unions to offer exceptional service. Not doing so is seen as a weakness.
All research should ask the respondent’s likelihood to recommend their institution to others. This question acts as the single most important barometer of not only loyalty but also service quality.
Affinity-based credit unions and private banks (niche institutions) should have more loyal customers, followed by community banks. If the market hosts many of these types of institutions, they will inflate the overall loyalty average. The converse is true when the competitor mix is skewed by many large commercial banks, since bigger is generally not better in terms of service quality and loyalty. Over-banked markets often display less loyalty, as the consumers disperse their relationship across more providers than usual.
Once we amass the groupings, we can view the brand’s current position in the market and query this data by the primary competitors. If the customer base of one or your competitors offered a favorable opinion of your brand, this could yield an opportunity to target their customers.
The results from each question in a brand evaluator study yield valuable data. But the findings serve as mere coordinates on a map or tiles in a mosaic. Once the researcher has analyzed the data and factored in any outside market influences (such as mergers or negative press), then the story behind the brand is realized.
Positioned for growth
A financial institution's brand represents years of carefully built trust, customer relationships and market presence – assets that can erode quickly without proper monitoring and maintenance. Through systematic evaluation of both prospective and existing customer perceptions, banks and credit unions can uncover the critical gaps between their brand promise and market reality before these gaps become irreparable cracks in their foundation. By making brand evaluation an ongoing priority rather than a periodic exercise, institutions can ensure their brand remains strong, relevant and positioned for growth in an increasingly competitive financial marketplace.