What bank leaders can learn from Wells Fargo

The Wells Fargo cross-selling scandal will affect more than just it and its customers. The scandal will affect the entire banking industry, which means banking leaders must be beware of simmering anger with banks and know what to do going forward.

There are already reports that other banks are being investigated by regulators. Stories have also emerged of employees at those banks saying the sales culture is just as intense there. That is, a culture that could produce the same over-reaching employees that worked at Wells Fargo.

Wells FargoConsumers have always had love-hate relationships with banks. To them, a bank is both important and irrelevant. Few enjoy going into a branch anymore, making branches into very expensive billboards. In fact, most people don’t even want to hear from their bank because any notice just means bad news. That’s what makes banking both low intensive and low involvement – except at that point of failure.

We’ve conducted proprietary research for banking clients and there is one constant throughout: At any given time, a customer has considered leaving that bank. It doesn’t matter the demographic involved. In fact, about 7% of the market is seriously thinking about changing their primary financial institution at any given time.

Therefore, will that percentage increase for Wells Fargo and will more people leave?

Probably not. The thought of switching feels too complex for many bank customers and, with the lack of differentiation among all banks, there is very little reason to switch.

How Wells Fargo affects all banks.

But here’s the thing. Rising distrust of the banking industry will rise and cross selling will be less accepted. This is akin to the financial crisis in 2008 because the general public blamed banks for that – and this can feel more personal.

If you think it’s difficult to reach those goals now, just hold tight through the rest of the year (and beyond).

So what are bank presidents to do? How do they keep high margins when faced with higher regulatory costs and low interest rates?

Consider this. Most customers do not switch because they don’t see any other bank as being much different. They see the banking industry as a whole, not a collection of its parts. It’s one big glob to them without any differentiating brands. The question asked is, “Will it be any different over there?”

Wells FargoDuring the recession, credit unions blew a perfect opportunity to steal market share from banks because anger was so high. Credit unions had the high ground but it only exploited it by using the same messaging about how they are not beholden to stakeholders.

That is not an emotional thought, just a logical one. It is hard for potential customers to see how no stockholders give them a personal advantage. Humans, by our very nature, generally only act when events directly affect us. The ones most likely to leave Wells Fargo, for instance, are the ones who were financially hurt by the scandal. Credit unions were just lumped into the banking industry as its little sibling. In the end, customers believed credit unions were also banks but with sign-up restrictions. So few of them joined up.

A similar situation is threatening to brew here, although not as severe but more pointed. The anger will result in weariness of banks doing any cross selling or accepting any new offer from a bank. (“They’re just going to screw me over!”) Want more customers to sign up for a credit card? Good luck.

Where the opportunity lies

But there is opportunity for the right bank (or credit union) to take advantage. Like in 2008, customers will see all banks in the Wells Fargo glow and will only prefer a new one that’s truly different and better.

The knee jerk reaction by most banks is to reassure customers (and, hopefully, new ones) that they have integrity and would never do that. Banks will say that there are safeguards in place to prevent any wrongdoing and that, we the banks, are always focused on you, the customer.

It won’t be believed or move the needle. No, instead a bank that takes ahold of the current opportunity must drop all the trite messaging that exists in the banking industry.

Wells FargoNow is the time to be truly different. A brand message that taps into the distrust and is truly emotional will win the day. Tone is key because banks never adopt an edgy tone that gets noticed.

In fact, tone can prompt the switch because the right one would align with the attitudes of the target audience. Telling them to switch because it’s time to take action would be a stronger message than what banks are promoting now.

To convince audiences to switch their primary financial institution is extremely hard. To get people to switch doing what they are doing now in any thing is nearly impossible.

But the door is ajar for the moment. The bank that steps in will become the leader.

Office Depot, Staples and new CEOs

What the future CEOs of Office Depot and Staples should know

Changes are afoot among the office supply chains with both Office Depot and Staples looking for new CEOs. This comes on the heels of the expected merger between the two retailers coming to an end over antitrust concerns.

That leaves both of them in a quagmire. What to do now? What do the future CEOs of these chains have to look forward to when they take office?

Office DepotFor one, they both will find declining sales and profitability. Office Depot will close hundreds of stores, including an exit out of Europe. Staples is doing much the same with sales declining 5% in the last quarter.

Both retailers have blamed the rise of internet spending for the kinds of products they both offer, and they are right about that. Amazon has become the go-to retail space and threatens the entire retail industry, not just the office supply chains.

From the perspective of consumers, why buy from office supply stores – especially in bulk – when shopping online is believed to be more convenient?

Where Office Depot, Staples stand now

The proposed Office Depot Staples merger was irrelevant anyway. Consumers never saw a true difference between them, so a Office Depot Staples merger would have largely gone unnoticed among them. (That is, until prices went up.)

Now that a federal judge has nixed the merger, both must think of the other as the enemy, not a potential partner. Stealing market share from Amazon is possible, but it’s impossible if target audiences cannot distinguish between the two suppliers. Consumers can’t choose either Home Depot or Staples when they cannot tell why they should choose one over the other. Audiences couldn’t tell you which is which.

Closing stores will mean nothing if consumers have no compelling reason to choose one of them over the competition. In fact, if Office Depot and Staples don’t uncover those reasons for choice, they will become the next Circuit City and Radio Shack.

Right now, neither has a brand claim that makes them relevant. The theme line for Staples is “Make More Happen.” Office Depot claims you shop there to “Gear Up for Great.”

StaplesWhat do those mean? Is either of them emotional enough to create preference? Both themes are used in current back to school advertising, but neither are emotional or say anything truly meaningful about who their individual customers are.

Taken at its word, the definition of a Staples customer is some one who wants to make more happen. The definition of an Office Depot customer is that they gear up for great.

Does either of these retailers truly believe these are the most emotionally intensive triggers for target audiences when buying office supplies?

What the CEOs of Office Depot and Staples should do

Let’s take one step back. Retail as a whole is an industry in crisis. Amazon has taken a big bite out of the market share of brick and mortar brands, and retailers have been late to respond. It’s not too late, but audiences prefer Amazon in greater and increasing numbers, thanks largely to its Prime membership.

But there are larger issues involved. Retailers have long taken for granted that the shopping experience will draw customers. Therefore, there is an entire science devoted to making the experience more fulfilling and enticing.

What if shoppers don’t want to experience a store at all? What if they would rather do something else and leave the shopping chores (such buying back to school supplies) to Amazon for the convenience or Walmart for the prices?

Office DepotThe answer to those questions is simple, but difficult to achieve. You must create preference for your brand.

Strangely, retailers invest very little in their brands. Instead, most focus on products, sales and sub-brands. The problem with that strategy is that you train audiences to shop based on convenience – which store is closer – and that means opening more stores, not closing them. Convenience becomes the rational trigger because all retailers sell similar products, hold sales and promote sub-brands. Customers can get them anywhere (even online).

Instead, investing in the parent brand as the reason for preference gives the meaning to why those products, sales and sub-brands are important. It demonstrates the difference between you and your competition to offer a true choice.

It’s the reason why Nike has rarely talked about the advantages of its shoes, instead saying the Nike user will “Just Do It.” The Nike wearer is a winner, who does not have time for indecision.

For the new CEOs of Office Depot and Staples, there is also no time for indecision. There is a future where both chains could close and the new executives will wonder why they couldn’t prevent it. Don’t be that CEO.

Samsung Galaxy 7 faces a brand hurdle

Powerful brands can overcome product failures. Is the Samsung Galaxy 7 one of those?

Do we forget when a popular product fails to meet our expectations?

What’s the one major critique of the iPhone 6? It bends. Or at least it did. Thing is, “Bendgate” is now imprinted in many of our minds, especially for those who experienced the bending.

How about those silly hoverboards? Turns out, they are catching on fire. Hoverboard manufacturers are surely climbing challenging terrain these days.

Samsung Galaxy 7
Will the Samsung Galaxy 7 survive its recall?

What about the latest news — that the Samsung Galaxy 7 has an exploding battery. Yep, the thing detonates. It’s so bad that Samsung has issued a worldwide recall of the phone. It’s pretty horrible timing for Samsung with the pending release of the iPhone 7.

It’s difficult for a brand to make the problem go away in the minds of many. For some of us, we seek out the problems — this seems to be an innate trait in many of us.

People are intrigued by a disaster. It’s why cars slow down on the highway to examine a wreck. Why TMZ lives on. Why the Kardashians hold the limelight and also why we may never forget that the Samsung Galaxy 7 battery explodes, that the iPhone 6 bends or that hoverboards catch fire.

Sometimes a brand is too powerful to be affected by product glitches.

How will the Samsung Galaxy 7 overcome its faults?

Even after “Bendgate” went down, demand for the iPhone 6 was huge. It took me a month and a half after its release to get a hold of my own.

I wonder, too, how many of those who bought and returned the Samsung Galaxy 7 will replace it with another Samsung phone? My guess is most will, but it will be a test of the Samsung brand. In the case of the iPhone 6, the brand of Apple was so powerful that people have largely forgotten about the bending.

That says something special about brand preference — that we rely upon brands that align with our precepts. Having that kind of meaningful brand is what gets those products and companies through the bad publicity. If you don’t have a brand that is preferred based on emotional triggers, then the bad news sticks.

Insurance branding to create preference

The purpose of insurance branding.

Any process of insurance branding includes questions about creating preference. How do we gain preference for our products when, basically, they are identical to that of the competition? How can we convince target audiences to buy insurance when, if I’m being honest with myself, they don’t really want insurance? How can I assure our message is getting through when we go through a middleman, such as a broker or an independent agent, to sell it?

The insurance industry is one of the most heavily regulated of all, right there next to pharmaceuticals. It must respond to changing laws, reimbursement issues, market forces and, especially, health care requirements.

Insurance brandingIts other hurdles, however, are not that unique to its industry. Most markets are mature ones, meaning that products and offerings are similar, and true innovation is rare. Most of the products consumers buy they don’t really need (c’mon, who really needs an iPad?). And most brands don’t sell directly, meaning they depend on a retailer or distributor for sales.

Does that mean the answers to those questions posted above are the same for any industry? Yes and no.

Facing the belief about insurance branding

The reason they are not all the same is that insurance brands have an image problem few have. They are seen as a scam. We’ve done research for various insurance companies and respondents are very wary of insurance companies that make promises on which they don’t deliver. Any number of the general public can tell you a dreadful story about filing a claim and having to hire an attorney to goad the company into complying.

You could retort that all industries have failures and breakdowns, but the anger is stronger with insurance brands because the issues seem to be embedded into the process itself.

You pay your premiums without filing a claim for years, then you are denied when you actually do file. As it’s said in a Liberty Mutual commercial, “Why have insurance when you have to pay more to use it?”

In some ways, this anger is similar to what consumers felt about banks. In the face of the 2008 recession, anger at banks was at an all-time high.

Why do so few take action?

But few financial institutions, such as credit unions, aligned themselves with that anger to steal market share. Our studies showed that about 15% of customers seriously consider switching banks at any given time, but few actually do it because switching seems complicated and no one has a message that gets them over that hurdle.

In the insurance industry, switching is certainly one of the end games of insurance branding. But another is adding to the policies you already have with that customer. In that situation, customers are usually reluctant to add policies because of the negative feelings they have about insurance companies.

The Liberty Mutual ad campaign has been successful largely because of the belief among consumers that insurance companies scheme their way to take your money. It works as a message, but it would be more effective if the emotional pain of that the audience was embedded in the Liberty Mutual brand. Then Liberty Mutual could be preferred, rather than just considered.

hamster wheelSure, Liberty Mutual says “Liberty stands with you,” but that’s just marketing garble and identical to “Nationwide is on your side.” (We liked the question it asked years ago, “What’s your policy?”) To really make an impact, and provide preference, its theme should not be so forgettable and easily overlooked. It should hit the heart of how prospective customers feel and how they should see themselves in the Liberty Mutual brand.

Brand answers the questions

Therein lines the answer to all the hurdles discussed. Your products are basically the same as those of your competitors? They will become more important to target audiences if they are given emotional reasons why they exist beyond the tired of messaging of protection against the future. How to open up more policies for customers? If the brand fulfills an emotional promise, then those customers will be more open to listen to you.

That’s what insurance branding should do.

Want better control of the message? Then have a brand message that is unique because most agents, according to our research, are bored stiff repeating the same message over and over, regardless of carrier. That is why most of them compete on price. They have nothing else to say.

Let’s consider Liberty Mutual’s “Liberty stands with you” theme one more time to get at the root of the insurance industry’s problem. Intellectually, you might think that theme would be the answer. Here’s the problem. Like most insurance companies, Liberty Mutual truly doesn’t understand the power of brand.

The brand theme here is about Liberty Mutual, not about the prospective customer. Nike’s “Just Do It” and Apple’s “Think Different” are powerful because they are about target audience, not the company.

If there’s a larger problem in insurance branding than what we’ve listed before, this is it. Insurance brands spend millions of dollars in advertising to sell a message that simply will not resonate. That is insanity.

American Fidelity. A case study in branding insurance.

The American Fidelity Case Study.

How we helped American Fidelity find the right brand promise.

American Fidelity is one of the leading providers of supplemental insurance and benefits, specializing in auto dealerships, education, municipalities and health care. Its core customers are employers who offer supplemental insurance to their employees in those segments.

American Fidelity
The old logo of American Fidelity had little brand meaning.

As a business, it operates in divisions based on those specialites. At issue was that American Fidelity had no overarching brand promise that brought the divisions together, increase preference with existing customers and attract new prospects.

Finding meaning for American Fidelity.

To achieve that, the project entailed qualitative and quantitative research with employers, employees and associations – both current customers and those who use a competitor. Also, an analysis of the competition and a brand audit was conducted to see where the current brand stood in the market and what it could claim.

Our competitive analysis found that competitors, which range from regional carriers to giants such as Aflac, focus solely on price, coverage and, in the case of Aflac, quick results.

American Fidelity
The new logo for American Fidelity redefines who its customers are: Those who always seek a different opinion.

The research demonstrated that administrators and employees believed all supplemental benefit providers were basically the same.

For the employer, who has complete control in selecting a supplemental benefits provider, the research clearly showed that they viewed their individual organization’s needs as unique. To find the right coverage for their particular needs, they seek something different.

Wanting something different was also part of their belief system, which is the emotional driver of human behavior.

Using an existing strength of the company – its niche focus – the new brand promise of American Fidelity stated that it represents a different opinion from the status quo because it is a specialist that knows there are no pat answers.

As the company says now, “When it comes to making health decisions, many seek a different opinion from a specialist. When choosing supplemental benefits, it’s important to seek a different opinion too.”

To reflect that brand, a new logo was developed that demonstrated American Fidelity being different and more important than the rest of the pack.

From advertising to collateral systems, signage to stationery systems, Stealing Share created a comprehensive brand structure for American Fidelity. Included was a brand standards guide that demonstrated cues for logo uses along with messaging and brand personality guidance. Stealing Share also conducted brand training for its thousands of employees.