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.

Macy’s national holiday hiring day is disingenuous

Troubled retailer Macy’s is creating yet another made up holiday – national holiday hiring day. The holiday will be on September 30th when Macy’s plans on hiring 83,000 seasonal workers to fill holiday positions in their call centers, distribution centers and fulfillment centers.

The move reeks of terrible PR and feels incredibly disingenuous.

national holiday hiring day
Macy’s national holiday hiring day is a joke.

Earlier this year, Macy’s announced that it was closing about 15% of its stores. This came amid six straight quarters of sales declines that were blamed on an increasing number of consumers moving to online purchasing – because as we all know, no one saw Amazon coming.

We have written a lot about the soft brick and mortar retail environment as well as the problems with Macy’s. Too many stores were built too fast with no vision of the future. Isn’t that the real reason?

National holiday hiring day should be laughable.

Now Macy’s is touting national holiday hiring day. I get the need to hire temporary people during this time of year. However, Macy’s bragging about creating the first national hiring day is simply a bad idea. It’s a naked attempt to get people to forget it is shuttering 15% of its stores and firing the countless people affected by those closings.

Have you ever watched a bad movie for a little longer than you should have just to see how bad it was going to get? Macy’s is much like that bad movie, getting a little worse with each passing minute. This blatant PR move once again demonstrates just how far Macy’s has fallen. Its brand is in decline, stores are closing, sales are declining and yet it is touting a national holiday hiring day. It’s a major disconnect and a failure of the Macy’s brand.

Will the holiday work? Of course it will, but not because of Macy’s. People need jobs and others need a second job to make their children’s Christmas special. Most people won’t be bothered by it, save the ones who are getting laid off in the store closings.

But Macy’s has lost its way and this is yet another example.

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.

The Ryan Lochte and Rio brands clash

Not to take it too lightly or too seriously, but the Ryan Lochte incident in Rio is interesting to me because it’s a war of two, highly different brands.

On one hand, you have Lochte, an Olympic swimming champion most known for partying with Prince Harry in Las Vegas and general knucklehead behavior.

Lochte
The brand of frat behavior.

On the other, you have Rio, known for its spectacular sights on the beach and street crime in the streets.

When Lochte claimed he was mugged, there were two reactions, both coming from a different brand perspective. With Lochte, knowing his general doofiness, there was some initial suspicion that maybe he’s not telling the whole truth or incapable of lying. As Greg A. Bedard of Sports Illustrated tweeted at the time, “It’s Lochte. We’re amazed he can dress himself. Everything else is gravy.”

The other reaction was an outrage from Brazilians; angry that frat boy behavior – demolishing parts of a gas station bathroom instead of being mugged – would besmirch the efforts of Brazil to make the Summer Olympics a safe place.

Both reactions were born from emotion.

What the Lochte and Rio brands mean.

Emotion is where brand lives. Companies often believe that rational arguments are the way to steal market share, but they are only supporting points for the emotional reason for choice. We don’t like to think that we choose based on emotion, but we do. We just don’t always realize it. It takes hard brand work to dig deep enough to find those emotional triggers that make brands preferred.

Think of it this way. The rational approach to the Ryan Lochte incident was to say, “He was mugged.” Then when new information came out, “Video shows he didn’t. He lied. End of story.”

Instead, emotions are swirling. Some may forgive Lochte because we know, as Bedard said, he can barely dress himself and he apologized (sorta). Others are angry that a lie hid a sinking suspicion that Lochte thought his tale would be believed because of the City of God brand of Rio.

Either way – and you can believe both – the reactions prove that emotion always wins the day.