Branding a Bank. Is Banking a Commodity? IS CVS a Commodity?

Paying Before The Pump. 

By Tom Dougherty

It seems counter intuitive to believe bank branding to be a vital element when trying to create value for what is commonly labeled a commodity product; however, your brand just may be the only market value you can claim. The battle for your “market share” of wallet needs to be fought with heavier artillery then mere banking benefits, and yet most banks and credit unions have thrown in the towel, competing solely on free checking, ATM fees, competitive rates and competitive pricing. When you brand a bank, surely this must be more than what current banks claim?

When you brand a bank look to other markets as a model
Banks need to be more than a bank

The financial services market place is littered with the wreckage of once-upon-a-time bank brands whose products became commoditized, surrendering the brand fight in exchange for product benefits (as opposed to brand benefits). Observe most street corners, and you immediately notice the once proud Exxon, Shell, BP or Texaco brands all selling “product” at the same price, hoping to lure customers with a commodity convenience store selling six packs of soda water or cases of discount-priced cigarettes. The battle no longer centers on margins in their core competency, but instead takes the shape of a shadow war over preference and total transactions. The branding differences are just not there anymore.

CVS Seems Akin To McDonald’s

Brands seem generic. Few invest in their brands beyond category benefits. In addition to banks, credit unions and gas brands — pharmacies have also failed to differentiate, substituting location for brand equity. The race is on for drug stores to expand into new locations and build bigger, more expensive superstores. Can you see how banks and credit unions have done the same?

On any given corner, three or four banks have build branch offices. There is no investment in brand, and consumers move loyalties like so many prescriptions and their patronage goes to the new and “nearest” drug store as soon as it opens. In short, the customer values location over brand equity, and there are now drug stores and banks on every corner and in every strip mall.

Something is wrong when CVS, Citi Bank, Bank of America and Wells Fargo seems akin to McDonalds. There are no branding differences. No personality. No Clarity. When companies try to brand a bank they miss the mark.

Consider the categorical trap of the gas station business for a moment. Brand identity and strategy beyond “biggest” is slim to none. They built their model around service stations where the brand’s value formerly took the form of the owner/ mechanic servicing the customer. As a result of the personal relationship, the consumer often secured a credit card for the brand even while traveling far from home. (Read about the pharmacy business here).

In order to brand a bank you need more than just a VISA affinity cardFurther down the road, Visa and MasterCard made the use of proprietary gas cards irrelevant and triggered the demise of the “service” station. “Fill only” stations introduced the hourly paid clerks instead of interested mechanics, and the entire market paradigm shifted. The “c” store profits account for the financial health of the average gas station. The key is not to allow this downgrade to occur in your business. Do not confuse the business of the bank’s business with that of the bank’s brand. From the vantage point of being brand developers, we see the same vicious cycle within automobile manufacturers and hotel chains: loyalty programs replace brand equity.

Fortunately, creating bank brands is not the province of simple minds. Brand equity is built around the precepts of the target market rather than financial product advancements and innovation. The advancements made to your banking service are what we call table stakes —requirements to compete in business, not the hallmark of brand equity. For example, table stakes for a hotel chain are spacious rooms, good beds, friendly service, fair rates and complimentary breakfast. Remember when hotels used to advertise air-conditioning and color TV? Amenities are table stakes as are change strategies based on segmentation.

The new breed of “suites hotel” advertises more space; high speed internet, complimentary breakfast and “managers happy hour.” These are not differentiating brand benefits because they reflect the value of the property and not the values of the customer. In Banking, table stakes are more of the same… free checking, convenient hours, convenient locations, many ATMs and competitive rates.

Where Is The Relationship?

When you rand a bank the customer and prospect are key
A relationship requires an emotional connection

Observe the automobile business as another source of lost brands. One brand (i.e. Dealer Family) may own half a dozen dealerships within a given geography. You might see ABC Ford, Toyota, and BMW all within a stone’s throw of each other. The relationship is not with the brand; it is with the dealer (sometimes). Most car buyers choose a style (like an SUV for example) and then shop all the brands to find the one they like best. There is little brand equity among any of the manufacturers. No wonder their stock is in the tank.

Brand a bank. A Good Example

Commodity productsBy you brand a bank,  your bank’s brand equity, everything sold or delivered holds more meaning. If you are Blue Rhino, for example, and your brand represents “a better way” and is positioned to provide guys with a stronger sense of control, then everything “Blue Rhino” has more meaning. Propane tank exchange represents a better way to keep your grill lit, and the brand is preferred by consumers over rival brands, their margins are greater and their distribution bigger. Blue Rhino realized long ago that they were selling more than just propane (a commodity) —they were selling a better way, and smart consumers continue to pay more for the actual brand. Stealing Share helped them deliver this brand to greater profits and greater demand.

Building bank brand equity requires knowing your customer as well as your financial product or service. It necessitates the understanding of the belief systems that drive banking consumer behavior and aligning your banks brand with these customer held precepts. It means viewing your competitive banking world without the preconceptions of your own paradigm. The biggest problem banks have when building their bank’s brand is getting the tried and true marketing principles to step aside in exchange for values that are important to your bank’s customers. Too often we assume what makes sense to us (our bank business) rather than taking the time to recognize what actually exists in the mind of the bank consumer.

Make Research Actionable

Powerful market research is often the meat of the financial services solution, but only if we ask the right questions. Our clients come to us (Stealing Share) for results, and for that very reason we do not ask questions to which we already know the answers. We never ask any question whose answer is not actionable. Knowing what to ask is a result of strategic work, a full third through our process and is not left to researchers. Our questions are designed by our strategists because we refuse to only know what is…we must know what can be. Only then can we begin to shape a bank or credit union brand that moves the needle. If commodity bank brands fail to differentiate themselves via their brand, they will continue to disappear in the banking haystack.

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