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Article written for AdMap on creating advocates in Retail Banking.
Advocacy is key to rebuilding
banks’ brand reputations
To succeed in the post credit-crunch world, financial organisations need to have
customers actively recommending them, argues Brandon Murphy, 22squared
HINK BACK BEFORE the sub- FIGURE 1 Even before the financial solvency and
prime mortgage crisis that sent Sizing up brand advocacy practices of retail banks came into ques-
retail banking into a tailspin. Hind- tion, many of their customer relation-
sight is 20/20, right? But, looking back at Percentage of brand’s customers ships were on the rocks, despite imple-
the lending practices of many banks and who are... menting many innovations that made
other financial institutions, could we Rec
banking more convenient for customers,
have stopped this crisis? Maybe. But what including online and mobile banking.
really caused it? Bad business decisions? Across the categories we measured, the
Lax lending guidelines? Greed? average ‘true advocacy’ (advocates minus
Probably all of the above and more. But sfie critics) was 21%. Retail banks averaged
even as these unforgivable practices were 9%, even with the inclusion of a standout
putting our global financial system at risk, such as ING Direct – a brand that ranked
ADVOCATES BUYERS CRITICS
many banks ignored a measure that could in the top 10% of all the brands studied
predict how their customers would (Figure 3). A closer look revealed a poten-
respond when the system nearly collapsed tial downward trend as most retail banks
and when the honesty and transparency Source for all charts: 22squared
scored negative ‘true momentum’, with
of banks would be questioned by nearly more customers moving away from the
everyone. That measure is advocacy – the FIGURE 2
brand than moving toward the brand.
percentage of a bank’s customer base that
Retail banks high on critics
actively recommends it to others. Bucking the trend
In March 2008, right before the US Ad One thing was clear: retail banks were
economy started to officially slide into vo 34% growing, and many were doing it in spite
recession, we studied the relationships be- 36% of a deficit in personal recommendations.
tween six popular US retail banks and But how? The very thing that was fuelling
their respective customers. ye
much of their growth was also sacrificing
49% their advocacy levels.
Category comparisons For some time, the marketing perspec-
Within the same time-frame, we also con- Cr
25% tive of retail banking has been ‘the more
ducted similar studies on other cat- 15% share of wallet we can get, the less likely
egories, including wireless providers, per- consumers are to switch’. Banks knew
sonal computers, apparel retailers and air- Bank mean Cross category mean that the hassle of switching often out-
lines. We examined the relationships weighed the benefit of it, especially given
each bank held with a random sampling the lack of measurably better alternatives
of its customer base. Through the lens of FIGURE 3 and an overall lack of customers advocat-
friendship, we explored the roles banks Advocacy and momentum ing for those alternatives.
played in the lives of their customers. So, organic growth (selling more prod-
We took a pulse on the future direction ING Direct 48% 26% ING Direct
ucts to existing customers) became the
of each relationship to see which banks focus of many banks. Usually, that’s not a
had positive relationship momentum, Personal
bad strategy for a brand. After all, the
which brands were stagnant and which computers 38% more a customer buys is typically an indi-
brands were moving backwards. cation of loyalty and even advocacy.
Most importantly, we measured the Airlines 25%
But for banks, this wasn’t the case.
ratio of advocates, buyers and critics with- computers
In 2006, it was estimated that $20bn,
in each bank’s customer base (Figure 1). 17% Apparel
half of the industry’s revenue, was gener-
The study revealed the prominence of Apparel retailers ated from ‘nuisance fees’. You know,
weak and antagonistic relationships the kind of fees that surprise you: the
Wireless –7% Wireless
between retail banks and their customers. providers 13% providers charge for speaking to a teller; the service
Of all the categories studied, retail – 9% Retail banks
fee for your checking account when it
Retail banks 9%
banks had the most critics, with an aver- dropped below a certain balance;
age of 25% of customers fitting into the the untold charges for overdrafts; ATM
critic category (Figure 2). The only other True advocacy True momentum usage; or shockingly high late fees.
category that came close was wireless Category averages Category averages It’s no wonder that 42% of bank cus-
% advocates % moving toward
providers, with an average 23% of con- minus % critics minus % moving away tomers said they would switch primary
sumers feeling trapped by contracts. banks if they had lower fees or better cus-
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Brandon Murphy is director of
planning and engagement at
22squared, a marketing agency in
the US specialising in developing
advocates for brands. His recent
work has centred on understanding
how brand advocacy and
conversation is created in specific
tomer service. Even so, 92% of people FIGURE 4
didn’t switch banks in 2008. Back to basics of relationships
While banks were working hard to get
more of their customers’ business, they Out of the dozen brand behaviours that drive brand advocacy, three very basic actions
were ensuring that many of those cus- were found to drive advocacy the most in retail banking. While these actions seem
tomers would ward off potential new intuitive and part of good business, many retail banks have not delivered.
ones. The tension between organic
1) Be supportive: This means acting
growth, nuisance fees and switching has- on your customers’ behalf and being
65% of customers did not feel their
sles led many customers to feel trapped. bank supported them.
there when they need you.
In fact, of the six retail banks we studied,
41% of customers felt they were trapped 2) Be Transparent: Demonstrate
in an involuntary relationship. 57% of customers did not feel their
clear and honest intentions while
bank was transparent.
Along with nuisance fees, other factors not hiding anything.
were negatively affecting the customer
relationship. 3) Be empathetic: Show you
74% of customers did not feel their
● Customers have scars. Even though understand them and their financial
bank understood them.
they may not have been switching prim- goals, issues and concerns.
ary banks, many customers were divers-
ifying across banks because they are FIGURE 5
reluctant to commit more due to negative
ING Direct versus Citibank
● Privacy was compromised. There were
ING DIRECT CITIBANK
many instances of banks compromising
True advocacy: 48% True advocacy: –10%
the identities of their customers, leaving
them at risk of fraud. Sampling of current actions:
● Is ‘big’ bad or good? While big banks Simplify everything, ie two-page home loan Raising interest rates on CC average of 3%
typically offer more convenience when it agreement (Business Week). (USA Today).
comes to branch locations and ATMs, our Forego their annual Christmas parties
Some bailout money going to exec bonuses
study found that the more branches a to help 55 customers pay off their
bank has, the lower its advocacy.
Embracing social media by providing
● Innovation ambivalence. Large banks transparency and support via Twitter and Sponsoring sports teams and paying for
such as Citibank, the innovator in online YouTube. name rights (ABC News).
and ATM banking for years, have launch- ‘Declaration of Financial Independence’ Security hole enables hackers to obtain
ed many innovative products without in- shows bank stability while helping customers’ PIN numbers at 7-Eleven
creasing advocacy. This suggests that, if customers to save money. ATMs and steal millions (Dallas News).
banks don’t deliver on the basics of a rela- $25 bonuses for opening a checking
Free overdraft protection is now $10.
account and £10 referral bonuses.
tionship, innovation doesn’t improve
advocacy (Figure 4). We the Savers: 10 point plan/petition to ‘Citi Never Sleeps’ ad campaign reinforcing
help you take control of your financial life. broad product range and stability.
Fast-forward to today’s uncertainty. In
the time between our 2008 study and the
writing of this article, we have seen Not so ironically, two of the banks with the ping 48% ‘true advocacy’ and is the only
the global credit crunch, the sub-prime lowest advocacy levels in our study failed bank brand with positive momentum.
mortgage crisis, the collapse of invest- the recent stress test – Bank of America They did it by doing the opposite of most
ment banking, skyrocketing home fore- and Citibank. This further supports many national retail banks, like Citibank (Fig-
closures and unemployment rates, the links that have been drawn between ure 5). Here are a few of the ways it has
disappearance of two banks we studied healthy financial growth and brand advo- earned advocacy in a category where
(Wachovia and WAMU), as well as wor- cacy levels. So, how does a bank increase advocacy is rare:
risome results from the government’s advocacy and win new customers? ● Focus: ING Direct has a very simple
stress test for banks. ING Direct entered the US market with and focused business model and product
Now, besides the basics of good cus- a focused business model and a simple offering. It was early to market, a
tomer relationships, customers are con- ethos grounded in savings. It now serves purely online, interest-bearing checking
cerned with the stability of banks, the 7.5 million customers in the US and account, which is still the cornerstone of
availability of money and the flexibility enjoys category-high advocacy levels. In its business today.
they need in tough financial situations. our 2008 study, ING Direct had a whop- ● Simplicity: As a result of its focused
© World Advertising Research Center 2009 October 2009 • Admap 31
ADM Oct 30-32 FOCUS Murphy LAYOUT 3.qxd 9/15/2009 12:24 Page 32
FIGURE 6 estimated that credit unions have about
How to increase brand advocacy 14% more brand advocates than regional
and national retail banks.
Eleven ways for banks to increase advocacy and position themselves as customer-focused brands Another advantage of credit unions is
1) Make leadership more visible. ING Direct's chief executive of savings, Arkadi Kuhlmann, does that they think locally, as many of them
this well. Customers want to know there’s a person behind the bank who has a vision for what are local. So, they can be more oppor-
value the brand offers and is accountable for delivering it. tunistic with their marketing, position-
2) Embrace social media. It is a communications medium and a customer service channel ing themselves as an increasingly relevant
rolled into one. Use it to find new ways to add value for your customers on an ongoing basis. alternative to banks.
3) Give people practical advice and tools to be financially stable and successful… which usually They also band together. In fact, the
means being a content broker and provider. American Association of Credit Unions
4) Act more, speak less. Consumers now have a healthy dose of cynicism when viewing ads.
and the World Council of Credit Unions
Nothing is more convincing than action, so show people what you’re doing to earn their trust. sponsor a humorous explanation of the
5) Find your advocates and equip them to spread the word. They are your best marketing tool.
difference between credit unions and
Involve them, allow them to participate and feel more like owners, rather than just customers. banks at www.bankerspank.com. Their
parody of the Mac/PC campaign argues
6) Balance technology and personal service. Technology can help to make banking a simple that the credit union business model is
retail experience. Mobile banking is emerging as the next opportunity. But add personal service
instead of charging extra for it, whether it’s in person, on the phone or in chat online. more beneficial to the customer.
Another example comes from Servus
7) Be more transparent. Be up-front about fees and make things easier to understand for
customers. There is a strong link between simplicity and transparency. Credit Union in Canada, which created a
special user-generated campaign to reach
8) Earn, don’t trap. Look for ways to earn more business from customers and reward them for it.
a younger generation of consumers via
9) Add value with marketing. Every communication is an opportunity to be of service and add www.youngandfreealberta.com. The blog
value to the customer’s life. Image management is out, marketing as a service is in. was launched with some humorous paper
10) Recognise the past. Even though banks have reinvented themselves, they aren’t starting cut-out videos, explaining the differences
from square one. Don’t ignore your past wrongs, but do things that earn back trust by between credit unions and banks.
acknowledging wrongs and making them right.
11) Do good. As CNN Money put it, ‘be a part of society’s safety net’ and enable your Looking ahead
customers to take part as well. Developing a belief system worth talking about is a critical part As banks reorganise and restructure
of making your advocates more active.
themselves to serve customers in the new
financial era, they will need to keep a
business model, it can portray a very sim- especially since the government is so close eye on what may become the new
ple and transparent experience for its cus- heavily invested in banks, and consumers ‘normal’ and what will emerge to be the
tomers. Its no-nonsense approach, good are sensitive to the misuse of their tax con- new banking customer as we make our
rates and simple user experience run tributions. Additionally, many banks way through this financial crisis.
counter to the rest of the industry. have compensated heavily to shore up Meanwhile, banks should do all they
● Stability: While larger retail banks loose lending practices, making it difficult can to adopt a customer-centric model
struggled to refocus their business for consumers seeking financing to get necessary for increasing advocacy. That
from lending to deposits, ING Direct was mortgages and loans. means starting to build a reservoir of trust
already there and capitalised on it by Some banks are focusing their advertis- and continually winning customers over
quickly issuing a ‘Declaration of Financial ing on savings products, others on stabili- with value-added services, instead of hold-
Independence’, detailing why it was ty and reassurance, while some aren’t ing them prisoner with the hassle of
financially solid. advertising at all. But as banks struggle to switching and the lack of better options.
● Advocacy: It rewards people for refer- adjust to the changing consumer and eco- A new marketing outlook is dawning
rals and embraces social media as a nomic environment, there is one finan- for banks: treat each customer as your
means to be transparent and spread the cial sector that is taking advantage of the next 10 customers. Some banks are al-
word about its philosophy, products and melee, and that is credit unions. ready adopting this philosophy. For exam-
experience. Credit unions were less affected by the ple, regional banks, such as First Ten-
● Empathy: It identifies with people’s sub-prime mortgage crisis. They are nessee and Commerce Bank (Bancshares),
desires, needs and concerns with its mar- already built upon a more consumer- top JD Power’s list for their respective
keting actions. From sponsoring mara- focused model and are in a position to win regions. Commerce Bank’s marketing
thons instead of coliseums (a metaphor more primary banking relationships as motto – ‘ask, listen, solve’ – is definitely
for financial savings, planning and in- banks struggle to meet the lending needs something to live up to.
dividual achievement), to Planet Orange, of consumers. The biggest barrier for cred- Poised to capitalise on brand advocacy,
a programme designed to help kids in it unions to overcome has been conven- BB&T is a super-regional bank that not
grades 1-6 learn about earning, spending, ience. But, with online banking and a only passed the stress test with flying
saving and investing. growing network of ATMs shared among colours, but also ranked top in mortgage
ING Direct is the anti-bank, as banks credit unions, that barrier could become service for the past two years. One thing is
have been traditionally defined. It has far less important. Traditionally, credit for sure; as we head into the new future of
been able to add value to its customers’ unions have always had better rates on retail banking, those with the most advo-
lives without imprisoning them in bad re- loans, since they are essentially a not-for- cates will win.
lationships. Today, many banks are retool- profit entity that exists to serve its mem-
ing their offerings to become more bers. As a result, they have been a source more on financial
deposit-focused and more customer-cen- of financing when consumers cannot get services marketing at
tric. Advertising is a confusing landscape, loans from banks. IBM Business Services www.warc.com
32 Admap • October 2009 © World Advertising Research Center 2009