Banks: Less Differentiated Than a Bar of Soap
A research company studied brands in 75 different categories to measure the degree of differentiation among competing companies. Banks were among the companies studied.
Guess what? Banks are viewed as having zero differentiation. The good news is that banks weren’t the only undifferentiated category:
“Banks, motor oil and 20 other categories – nearly a third of all the categories examined – did not have any differentiated brands. The products and services were ‘known,’ but not known for anything in particular.”
For some reason, soap manufacturers have figured out something most financial institutions haven’t. The study found that 100% of soap brands differentiated themselves.
It makes sense. Look at the six brands of soap to the right. All six are distinct. Most people could probably articulate something different about each of them even if they don’t personally use those particular brands.
- Dial works longer.
- Lava is for tough guys with dirty hands.
- Dove is smoother, and for women.
- Zest opens your eyes.
- Neutrogena is pure, simple and clean.
- Irish Spring leaves you “Fresh and clean as a whistle.”
One reader of the study blames hollow bank slogans and endless mergers for the lack of differentiation among providers of financial services:
“Take the category of banks. They produce one meaningless slogan after another. ‘Where money lives,’ ‘Embracing ingenuity,’ ‘The clean Swiss bank,’ ‘Here today. Here tomorrow.’ Slogans like these and endless mergers have commoditized the category.”
Add to this the many similar-sounding names endemic to banks and credit unions — 1st, First, One, Community, etc. — and you’ve got another major contributor to financial “blanding.”
Bottom Line:
- If you don’t clearly stand for something — anything! — consumers will think you stand for nothing. This is a recurring theme in financial services.
- Failing to create meaningful differences forces people to define you by their own criteria — usually quantifiable things like rates, fees and the number of your branch/ATM locations.
- You absolutely must distinguish and differentiate your financial institution from the countless bland options that already exist or risk reduction to a simple commodity.
Key Questions: Can your organization succinctly articulate a clear, unique and meaningful brand promise or position? Do key stakeholders in your organization agree on this brand position?
Reality Check: Is there anyone else in your industry who could credibly make your Brand Promise? (Hint: If you said anything about “friendly, personal service,” or something like being “the best provider of financial solutions,” the answer is most definitely “yes.”)
Note: The original study is available offline from Brand Keys.
This article © 2012 by The Financial Brand and may not be reproduced.
Related Articles From The Financial Brand:
- The 2 Most Important Branding Questions You Could Ever Answer
- Is It Time For You To Rebrand?
- Study Shows Consumers Distrust Banks More Than Any Other Industry
- Antes vs. Drivers: 3 Steps to Find Relevant Differentiation
Read this for an interesting perspective:
http://www.marketingprofs.com/8/myth-of-differentiation-schultz.asp
@Ron – I dropped MarketingProfs from my RSS a while ago. I see I haven’t been missing much.
The author has a real issue with organizations saying, “we’re unique, we’re different.” Sure, I’d agree with that. Real and substantive differentiation isn’t achieved by simply making a declaration, “Hey, we’re unique!” That’s the kind of lie people use to reassure others (and themselves) that they are, indeed, special — not merely another option essentially identical everyone else.
He also says you shouldn’t simply be different for difference sake. I’d agree with that too. You need to create relevant differentiation. Differentiating in relevant ways requires an understanding of audience needs and market opportunities. That’s how you create value (or the perception of it).
All the soaps above have differentiated themselves in a manner relevant to the people buying them.
If the word “differentiation” makes someone uncomfortable, they can always use “market segmentation” instead. They are interrelated concepts.
I think this is more of an issue of positioning with financial institutions than anything else.
Take for example Credit Unions:
There are clearly differences between a traditional bank and a traditional credit union. Credit unions for years have tried to harp on that differentiation ad nausuem to no avail…as a category, they continue to loose customers as those customers age out. Granted SOME are doing a good job in replacing the younger ones but it is by no means a wholesale move in the category. The problem is, as our research suggests, is that at the end of the day, there are few, if any, differences between a credit union and bank from the perspective of the customer or the target customer. In fact, messages that preach the differentiation between those two institutions are generally wasted as unless you have some sort of experience with a credit union, for most consumers, credit unions are not even part of their considered set.
I believe that it is truly impossible to differentiate financial institutions in terms of feature/benefit. It is a regulated business, and you cannot put a sheet of paper between the Banks of America and Wachovias and (insert bank name here) of the world. However, and this is what baffles me, is that you CAN position financial institutions more effectively and NO ONE is doing it. Brands should be about the customer, not about the products and services. Effective positioning requires financial institutions to align themselves with the values and beliefs of their customers and target audiences and every experience that customer has with that brand should reinforce that alignment.
Great points Corbin.
You’re right. Brands should be built around the customer. One of the biggest problems banks and credit unions have though is defining a narrow audience. They commonly define their target audience as “all people age 25-55, skewing slightly towards women.” Basically everyone.
I also agree that trying to differentiate on features and benefits is next to impossible. If you have any success with it, the bank down the street will just copy what you’re doing.
This is a great article. While I hope it serves as a wakeup call to some bankers, I sense that many will dismiss the findings. Many bankers are convinced, as you mention here, that their “friendly, personal service” (or something similar) does differentiate their institution. Others have toyed with slight product tweaks, gimmicks, or other tactics that don’t offer any kind of real and sustainable differentiation – the kind that is linked to an overall position as Corbin suggests.
I also like your point about slogans and institution names. They’re safe and essentially interchangeable. They don’t offer any kind of information to consumers about how one institution is different from the next. The same holds true for many institutions’ website copy, product offerings, mission statements, advertisements, branch experience, etc.
Much of this gets back to having a well-defined target. Without it, institutions will continue their attempts at mass appeal – which doesn’t allow for the kind of strategic differentiation referenced here.