Why brands need to move from transactional engagement to emotional connection with customers
Michelle Ryan, Head of Corporate
For the past two decades, marketers have looked at brand positioning under the assumption that customer perceptions are static, and that businesses attain their hard-earned brand position purely through customer loyalty. This mentality is particularly entrenched in the banking and financial sector where customer loyalty is vital, yet, in today’s fast-paced environment, recent research suggests this assumption no longer stands.
Whether marketers like it or not, businesses – and brands – are constantly in motion, and customer perceptions of brands are constantly shifting, influenced by a 24/7 news cycle and social media. Banks and financial services brands in particular have witnessed this in recent years; increasingly being perceived by customers as ‘sandstone brands’ of a bygone era, while peer-to-peer lending and emerging fintech companies emerge as disruptors and innovators.
Our first global study, ‘Brands in Motion’, in partnership with WE Communications, looked at the rational and emotional drivers that motivate customer choices – and also explored how brands in the banking/finance sector are affected by this constant shift in brand perception. Our results revealed a dislocation between brands and customers: customer perceptions are moving so quickly that brands are failing to catch up, at their own detriment.
Customers may need you, but will shame you if you step out of line
It’s no secret that since the global financial crisis, anti-bank sentiment has been on the rise in Australia. Increasingly, there are calls for financial companies and their executives to be held more accountable for their actions. Our study reveals that customers are taking this attitude to new levels: 82% of respondents said they will publicly shame a financial company if they were at fault in time of a crisis – even if they had previously loved the brand.
Indeed, scandals across the sector – most recent example being ASIC’s investigation into money-laundering by Commonwealth Bank of Australia – have only served to heighten such sentiments. In fact, 64% of study respondents said they “hate” companies in the banking/finance sector. Such strong negative sentiments towards the industry as a whole drives home the need for banks, mortgage brokers, and other financial companies to build a stronger emotional (not just rational) connection with customers to maintain their loyalty.
In a time when smaller and nimbler fintech brands such as Acorn, Society One and RateSetter are carving out a niche when it comes to engaging with customers, the need for traditional players to propel their brand forwards has never been more pressing.
Moving the needle on connection
It’s not all gloom and doom for the sector though. Banks are still seen by customers as being a vital part of their life – 70% of respondents said they “can’t live without them” and more than half of respondents (52%) said they still intended on purchasing from a financial company in the next year. But it’s important to note these merely represent the rational drivers for customers to engage with your brand.
To connect with customers, banks and financial companies brands need to develop a purpose-driven and emotional relationship with customers too. After all, when another company can provide the same service as you, how else can you stand out from the competition and truly connect with your customer?
Customers are not only looking for brands to provide stability and quality of service, but a sense of purpose too. More than two-thirds of our study respondents expect brands to take a stand on important issues, particularly if that issue conflicts with the organisation’s core value.
Consider the ongoing controversy surrounding the funding for the Adani mine. A few years ago, few would have expected banks to be criticised for providing funding to a coal mine. Now, customers expect more from brands and want them to take a stand on environmental, social, and even political issues. At the time of writing, over a dozen or more financial institutions have distanced themselves from the Queensland project.
While banks and financial companies remain protected by a highly regulated industry, the truth is there is little love for brands in this space, as customers continue their transactional relationship with these companies.
Few will defend banks in tough times, which only highlights the importance for brands in the sector to build strong emotional connections with customers to maintain customer loyalty.
So what and where to next?
WE Buchan is hosting a panel of brand experts from Spotify, eHarmony, and Yellow Brick Road to delve into the research findings and discuss, with these industry insiders, the ways that brands can propel forward and respond positively to change.
Register your interest for our ‘Brands In Motion’ event on 12 October 2017, 5:30pm, at Harbour 220 in Sydney, or to learn more about the Brands in Motion study, contact us at email@example.com