Saturday, August 13, 2011

Cars: A Lesson in Brand Identity

A few weeks ago I was driving the Pennsylvania Turnpike when I noticed a sweet ride. Deep black, with flecks of blue, tan leather interior, advanced looking dash, and a pretty, well-dressed lady in the passenger seat to boot. I thought to myself, "what a handsome and successful couple". The car, as emblazoned on the trunk, was a "Genesis"... the beginning... awesome name.

I looked up the car later in the week. It is made by Hyundai. I thought "maybe that couple isn't so successful after all". The lightbulb atop my head went off, sirens blaring, slightly embarrassed by my reaction, but I think I had a blog post! My opinion of this couple, a couple I have never met, was significantly influenced by the car they drove. I promised myself I would swim in deeper waters in the future.

Is my reaction unique? When I transitioned from banking to bank consulting in 1997, I drove up to my new office with great anticipation. I was anxious to get started. My car... a Mitsubishi Eclipse. On that day, my boss matter-of-factly informed me that I would have to get another vehicle. He drove a Volvo.

When I coached my daughter's club softball team, I was in charge of finances. Funny how this banking thing bleeds into your personal life. But one family was persistently late making their fee payments. I caucused with the other coaches to see if we should cut them some slack. Cutting slack meant the other families would have to pay a little more to support the family having difficulty. We decided against it when the father pulled up in a Cadillac Escalade.

I don't think cars influencing our opinions of others is unique to me.

This causes some people great difficulty, including me. I grew up in a blue collar family. The first family car I remember was the Dodge Dart Swinger. As I moved through my professional life, my family income has naturally gone up. But my upbringing does not permit me to spend $20,000 more on a car just so people can think well of me. Look at the cars of other consultants, you'll find the Volvo's, BMW's, and Infinity's. I drive a Dodge. But not the famed Dart Swinger!

I witness many friends and colleagues spend suitcases of cash on vehicles. Some are spending cash they do not have. No matter what math you use, it does not make financial sense to drive a "status" car. And yet many do. I think there is a strong lesson here for financial institutions.

There are countless resources for FIs to research how to appropriately position their brand. Maybe we are looking at this the wrong way. Perhaps we should build a brand that enhances the brand of our target customers?

For example, after a bank board of directors meeting a few years ago, a director approached me on a different topic regarding something his Merrill Lynch broker told him. This bank had a significant Trust Department, and one of their directors had his money at Merrill Lynch. It almost felt like he wanted me to know he was a Merrill client. In the eyes of the director, Merrill Lynch elevated HIS brand. Wonder what he thinks of them now!

Getting closer to home, listen to how friends and colleagues discuss coffee. Some go to the break room and pour a free cup. Others go to Starbucks, often saying "I need my Starbucks". Their Starbucks? Again, this could be a case of a company elevating the personal brand of their customers.

The proliferation of Starbucks outlets has made drinking their coffee less exclusive, and therefore lessens their ability to elevate customers' personal brands. CEO Howard Schultz readily admits they diminished their brand by opening too many stores. Fortunately for personal brand builders, they keep their price points high so schleps like me gravitate to Mickey D's.

If the question about brand changes from building the brand of the FI to building the brand of the FIs customers, what changes need to be made? If our target customers are small businesses, how do we position the FI in such a manner that the small business person is proud to proclaim that we are their bank? And if we position ourselves as customer brand builders, do we have the courage to focus on our target customers to the exclusion of other customers that are valuable to us, but not our strategic focus?

It would be writing the obvious to say that banking is at a crossroads. History and culture did not require us to position our FI for anything other than locational convenience and efficient transaction processing. Now, we must be unique, be focused, have purpose. Much like Harley Davidson, our customers should be fiercely loyal to us because we mean something to them. We build their personal brand.

I think my next car will be a muscle car. Beats going to the gym.

What are your thoughts of brand building focusing on customers instead of our institutions?

~ Jeff


  1. Jeff, interesting take on bank branding and how it reflects on the customer, not vice versa. Here's my logic on the argument...

    Starbucks makes us feel great because 1) the destination itself is a desirable enough end, without even including the product and 2) it's loaded with more caff than competitors so we feel that much better after drinking it.

    Do we see any instances in banking where this same phenomenon occurs? I don't think so. Bank branding hasn't reached that level yet... The products don't make us feel good (separated by minuscule basis points) and even the most successful brands (ING, TD, etc) still don't have this impact on the consumer's personal brand level.

    Is banking brandable on this level at all? I'm not convinced. the product seems too boring to reach this level of brand loyalty. I'd love to see it proven otherwise tho.

  2. Anonymous,

    I would agree there are few examples of powerful brands in our industry, although Ray Davis of Umpqua Bank and Dave Payne of Westamerica Bank would probably take exception to this. I would also throw Vernon Hill of the former Commerce Bank of New Jersey in that group, warts and all.

    But there are examples in intangible services businesses where brand resonates so strong that buyers are willing to pay a premium for services.

    In my own industry, consulting, businesses are willing to throw boatloads of cash on the most august firms just to be associated with those firms’ brands… an enviable position indeed.

    Can community FIs elevate their brand to achieve similar results?


  3. Personal insight - In our family, we are value investors, preferring quality in reasonable dollars vs the status of "the name".

    Re vehicles, we used to think of Hydundais as cheap Korean cars. Ironically, we now drive 3 Hyundais, preferring high quality, best warranty in the business (they don't make money if they have to pay for alot of recalls), while still very stylish (several Car of the Year awards). We just didn't want to pay $15-$20K more for an "old school name" when we could have the same or better value in a Hyundai.

    Hyundai is one of the few car companies expanding market share today and others are now copying their marketing. As you say, banks need to view what their brand means to their customers...

  4. Tom,

    I appreciate you leaving the comment. The manner in which Hyundai attacked the US Market (price-driven) is similar to how financial institutions drive customers to their doors.

    But with the introduction of their 100,000 mile warranty and the "upscaling" of their vehicles, they are moving from price-driven to value-driven.

    As community FIs, have we made that directional change?

    ~ Jeff

  5. Jeff - in my opinion, one of the ways we'll start to see that directional change (or at least an attempt at it) is when community bank advertising/marketing stops focusing on pricing as the differentiator. Hyundai's initial attempts were to be the "low-cost" option. When your advertising/marketing is stressing rates or fees, you've taken the same approach. When customers, or prospective customers, only "hear" about you on price, that's how you will be perceived.

    Unfortunately, many FIs that I speak with still equate price to value. Look at how many still do RFPs, I think that's the ultimate price-driven approach.

  6. Mike,

    Using price to get customers and price to drive down vendor costs is the ultimate commodity-industry behavior. Are we there yet? Can we un-commoditize banking like Starbucks did to coffee? Look what WalMart did to the General Store, and Home Depot did to the local lumberyard?

    ~ Jeff