Win the emotional branding race

Lending Strategy April 2010

When I worked for lenders I always looked outside the industry for ideas and inspiration, and I still think this is important.

I recently read an article about tyre maker Michelin that sparked some ideas. I discovered that the firm has recently undertaken a marketing campaign in the US which has seen its market share rise by 7% in six months.

Lenders can learn from Michelin, although I’m sure many will be thinking that they could increase their market share relatively easily in the current market should they wish to do so.

But there is more to the Michelin story than market share growth. The firm has achieved this despite not having the cheapest products on the market. And because of its approach I’m guessing it is spending less on marketing than its competitors because its own is more effective.

The net result is increased profit due to the strength of the brand.

Lessons from the Michelin man
So what can lenders learn from the Michelin man?

Well, the success of the campaign is based on a brand promotion that leverages emotional connections rather than simply pushing products. This has helped the firm to differentiate itself.

This is something lenders could learn from, especially as it is widely felt that lenders don’t care about consumers or brokers. They can begin to change such perceptions by delivering more customer-focussed marketing.

I’ve mentioned in previous articles that advertising mortgage rates is a waste of time and money. There are other ways to highlight products, but you must make a connection before the customer journey can continue.

To illustrate this, I have seen two contrasting press advertisements recently. One is from ING which has cleaned up its adverts to present a clear message about its online system.

The other is from Chelsea Building Society whose advert promotes a range of rates that only serve to confuse. This advert may generate enquiries but how many convert and remain customers?

Moreover, I had to search the advert to see who it was for before eventually finding the logo.

Michelin has connected on the issue of the environmental friendliness of its tyres, born of customer research. I am not suggesting lenders promote their mortgages based on green issues but they need to find some customer connection, and this requires research.

If you are familiar with the work of Stephen Covey you’ll know about the importance of seeking first to understand, then be understood. I’ve always advocated this because marketing begins and ends with customers. So regardless of whether you distribute to consumers or via brokers the more you understand about your target market the more effective your product design and communications will be, and the smarter your marketing will be.

A good piece of research involving customer satisfaction can highlight what needs to be done for the future - the alternative is to be left behind, making no connection with your customers

This will help you to build a stronger brand which will alleviate the need for cut-throat pricing.

Undertaking research is straightforward but undertaking research that actually makes a difference to your business is a different matter.

Effective research will make a big difference to your profits and if you have not done any in the past 12 months your vision may be clouded. But please do not carry out research just because you haven’t done so recently. There must always be a reason for it.

Too often research only seeks to find out the ’whats’ rather than the ’whys’. Asking why is a powerful tool.

When I was at GMAC-RFC people thought we had a big marketing budget. We didn’t - we just used what we had wisely because of continuous customer insight. This meant we were able to communicate a clear message and punch above our weight.

We used a variety of research types, from regular online surveys to consumer research that helped shape public policy. We also undertook customer satisfaction and psychographic studies.

In the new era, businesses have gone a bit measurement mad. While I have always been a believer in measuring marketing activities we are now seeing activities not being carried out simply because they are hard to measure.

In my humble opinion there is only one true measure of success - customer satisfaction. Some will argue that it is sales data or profits that really matter and I am not disagreeing with that but sales figures and profit data deal in the here and now, they do not paint a picture for tomorrow.

A good customer satisfaction piece of research can highlight what needs to be done for the future. The alternative is to be left behind, making no connection with customers.

To get really smart, find out the key motivators of your customers and assess your ability to meet these compared with your competitors.

From this you can build a model that gives the whole organisation an instant view of how to take the business forward. Using the Net Promoter Score too will give you hard data to hang your hat on. It’s also a great way of uniting departments to get behind a common goal.

Build on this with psychographic research. This allows you to get into the minds of consumers and brokers, finding out more about their motivations, personalities and behaviours.

By doing this you’ll know how to reach them, where to reach them, and when and why you need to reach them.

Your marketing communications will be more effective as you will be making emotional connections with your target audience rather than simply promoting products.