After more than three years of turmoil, the financial services industry is starting to regroup and move forward on the public relations front. It's a return to normalcy, accompanied with a natural inclination to return to the familiar and comfortable. But with new regulations and a rapidly changing communications environment, there is a need to consider fresh ideas — from unexpected sources.
Consider the organic farming industry, which has averaged 13.6 percent annual sales growth during the past five years. In his best-selling book, The Omnivore's Dilemma, Michael Pollan describes an organic farm that thrives by leveraging the complex interdependencies in nature and tapping into consumers’ values and passions. Banks can improve their public relations strategy by applying the following lessons from organic farmers.
Take a comprehensive view of strategy: Financial services firms in today's swirling digital news cycle face some of the same challenges as organic farmers. Pollan describes an organic farm that thrives in the midst of complexity by leveraging the efficiencies found in nature. A high performing organic farm creates a virtuous cycle in which free-roaming chickens fertilize fields, which helps produce healthy pastures for cows, which reduces the need for antibiotics, etc.
This approach is a stark contrast to the old-fashioned system of linear efficiency made famous by Henry Ford's assembly line. Clearly, a public relations strategy needs to focus on moving from Point A to Point B, with defined metrics. But for bankers today the path to success looks less like Ford's production line and more like the "synergistic ballet" described by Pollan, with complexity, interdependence, and symbiotic relationships.
One aspect of the synergistic ballet described by Pollan is "holons" — an entity that is simultaneously a self-contained whole as well as a dependent part. Examples of a holon are a body organ such as a heart or liver. The concept can be applied to a bank’s employees, shareholders or customers, all of whom function on multiple levels as self-contained wholes and dependent parts. Misjudging the complex interdependencies among these groups can have a ripple effect on a bank's reputation, stock price or revenue.
Remember that consumers look at the big picture: Organic farmers understand that many consumers will pay more for organic products because they are concerned about broader issues such as family health and the environment. The purchase is a reflection of their values. A recent study by my firm reveals that the reputation of the company behind the product brand is critical to consumer purchasing decisions. In fact, 70 percent of consumers surveyed in four developed and emerging markets (U.S., U.K., China and Brazil) actually avoid buying products if they do not like the parent company.
Banks are no exception. A recent BAI study reported that 84 percent of U.S. customers believe a strong reputation is a "must-have" or would make their banking experience ideal. The challenge for banks is indicated by a Gallup poll last November, which found that only 15 percent of Americans had "a great deal" or "quite a lot" of confidence in the banking system. Now, more than ever, banks need to invest more in strengthening and protecting their corporate reputation—it drives purchasing decisions and has a direct impact on the bottom line.
Leverage the social media ecosystem: Social media has triggered a fundamental change in the way we communicate, with consumers demanding the ability to easily access information and engage with nearly everyone. Traditional news media have adapted by presenting their stories in multiple formats and across many platforms. They understand that consumers expect a variety of options, both in where they get their news and how they absorb it.
Some banks have resisted social media because it's complex and presents risks. They need to learn a lesson from organic farmers. Rather than try to fight nature, a successful organic farm adapts to the realities of the local ecosystem. Banks need to embrace the reality of the social media ecosystem by expanding their communications approach and thinking like a creator and distributor of stories and content. They need to develop their own content by conducting internal "story mining" sessions and think creatively about publishing their own "news" in a wide array of formats, mediums and destinations—both traditional and digital.
Harness the power of advocates: Organic farmers have thrived by triggering the enthusiasm of an army of advocates. Powered by social media, more and more people are eager to climb on a verbal soapbox and help—or hurt—a brand. An estimated 72 million U.S. adults were advocates in 2011, regularly giving advice about products or services. Equally important are "badvocates," who are ready and willing to criticize. On average, they tell 14 other people about their negative brand experience.
For banks, social media is a critical tool for influencing advocates. Consumers today are seizing control when they make purchasing decisions by actively "pulling" information. In fact, research by McKinsey & Company indicates that two-thirds of the touch points during the "active evaluation" phase of purchasing are those controlled by the consumer versus those initiated by firms, such as advertising. These consumer-controlled activities—including Internet reviews and word-of-mouth recommendations—are heavily influenced by social media. Traditional firm-driven marketing still has its place, but banks need to focus more on influencing consumer-driven touch points, which are dominated by advocates and enabled by social media.
Generate support from the ground up: Organic farmers have been savvy about recognizing consumers' yearning for local touch points as exemplified by the local-food movement. The value of local touch points for financial services firms can be seen in the U.S. Department of the Treasury's "Go Direct" campaign, which Weber Shandwick has supported since 2004. This marketing campaign uses a national surround-sound approach, with a focus on building grass-roots momentum in the form of local partnerships. The campaign has recruited more than 2,000 partners to serve as trusted voices in key local markets, and has already convinced 8 million Americans who receive their federal benefits via paper checks to move to direct deposit.
A positive sign for banks' local standing is that consumers have very low confidence in the banking system but higher trust in their primary bank, according to various surveys. How can banks build on this local support Branch networks provide an ideal platform, and employees are a vital touch point. Most banks have a great story to tell about supporting the local community and economy; employees are a key resource for telling that story. Focusing more resources on these local touch points will help banks inspire trust and advocacy, generating long-lasting benefits.
McKinsey's classic definition of a successful strategy is "an integrated set of actions designed to create a sustainable advantage over competitors." This approach requires more time and thought, but it will help banks develop a strategy that is more in tune with the changing communications landscape, more closely aligned with the empowered consumer, and—ultimately—more sustainable.
Jim Holland is a senior vice president in the financial services industry practice at Weber Shandwick. Before joining the firm in 2003, he worked for 20 years in corporate communications for the Federal Reserve Bank of Chicago.