The corporate brand is one of the last great underleveraged assets in financial services. Few senior managers in the industry fully understand the value of their brands, and fewer still have adopted strategies and processes to maximize this value.
In most financial services firms, brand-building tends to focus on advertising. Yet many brand aspirations articulated in ads remain undifferentiated and unfulfilled; witness the countless banks today that assert their desire to have a "relationship" with the customer. As a result, most measures of consumer awareness have shown little improvement in the brand strength of financial services companies.
Advertising, in fact, is the least important of the key activities that must be aligned with the brand promise when developing a world-class brand. Successful brand strategy links brand equity quantitatively with market share and profits, and then devises programs to reconfigure not just advertising but also the more critical activities-product offerings, the customer experience, business processes, and employee behavior.
The weak stature of brands in financial services is troubling, because the value of a strong brand has risen sharply in recent years. Consumers and business customers, bombarded with competing offerings and marketing messages, are relying more and more on brands to guide their buying choices. In this noisy environment, a strong brand differentiates a company from its competitors. It enables a firm to attain higher market share and charge higher prices, reduces customer acquisition costs, increases cross- sell ratios to deepen share-of-wallet, and improves customer loyalty and retention.
Finally, a strong brand secures a sustainable point of strategic control, one of the critical dimensions of a company's business design. Strategic control protects the profit stream of a company from its competitors, and thus serves as a powerful generator of shareholder value growth.
Well-established firms ignore brand management at their peril. Innovative upstarts are using sophisticated customer relationship strategies, founded on detailed, segmented data about consumer buying behavior, to attack market leaders by targeting their most profitable customers with highly tailored value propositions. The upstarts are, in effect, neutralizing incumbents' brand value.
This new dynamic has been playing out in credit cards, where long- dominant brands have seen many of their highest-value customers stolen away virtually overnight, and it is now spreading to other sectors of financial services. Moreover, as Internet offerings grow and cascades of electronic information raise the noise level, only strong brands such as Schwab OneSource will attract the click of the mouse.
Against this backdrop, how can financial services managers build strong brands? We believe that brand equity can be built only through a strategy developed from quantitative analysis and executed through effective alignment and continuous refinement. An overview of the process looks like this:
Begin with an understanding of brand equity-the total value of all attributes implied by the brand name that actually shift consumer demand. For example, a global firm such as Merrill Lynch might promise to be "the preeminent financial management and advisory company" through "client focus," "respect for the individual," and "integrity." Only the attributes that actually change customer demand are equity elements.
Quantifying brand equity requires a systematic analysis of the drivers of consumer choice behavior, which are product features, pricing, channels, and brand attributes. After eliminating the differences in demand between brands that are due to product features, the remaining differences in demand are a result of the equity of each brand.
The drivers of brand equity can then be identified among a battery of 80 to 100 brand image attributes, using marketing science techniques that isolate the attributes that influence customer choice.
Unlike other common methods for estimating brand value, such as standard market research surveys or balance-sheet analyses of goodwill, a choice- based approach directly ties brand image to market share and, ultimately, to the relationship value of individual customers or customer segments.
Once a company understands brand equity and its drivers, it can develop a strategy and focused programs for maximizing equity. The chosen strategy will depend on the company's business design, a thorough diagnosis of the current brand, and an economic analysis of strategy options. Such an analysis determines the potential revenue impact of each option, the cost to implement it, and the effect of competitors' responses, leading to a net present value for each option.
To determine the right strategy, a company should above all exploit its core equity elements-those that are superior to the competition and drive positive equity in a given customer segment. The company should also address negative equity elements-those that can drive share, but which are weaker than competitors'.
After identifying the priority investments, a few focused teams supported by senior management can implement the brand strategy and align the company to support this strategy.
One team could tailor and target products, to ensure that product features, pricing, and channels are consistent with the brand promise.
Another team could focus on customer service and related processes. For example, a credit card company working to improve its brand promise of "convenience" might have to make its statement and payment processes more attuned to customer priorities.
A third team, meanwhile, could coordinate advertising and marketing programs.
Quantification and alignment of brand equity in this manner sheds light on previously unrecognized opportunities. By taking a more rigorous, data- driven approach to brand management, companies can translate brand equity into large-scale gains on the bottom line.
