Someone once said, "If you want to make God laugh, show Him your plan."
But in an era when differentiation of products and services is becoming increasingly difficult and the market value of companies is determined more by intangible than tangible assets, it is important to have a plan. It becomes a robust blueprint for who you are and who you are not, what you do and what you do not do. It contains your vision-your reason for being and your missions-and the goals that move you toward your vision.
But technology has created a revolution in the way services and products are delivered. The convergence of the banking, brokerage, and insurance industries makes differentiation more difficult.
To differentiate themselves, banks need to take a giant step beyond a plan: They must establish a brand identity.
Management must leverage the insight that state-of-the-art market research can foster and use it to develop a brand position that will build a competitive advantage.
Good branding requires a strategic rather than tactical approach to create an emotional bond between a person and a specific organization, product, or service.
No longer limited to tangible products like Jell-O, Coca-Cola, or Nike sneakers, branding creates a consistent message. It gives customers the clarity they need to grow loyal. This loyalty is essential for institutional survival among the barrage of financial options displayed on a daily basis.
The idea is that once you get a share of people's minds, market share will follow.
The consistent message of a well-executed brand creates market change. It repositions competitors, galvanizes and rallies internal cultures, and gives strategic guidance to tactical decision-making.
To get a feeling for how some banks are approaching the challenge of creating an identity, I spoke to chief executive officers around the country and asked what they were doing to differentiate their companies from other providers of financial services.
Manuel J. Mehos, chairman and chief executive officer of Coastal Bancorp of Houston, sees geography and product mix as differentiators to business banking.
"Customers are no longer loyal," he said. "They know their options are limitless when choosing a lender. Most, in fact, perceive a bank no differently than a store."
To capture the business customer, Mr. Mehos differentiates his bank by "providing services that have traditionally been the domain of investment bankers-alternative financing, raising capital, M&A services," he said. "We have it or arrange it."
Mr. Mehos believes that today's financial marketplace and the regulatory environment are letting banks branch out on customers' balance sheets. "These services can be developed internally or through acquisitions or strategic alliances," he said.
He also believes that location still counts for something, since credit decisions and loan pricing rely less on standardized information than consumer lending. "Someone with the lending organization must have a certain amount of continuous contact with the customer," he said. But these business customers "must be provided with a larger universe of services to remain profitable customers."
As traditional banking business becomes obsolete, Mr. Mehos is positioning Coastal Bank to do what some banks don't.
"We don't say no to commercial customers when we call on them," he said. "We position ourselves to provide or arrange for all of their financing needs. Nonstandardized products are the last bastion of using your local advantage."
Bob Meuleman, chairman and chief executive officer of Amcore Financial Inc. of Rockford, Ill., wisely observes that investment management funds are better accepted than bank funds. So Mr. Meuleman has cleverly chosen not to fight the image, but to position Amcore as an investment management group and use the brand name of the company they are acquiring for its investment funds.
"We're packaging it under the IMG brand," he said. "Instead of wasting energy fighting the image, we are devoting resources to segmenting the market and selling into it under a brand name with consumer appeal."
Charlie Hamm, chairman, chief executive officer, and president of Independence Savings Bank in New York, feels that in a consolidating industry "creation, not function, is critical."
"The CEO's great challenge in this time of rapid change is going to be the ability to create," Mr. Hamm said. "In order to be a player you'll have to move on gut feel and vision, or you'll drown in all the information and outside stimuli."
For Mr. Hamm, branding is not necessarily manipulating a name or product, it is about being something. "You must be instead of claim," he said.
These are wise words from a bank CEO whose former career was in advertising.
"A corporate nomenclature can take you just so far," Mr. Hamm said. He remarked that though Proctor & Gamble's Tide brand may be nationally recognized, "there has to be a Tide."
Mr. Mehos agreed. "Banks are excluded from many of the top-100 business lists because there is no easily identifiable and neatly measurable product being sold," he said.
But in the absence of a unique product, banks must use branding to create an ongoing relationship with their customers. A brand is your promise to your customers.
Supported by new technology, banks can analyze customers' behavior, understand their motivations, and determine the profitability of the relationship. Only then does making a promise and keeping it become a wise business decision.