Financial services companies are not known for their progressive approach to branding-for good reason.

Branding guru Larry Chiagouris-who has worked with companies ranging from Prudential Securities to AT&T Capital to Sallie Mae-insists that most financial players fail to invest in brand. Worse yet, even fewer fail to see branding as part of efforts to capture the attention of customers. "All the pieces of the marketing system need to work together. It is truly a choreography, it is an orchestration," says Chiagouris, managing director at CDB Research & Consulting. "If all you are doing is spending money on advertising, and you don't have the ability to deliver through your sales force or your delivery channels, you are not going to be very effective."

Find out where the financial services industry often goes wrong.

FSM: Financial services companies are more focused on branding. What's driving this?

Larry Chiagouris: The reasons are many. They are recognizing that, as they move beyond limited product lines to broader product lines, simply the costs of marketing individual product lines and services become very prohibitive. If they've developed a family or umbrella-like brand, that can be the basis for standing for all they sell. Marketing then becomes more effective and more cost effective. Another part of it-this is what makes them different from other packaged goods companies-is that they see their competitors doing it. There is a little bit of me-too marketing. They know that somebody else is doing it, so they figure they have to do it to keep up.

FSM: That isn't very strategic thinking.

Chiagouris: The other thing to keep in mind-this is much more strategic- is that many of them recognize that the landscape is changing and more companies are being bought. They recognize that if they have a brand, their asking price will be a lot higher. The bread-and-butter reason is to begin to stand out in the crowd in a way that makes your marketing work more effectively because consumers have thousands of options.

FSM: Are any financial services companies on your personal list of Top 50 U.S. brands?

Chiagouris: I would put Merrill Lynch on that list. (It's) done a great job of conveying a sense of trust, honesty and stability. Those are all things which are incredibly important to customers. They've been consistent with doing that over the last five years in working with their agency, Bozell.

Would there be other companies I'd put on the list as well? Hard to say. Chase is trying real hard. I wouldn't put too many financial services companies on that list.

FSM: What are most financial services companies doing wrong?

Chiagouris: It is a matter of consistency. A lot of them don't appreciate that when you are conveying a brand, you need to approach it both from an emotional perspective, as well as a practical, rational perspective.

A brand has many components. Merrill Lynch is a very good example of doing it the right way. A good campaign they ran in 1996-97 had to do with the fact that they are with people all the way through their lives. They demonstrated that by not just well done emotional vignettes, but they also showed some very specific examples of practical considerations people need to think about when planning their financial lives. Their assets under management grew considerably, in part because of the way they positioned themselves.

FSM: How do single-product companies do with branding?

Chiagouris: There is nothing wrong with being singularly focused and sticking to your knitting, but you still need to find a practical and emotional benefit that you stand for.

For those who are singularly focused, they tend to focus too much on the nuts and bolts of what they do-not on the benefits to the consumer. With a few exceptions, insurance companies have been way too focused on representing attributes that most people don't understand and don't quite clearly appreciate.

FSM: Is their a disconnect between the idea of branding and being willing to pay for it?

Chiagouris: Yes. A lot of CEOs or top marketing guys will talk about the need for branding, but then do not do the spending that branding requires. The development and execution of branding requires an investment. It is no different from anything else.

FSM: What is the best measure of branding's ROI?

Chiagouris: A strong brand makes people more receptive to the sales call, but, at the end of the day, it is the customer service person that ultimately closes the sale.

FSM: How does branding work in a commodity business?

Chiagouris: All of these companies are buying and selling money. Despite the fact that they are all doing the same thing, why are some companies are more successful than others? Look at credit cards.

FSM: Can new talent deliver better branding success?

Chiagouris: We've seen some very senior players move into (financial services). Slowly, but surely it is having an effect. The challenge though is that when they bring the talent in, many of these companies don't see immediate results. The reason is that their institutional fabric is still the same. You can bring in great talent, but if the bureaucracy is so dug in, it will take a very long time for that talent to be successful.

FSM: Will financial services companies only muddle through and not really succeed?

Chiagouris: That is a very fair statement. The reason why they'll survive longer than (one would think) is that there is a tremendous amount of inertia among customers. A company that muddles through can get away with it for a while, though not forever.

FSM: What characteristics drive branding success at firms?

Chiagouris: Those companies have a management team with a very clearly articulated vision for who and what they are. Companies whose employees appreciate and understand that vision.

-J.Racine

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