I was out for dinner the other night with an old friend whose opinion and guidance related to marketing I consider invaluable. I gave him an elevator pitch on a new social media solution I have been working on to customize for retail and commercial banking. As I hoped his eyes got wide, realizing the value of the solution. His level of interest grew, he asked great questions, he was totally engaged the pitch had worked. Then he asked something I wasn’t expecting “…why would you waste time focusing on financial services”?
The logic that followed made some sense. He explained that, in his opinion, banks lack teeth when it comes to marketing and therefore are not quick to adopt new solutions in this space. Early adopters of new marketing solutions are, based on his experience, industries with teeth; beer companies, soft drink companies, car companies, personal care/makeup, and mobile phone companies to name a few. His thesis is that the difference between these industries and Financial Services comes down to a buy vs. sell mentality.
Financial Services, he reckons, believe that their services should be bought, while the industries with marketing teeth believe that their products and services needs to be sold and spare no expense to investigate, and experiment with new marketing concepts and solutions to sell. We also spoke about the aversion Financial Services has when it comes to learning as much as they can about their existing customers for marketing purposes. When you think about it banks have been sitting on a vast amount of transactional and demographic data for over half a century. In that time no truly revolutionary innovations related to marketing or distribution of marketing data, even in aggregate, has come out of Financial Services (if anyone can point one out I’d like to hear about it). The innovations that have been made in the use of this data have been focused on risk assessment, fraud management and monitoring, governance, and compliance.
Despite the claims that most banks make about commitments to customer service, knowing their customers, and the creation of a sales and service culture most fall short of excelling in these spaces. Why? In my friends opinion it’s because in Financial Service it was not a risk reward paradigm that built the giant Financial Services groups that dominate the market. In fact it was the opposite. In Financial Services rewards have been gained by managing and mitigating risks. The risk management mentality that built the business over a couple of centuries has permeated to all aspects of the enterprise and the marketing group is no exception.
Teeth, when it comes to marketing, get cut in extremely competitive industries fighting for the hearts and minds of their market. They market their product by selling a lifestyle and a belief that their product is inherently better than their competitors’ and that their customers’ lives will be better because they use and are associated with the brand. The problem for Financial Services, in my friend’s opinion, is that aside from some thought leaders the enterprise has not yet realized that they are now in a growingly competitive market. That Financial Services traditional lag in adoption of innovative marketing solutions will no longer serve them well as disruptors, innovators, and new market entrants eat their lunch. It may also be because that Financial Services offer highly commoditized services not actual products. Because they are not actually selling a product they need to sell their service, as it is the only true differentiator. They all say they differentiate with their service but none of them are making us believe via marketing.
Let me know what you think. Is Financial Services truly lacking teeth when it comes to marketing?