Some stories are simply too important and too complex to tell in one sitting. So I’ve written a two-part story about the immense challenge facing financial service executives, and shared the stories from several CEO’s own rebranding journeys. Amidst a dynamically changing mobile and fintech shift, coupled with a fickle and rising millennial market, when do you know if your brand is helping or hurting your organization from external growth and internal cultural alignment?
If the symptoms of a misfiring brand are clearly holding you back, how do you get to work tackling where and how your brand is not performing, so you can fix it? In what is a dynamic geo-political year of change and competitive challenges in the U.S. financial services industry, I think this is a timely story.
It’s fascinating (in a slightly uncomfortable way) to hear the frequent stories from senior financial institution executives who have reached the conclusion they have an ill-defined, stagnant, or ineffective brand that is holding their organizational growth back.
Worse yet, some realize that over time their brand has grown into a multi-layered, non-cohesive, and confusing “house of brands” that no one within the organization can articulate or fully align around, let alone manage. It can lead to the rise of siloed cultures, conflicting corporate team KPI’s and goals – and even worse, stunted growth.
It’s not hard for many leaders to see that at some level, the “wheels have come off” their brand. They no longer have any relevant (or well defined) external market distinction, no clear brand promise, personality traits, or an aligned focus internally among staff that is fueling cultural energy, rich user experiences, high NPS (Net Promoter Score) scores and growth. Unfortunately, it’s not so simple to define a process forward to help identify and tackle the complex issues that led their brand stagnation to this point.
A weak brand has major consequences and many unforeseen costs
Astute leaders often have an intrinsic sense that the cost of not having a clear, distinct and aligned organizational brand and culture is high. But identifying the ROI value (or unintended consequences) of your brand isn’t so simple. What’s often not considered is the flip side of a clear ROI. What about the LOC (Lost Opportunity Cost) of a fractured brand among not only consumers, but also your own employees, board and stakeholders? While vital to growth, the financial bottom line metric of ROI may not be the only, or even the most critical factor in the value of building a strong and well-aligned organizational brand and culture.
“We built the Starbucks brand first with our people, not with consumers. Because we believed the best way to meet and exceed the expectations of our customers was to hire and train great people; we invested in employees. “
Howard Schultz, retired CEO, Starbucks
Like other brand leaders, we have found whether working with financial institutions $200 million or $18 billion, that in a financial services model, just like Starbucks, you are in the people business first and foremost. And the consequences of an unfocused or floundering internal and external brand leads to some unforeseen (but fortunately repairable) bad outcomes far beyond just ROI, that filter down to your employees and ultimately members, consumers and even market reputation.
Jim McCarthy, CEO of Portland, Oregon Trailhead Credit Union share this brand reflection: “Like other financial industry CEO’s, I spent a lot of time thinking about how my credit union could succeed and how we could gain attention and build awareness. After seven years of negative member growth, I knew we needed to make a bold move in order to grow and thrive.” At the end of the first full year of implementing an enterprise-wide transformational rebranding program, Trailhead’s loans increased 18%, net membership growth rose 12% (another 14% the second year), website traffic increased 28% and capital increased 54 basis points.
Three of the most impactful brand outcomes hurting organizations
Our work across the US and Canada with leading credit unions and community banks has led us to consistently identify three of the major outcomes we have found that weak brands are costing organizations in consequential enterprise-wide impacts. They can influence inferior earnings, limit competitive growth and market share, cause staff and member/customer frustration, or worse yet, generate staff and consumer candidates for flight risk and costly attrition.
- Misaligned cultures and siloed teams
We often learn in our client internal engagement early on, that misaligned cultures create a sense of frustration among employees and managers when we conduct cultural brand quantitative surveys, interviews, cultural assessments and qualitative focus groups.
Our research reveals that when employees feel a lack of shared purpose; gaps between what brand, core values and marketing messages are – and the brand (and experiences) that is really being delivered, there can be levels of discontent, frustration and lost organizational focus.
The absence of a clear brand program, well-aligned values and actions, and a shared Brand Promise sometimes helps foster silo-driven environments. These silos create pockets of non-engaged employees, or non-aligned goals and communication that accelerate lower overall employee engagement scores – and lead to costly higher staff turnover. This has a direct impact on internal morale, employee engagement scores, lower retention, and resulting lower member service satisfaction ratings and NPS scores. The economic cost of losing good talent, or even having disengaged employees is staggeringly high and well documented.
HR organizations like the Society for HR Management and the Center for American Progress estimate the cost of staff turnover can range from a low of 60% of an employee’s salary for lower skilled workers, to 200 – 400% of highly trained staff. If you match that against your lost employees each year, it’s easy to see the huge cost
is not only financial, but impacts HR, training, service levels, knowledge and focus.
In today’s competitive financial services environment, providing ‘caring and friendly’ service without a shared brand promise to unite teams, well-understood messages, and an inspiring Mission is woefully inadequate to engage and retain highly principled and motivated millennial staff – who want to make a difference in the world. In fact, 95% of today’s Millennials believe that culture is more important than compensation, according to a recent Deloitte survey.
A study by Columbia University found that rich company cultures experienced 13.9% average employee turnover, vs. poor cultures that averages 48.4% turnover. Imagine the financial impact to your bottom line ROI of lowering your staff attrition by even 10%. As some astute credit unions have discovered, the reduction of lowering customer/member churn by even 5-10% has a drastic impact on increased earnings.
- Flat growth of net new members/customers.
Slow growth is not always because you’re not adding gross news consumers each month. It can also be driven by higher than average attrition, or “churn” rates (that average 15% in the U.S. banking industry and 20-25% for first year bank customers). That vicious cycle then requires higher new member/customer acquisition to net out positive membership/customer growth. It’s a runaway and expensive train, and churn is very costly considering the high cost of new customer acquisition (industry averages generally suggest $200 per new customer).
For financial institutions aggressively focused on indirect auto lending to drive high net member/customer growth rates; high churn rates influence “true” member/customer retention. Indirect lending is a profitable loan strategy and revenue stream, but a “false” reading of true engaged net member growth rates from consumers who didn’t actually choose to bank with you. These indirect consumers got an almost anonymous car loan funded at the dealer, and stick around less than 24 months. Financial industry rates on converting indirect members/customers into profitable ongoing healthy multi-service relationships are abysmal with few exceptions (that shouldn’t stop you from converting those you can to deeper relationships with a sound onboarding and targeting strategy). This lending strategy grows revenue, but rarely builds brand awareness or market visibility.
The lack of an appealing and relevant brand strategy geared towards well-defined future target audiences (often younger Millennial and GenX Borrowers) can take years to identify, but cause countless leaders to wonder “why aren’t we attracting and retaining more engaged Millennials?”
Low organic growth rates from a weak brand delivering vague “friendly service” (sometimes incorrectly defined as branch-focused, and not rich mobile-focused experiences) from an unfocused culture, or inferior omni-channel delivery can result in below average NPS (Net Promoter) scores. The result: below average referrals, mildly satisfied clients and higher churn – that cost organizations major organic growth, retention and lost profitability. That does not clearly show up in brand ROI measures, but it is absolutely LOC (lost opportunity cost) hidden in a less than stellar user experiences and sub par growth rates.
- Stagnant wallet share growth (but beware of the “sales culture” illusion). With data analytics, stagnant wallet share trends can be tracked via a combination of low existing overall customer or member penetration, low services per household, poor new member/customer onboarding, and below average NPS scores that do not drive regular healthy leads and deepening relationships. Whatever the symptoms, a vague brand disconnected from consistent member/customer experiences, intelligent behavioral analytics, clearly defined (and trained) staff actions, and consistent brand behaviors cost organizations dearly in gaining higher levels of share of wallet and traditional and non-traditional interest income.
The answer many financial institutions have turned to “fix” this challenge is a never-ending quest to build an often-elusive “Sales Culture.” In our 25+ years working with countless financial leaders, we have found that for many organizations, that sales culture status always seems to be “another 3-5 years away from adoption and success.”
In fact, most bank and credit union employees (especially millennials) never came to work to join a “sales culture.” They came to help your organization make a difference in people’s financial lives – and enrich the local community they live in. To be the “white knight” of consumer advice and guidance that is trusted and helpful: not to sell people stuff they may not need. That does not mean you don’t need to hire and train knowledgeable staff in needs-based identification, active listening, and asking the most important questions of how people’s financial lives are challenged; what their goals ahead are. But perhaps not best led under the banner of “sales culture.”
For many credit unions and community banks, we’ve helped transform their organizational focus from an “operational,” or “sales culture,” to a focused and fully aligned “Brand Culture.” We have helped drive newfound levels of staff engagement, commitment, values alignment, support for change management – and a renewed and inspiring vision for the future. Getting there takes deep levels of team engagement; cross-functional team focus, brand training and purposeful alignment to a new set of behaviors, staff brand actions and shared focus. And the results that follow often vastly exceed prior “sales cultures.”
Stu Ramsey, CEO of the $1.4 billion Pen Air Credit Union in Pensacola, Florida shared this reflection on building an organization-wide brand culture: “I can’t reiterate enough how you want to time this brand rollout and not just rush through the process. We knew it would be important not just for our staff to go through the Brand Camp training, but to give their own input as to how we would live it, communicate it and what we were going to do every day for our members and our internal employees to experience our brand.” At the end of Pen Air’s first full year of rolling their new brand program out, the organization went from several years of negative member and loan growth, to a record 22.3% loan growth, solid net membership growth and 11% growth in mobile banking, online bill pay and e- statements.
In light of Wells Fargo’s giant 2016 fall from grace for an overly aggressive sales culture (Wells expected staffers to sell at least four financial products to 80% of their customers), consumers and employees alike have never been more sensitive to this corporate-driven quest for sales, incentives and profits.
Wells Fargo’s leadership lost sight of its reason for existence, and focused on ROI and profits over people. The pressure flowed down onto branch managers and branch employees. One former Wells manager shared: “If you do not make your goal, you are severely chastised and embarrassed in front of 60-plus managers in your area by the community banking president.”
We believe that in today’s consumer focused, trust-based environment, a sales culture is not the best path to increasing wallet share, ROI and deepening consumer relationships. Instead, a shared focus around your brand promise, your purpose, earning consumer trust, and effective needs-identification using savvy behavior-based analytics and relevant staff questions should drive higher levels of engagement. That’s where the true value of focusing your organization and staff around your brand and the alignment of your people should lie. Bringing value, relevant help, a shared focus, savvy tools and a common brand language to your employees first: so they can pass it on to your members via rich, well aligned brand experiences. Building a brand driven organization takes focus, commitment and purpose, driven by what author and social science brain researcher Simon Sinek describes as: “People don’t buy what you do. They buy the difference you make in their lives.”
In Part Two of “Articulating Brand Dysfunction and Tackling it Head On,” we’ll offer a series of ideas, recommendations and a process for how to articulate and uncover the state of your brand – and then get to work transforming your organization to a fresh new vision of brand focus, organizational alignment and sustainable growth.