What Happened to Differentiating Your Bank?
As a marketer, one of my favorite sayings was uttered by chicken rancher Frank Perdue: “If you can differentiate a dead chicken, you can differentiate anything.” Of course, Mr. Perdue went on to make Perdue one of the most famous brands of chicken in America.
It makes me wonder what Frank Perdue would have accomplished had he been a community banker instead of a chicken rancher.
One thing’s for sure, the banking industry is lacking in differentiating skills. In fact, I find it very difficult to name one bank that has done a great job of differentiating itself in any meaningful way.
I was reminded of this a couple of weeks ago after reading the informative article “10 Resolutions for Bank Marketers in 2012″ which was posted January 10, on the BAI Banking Strategies website.
As I was reading the article, I kept wondering when I would hit the resolution about the need for differentiation. While the author, James Marous, covered ten very important topics, he omitted mentioning banking’s need for differentiation.
Or did he?
The more I pondered resolution #10, “Don’t Be Afraid to Break From The Herd,” it occurred to me that perhaps it was this resolution that at least broaches the topic. Maruos’ opening sentence is a classic: “The banking industry is notorious for having a ‘herd mentality,’ with practitioners following each other’s lead as opposed to thinking independently.”
This herd mentality is a large part of what’s keeping bankers from attempting differentiation.
It’s much safer to simply follow the herd. It takes less effort and requires little or no creativity. And when things go wrong, following the herd provides cover. Today, it’s an excellent excuse for dropping free checking, increasing existing fees, and adding new fees.
To my knowledge, no one ever said differentiating would be easy. In fact, it’s a very difficult task.
First, you must come up with your differentiating idea.
Second, you must validate that it is feasible.
Third, you must then make it the cornerstone of everything your bank or credit union does moving forward. It’s not a slogan, a mission statement, or tagline. It becomes a way of life.
Famous Harvard marketing professor Theodore Levitt preached “There is no such thing as a commodity. All goods and services are differentiable.”
Levitt strongly believed that a bank can differentiate itself from its competitors.
When it comes to the topic of differentiating, your best resource is an excellent book written by international marketing consultant Jack Trout, Differentiate or Die. I just love the title – Trout leaves no doubt as to his feelings about the importance of differentiating your bank or credit union.
All this makes me wonder why no bank or credit union has done an excellent job of differentiating itself from the competition.
One bank tried recently.
Oddly enough, it wasn’t a new bank. It was a major bank repositioning.
I’m referring to online-only Ally Bank – formerly known as GMAC Bank.
In an attempt to differentiate itself from the herd, senior management at Ally Bank promised three points of differentiation:
- Talk straight
- Do right
- Be obviously better
Charging hard out of the starting gate, the bank promoted its 24/7 customer service with live employees, simple language disclosures, no asterisks in marketing copy, no pesky disclosures at the bottom of marketing copy, higher rates, no monthly fees, and no minimum balance requirements.
While Ally Bank has been quite successful in growing market share, it has had its ups and downs over the past couple of years – the most recent being its failure to pass the government’s latest stress test. Of course, this bit of news is probably off the radar of most consumers.
Still, as a follower of Ally Bank, I’ve noticed a drop-off in focus on driving home these points of differentiation. I expect everyone working for the bank to remind me of these points of difference every chance they get.
It’s like Jack Trout and Al Ries preached to us over their many years as both successful marketing consultants and prolific authors that the marketing battle is fought in the minds of consumers.
I just wish one or two community banks or credit unions would step away from the herd and make an all-out effort to successfully differentiate their companies from the competition.
Perhaps then we’ll begin to read more articles about the importance of differentiation in the banking industry.