Businesses in the financial sector are putting renewed effort behind strengthening the emotional links between their brands and consumers.
From Atom Bank offering its consumers the opportunity to design its logo, to NatWest’s “We are what we do campaign”, brands are working to reach customers on a level well beyond the rational. And the reason? Emotional bonds act as multipliers on everything the company does, giving a greater lift from the same customer experience.
Research company Motista has demonstrated that emotionally-connected customers drive up to double the value that a merely satisfied customer delivers. Our own work shows that a marginal pound of advertising has a greater impact on customer perceptions when those customers are already emotionally engaged. Emotional bonds create a confirmation bias that means customers are more open, believing and trusting of a message that comes from a brand they believe in versus one that they don’t.
Across industries, we find that the brand typically accounts for 10 to over 50 percent of a purchase decision (and upwards of 90 percent in the case of bottled water). But even 10 percent matters and its quantification fundamentally changes the brand conversation.
Knowing where and how to invest in brand based on the data can yield substantial financial upsides.
For a financial services company, we found that every point of brand improvement is worth $30 in the lifetime value per customer. For another company, increasing the brand score by two points was worth $600 million in annual profit — enough to get the whole management team’s attention.
When the brand is expressed in financial terms, it creates buy-in. Brand measurement that captures economic impact helps to create a common language and frame of reference, not just for marketing, but for everyone.
The challenge for many businesses is that this financial focus is often associated with the rational, operational aspects of the brand offering, measured with operational metrics such as the Net Promoter Score. However, this is based on a mistaken belief that only hard levers drive hard numbers. So, for example, a retail bank might perhaps spend a lot of time working out how to reduce queue time, rather than attend to how the tellers and sales and service staff interact with customers.
This strategy is attractive because it is often simple to measure. But although benchmarking energy and spirit of staff might be trickier, it might well prove more of an influence on how consumers feel and respond to your brand. If a strong emotional bond multiplies the impact that the operational levers have on customers, then focusing only on the levers is missing a vital trick.
Leadership teams across the board should therefore be asking themselves the following three questions: How does investment in emotional bonds raise business profitability? Which associations matter most in raising profitability? And, finally, what can we do to improve these associations?
The best way to get data like this for your business, where resources allow, is to use primary research linked with your customer data to quantify the influence of brand versus other elements in driving customer choice and delivering customer value. But even simple correlations of brand perception versus market performance will give a good indication of the size of the prize in a transparent and understandable way.
We’ve found that the system of refining your emotional connections with consumers involves three important steps.
First, you need to know what really matters to consumers in the sector that you operate in — the associations that make a brand stand out. In the airline business, for example, the service given by the cabin crew disproportionately influences brand preference.
The second task is to define the small number of associations that make a brand distinctive within those industry-specific aspects. These are defined by the brand strategy and drive meaningful differentiation through the culture of the organization and innovation across the experience. NatWest succeeded in making its ‘helpful banking’ claim more than just a tagline, when it delivered it through retrained and re-incentivized staff and extended opening hours.
Finally, find ways to track the cause and effect of how these associations impact brand perception so you can work out how best to invest your marketing budget. Delving into these links can yield some surprising results. For example, one brand learned that digital service channels have twice the impact on perceptions as physical ones. A consumer packaged goods company found that signage was at least three times more effective than either brand blocking or increasing shelf share in creating perceptions of the product as “readily available.”
Armed with all of this data on how you can effectively strengthen the emotional bonds between your brand and consumers, you are in a much better position to make decisions about marketing strategy — and achieve backing from the board.
We are all consumers and know instinctively that we are more willing to buy from a brand we feel connected to. This system of analyzing how a brand can be reconstructed to maximize this process allows us to show how this works, proving a common vocabulary that all senior directors can focus on.
Article originally published in Wealth & Finance International on October 29, 2016.