Branding and brand development through direct marketing in the consumer financial services sector: FINDINGS Aim 3

Branding and brand development through direct marketing in the consumer financial services sector: FINDINGS Aim 3

Aim 3: Barriers preventing financial services providers from using direct mail for strategic branding

Interviewees were asked whether there were any difficulties, specific to the financial services sector, in using DM to develop branding and brand commitment. Issues can largely be reduced and organised into the following four themes:

1. Short-termism and lack of customer information investment

Merger and acquisitions fever within the financial services sector, with, for example, ‘mergers of two different brands, two different brand values, two different cultures’ (DM agency) is seen as a barrier to long-term strategic planning, limiting segmentation and branding, as are clients’ lack of structuring of the company brand or of individual customer data, divisive internal politics and power struggles.

‘What I believe is that financial services are very short term, all waiting to be amalgamated or bought up. Not because they are low quality people but because they have problems with the board and shareholders and they have very short- term targets.’ (DM agency)

Investment in greater understanding of customers is considered critical to developing a relational dialogue and to maintaining brand relevance and differentiation.

‘The trouble with financial services is that they are either trying to build their brands on something that’s not meaningful for the customer, or on things the customer doesn’t understand.’ (DM brand-building judge/agency)

Investing in a marketing database is viewed as:

‘. . . expensive, it needs someone to champion it and one of the problems with somebody championing it is that they have to be there for some time and the problem with most clients is that they don’t last very long.’ (DM agency)

‘They are pouring money into direct mail but they wouldn’t necessarily do the same with a database.’ (DM agency)

2. Regulations and restricted space in DM Several interviewees maintain that brand and selling are not in conflict in DM. On the contrary, ‘on-brand’ mailings are thought to give an uplift to response. Tracking shows that these mailings have a hidden influence in strengthening positive

brand attitudes. A pro-branding DM agency claims:

‘A lot of the information is necessary but a lot of it [financial services direct mailing] shows little imagination and little respect for people’s intelligence. Everybody knows what a credit card is going to do. Everybody’s got millions of them; they should have moved on a bit until someone could say ”I like this mailing”. Then you could get into the sales pitch.’ (DM judge and agency)

Some interviewees, on the other hand, insist that lists of mandatory financial regulations, which can take up as much as 50 per cent of a mailshot’s space, when added to the sheer amount of space needed for selling, restrict creativity. ‘The biggest barrier in building a brand is that space issue’ (DM agency).

3. Intangibility

‘I think it’s a very British disease thinking that if you get the advertising right, everything will be hunky dory. I think the most powerful brands are built on the back of different tangibles . . . it’s about getting the whole mix right.’ (DM brand-building judge)

Branch closure is considered to be removing some brand presence or visibility in the financial services sector, whereas ‘frequency of visibility’ is considered by Hawkes (1999b) to be one of three principles of image building in communications (together with consistency and relevance). Branch closure may also erode emotional liking (leading to esteem) derived from contact with warm personnel, such as that discovered in Alliance & Leicester customer research of the late 1980s and 1990s.

‘They liked the branches, they liked the staff; they were warm and friendly and cuddly . . . If the brand is the warmth it goes, because branches are too expensive to maintain. . .’ (DM agency)

Many interviewees mentioned that the intangibility of certain financial service categories poses difficulties in branding and creative work.

‘There isn’t a product, it’s just something that’s stored nowadays on a computer, it’s not a tangible thing so therefore maybe Scottish Widows, where the brand is the widow herself, or Virgin, where Branson stands for the brand, is the way to do it.’ (DM agency)

Other interviewees concede that certain companies have successfully focused on the tangibles of service delivery in their campaigns, notably: First Direct, Direct Line and, in the past, Commercial Union. These good practice examples are analysed under Intangibility in the section on differentiation in the Appendix.

4. Low involvement Additionally, insurance products, in particular, are descibed by DM agencies as ‘unpopular’, ‘low involvement’, ‘low interest’ or even ‘grudge purchases’ from a customer perspective.

‘Because it’s a low interest area, it’s very easy to shop around. You don’t feel any requirement to not do that. Companies have encouraged it [switching]. They’ve made a positive effort to do that, trying to get everybody else’s customers. . .’ (DM agency)

Again these views can be contrasted with examples of past advertising campaigns such as the RAC’s ‘Knight of the Road’ fear appeal campaign or the Commercial Union’s ‘won’t make a drama out of a crisis’ which, by focusing on the tangibles, made car insurance appear ‘sexier’ — more involving and exciting.


Representative APR 391%

Let's say you want to borrow $100 for two week. Lender can charge you $15 for borrowing $100 for two weeks. You will need to return $115 to the lender at the end of 2 weeks. The cost of the $100 loan is a $15 finance charge and an annual percentage rate of 391 percent. If you decide to roll over the loan for another two weeks, lender can charge you another $15. If you roll-over the loan three times, the finance charge would climb to $60 to borrow the $100.

Implications of Non-payment: Some lenders in our network may automatically roll over your existing loan for another two weeks if you don't pay back the loan on time. Fees for renewing the loan range from lender to lender. Most of the time these fees equal the fees you paid to get the initial payday loan. We ask lenders in our network to follow legal and ethical collection practices set by industry associations and government agencies. Non-payment of a payday loan might negatively effect your credit history.

Calculate APR