A breakdown in the economy and a breakdown in trust

Depending on how old they are, British consumers have suffered up to five downturns in the last century: two between the wars, one as a result of the 1973 oil shock, an early eighties recession when Mrs. T got to grips with trade unions and finally, one in the early nineties, when the Gulf War caused another sharp rise in the price of oil.

Since then, not withstanding the dotcom ‘blip', there has been, pretty much, a clear run of 16 years consumer boom, during which amongst other things, we got fat while we watched grossly overpaid footballers, bought more expensive things than we could conceivably need, talked about our property portfolios ad nauseam and trashed the environment by regularly jetting off for winter sun.  

For all of that, there were many people and institutions that we came not to trust: footballers to stay abstemious for a start, but politicians to act with integrity, the church to behave with moral probity, the banks to act prudently with our hard-earned cash. Trust is at an all-time low.

Trust me I'm a banker!

In the current economic turmoil, jauntily renamed ‘the credit crunch', it is hardly surprising that there is an attitude of skepticism towards even the most hitherto highly regarded financial services institutions. This lack of trust will lead inevitably to long-term changes in the way that consumers engage with investments, savings, pensions and insurance.

In a recent report, the FSA observes that although the current climate has led many to review their finances, there is significant risk of long-term mistrust in financial products and the companies that sell them.

At a time when management is understandably risk averse, many financial services companies will follow marketing strategies that are designed to minimize short-term risk; strategies that are tangible, concrete. And yet, we know that many of the great enduring brands have an intangible magic, a magic which cannot be explained by the rational.

So there is a real danger that brand equity, built over decades or even centuries, may be damaged in an effort to make immediate returns on marketing expenditure.

The value of brands

Cultivating the brand is one the best defences for financial services companies in the recession. Investing time, energy and money in the brand is more important now than ever: because beyond price, companies need to be more relevant, more connected more in-tune with their customers.

By nurturing their brand now, companies will be better placed to reap the rewards when the economy inevitably returns to growth.

More than ever, financial services companies need to be seen by customers as brands they can trust. But what does that mean? The perception that the business in question does what's best for its customers - not just what's best for the bottom line, is an important measure of emotional engagement with the brand. This is a one of the key opportunities for differentiation.

It's commercially important, because customers actively recommend financial services institutions that earn their trust. Of the ten European banks rated best for customer service*, it was shown their customers have a markedly higher than average product holding, with higher margin products; and are twice as likely to consider them for their next purchase.

If it is a company's strategic intent to create a brand that can be trusted, every pound spent on creating and guaranteeing a successful brand experience is worth at least five spent on advertising. Those who believe in tangible brand experiences are creating the definitive form of future wealth: brands that we can trust.

 *Forrester Technology Adoption Study 2006