Brands are most effective in an industry like financial services where customers lack the information, ability and frankly, the will, to make informed product choices and where competitive offerings are perceived, by-and-large, as similar.  Without a rational basis for comparison, consumers are left with comparing brands on whatever rationale is known to and relevant to them, which is why investing in your brand equity is critically important to your business.

The ability of a financial services business to build brand equity is directly related to the level of involvement that the target market has in the category or product. Low involvement generally equates to limited consideration or attention by the target market and an environment where it is difficult to build brand equity.  In simple terms, if your target market rarely thinks about the products you sell and the services you offer, your ability to communicate with them at anything other than at a superficial level is limited. If we liken this to direct mail, you’re sending them an ‘envelope’, but they’re not opening it!

This explains why many financial services brands have managed to generate brand awareness, but have fallen short of generating the emotive associations with their brand required to build strong brand equity.

High involvement, on the other hand, presents greater opportunity to build brand equity. More attention and greater consideration by the target market means that they more readily receive and process the messages you send. They willingly open the ‘envelope’ to read what you’ve got to say. Liken this to a hobby you have a passion for – let’s say car racing. You think about car racing often and whenever you see or hear anything about it, you give it your full attention. You are totally involved and what you see and hear continues to shape your active view of car racing. Financial services may never reach this lofty height, but it does illustrate the power of higher involvement on your brand’s ability to build equity in the market.  And involvement does not have to come from the core product you are selling, it can come from associated, non-product aspects as well.

There are a range of factors that directly influence the consumer’s level of involvement including perceived importance, desire to control, inertia and convenience, perceived complexity, confidence in the industry and the nature of participation.
This article explores the interrelationships of all of these factors through the Financial Services Branding and Involvement Model and provides an actionable framework for marketing and branding strategy.

• Perceived as not important? Incumbent suppliers because people ‘set and forget’ and are less susceptible to competitor approaches.
• Perceived as very important? Suppliers looking for increased market share in markets where consumers are not getting what they want from their existing supplier.  Also an opportunity for incumbent suppliers to build a stronger brands through greater customer engagement.

Influencing the level of importance

The more your market wants to control the process and outcome of your products and services, the more involved they will be.
Bob and Mary both have managed funds.  Bob is happy to let the wealth manager do its thing and although he wants a good outcome, he’s not about to get involved with how his investment is being run. Mary on the other hand, actively chooses her managed fund products, monitors them regularly and makes adjustments. To do this, she is very involved and reads all statements, reports, website updates and talks to others about it. Mary wants to influence the process and the outcome and is very involved.

Mary is more receptive than Bob to communications and will actively form strong views about the wealth manager’s brand from what she reads and her overall experience. Bob will just ‘set and forget’.

Who benefits?

• Low desire to control? Incumbent suppliers because people ‘set and forget’ and financial advisers who can convince consumers of a gap between where they are heading and where they need to be.
• High desire to control? Suppliers looking for increased market share in markets where consumers are not getting want they want from their existing supplier – they are more susceptible to marketing approaches from your competitors.

Influencing the desire to control

• Lowering it – increase consumer confidence in your industry and your brand, increase the perceived complexity of your products and services (Telstra did this when Optus came to town) and ensure that your product and service utility is spot on.
• Increasing it – elevate the perceived importance of your products and services and reduce the perceived complexity of what you offer.

If people can set and forget a product or a service without perceiving any adverse consequences in doing so, that’s exactly what they will do.   If it’s more convenient to keep the status quo, that’s also what they will do.

Take a deposit account for example.  Once set up, it is unlikely that a customer will change their deposit account unless there is a real reason to or they are required to.  It is inconvenient to change as it requires forms to be completed, old account to be closed, new debit cards, changing direct debits and direct credits, etc… There is also a perception that all deposit accounts are the same and that researching alternative accounts is time consuming so why go to the effort to change?

Who benefits?

• Low inertia? Suppliers looking to increase market share will find it easier to switch customers to their products and services.
• High inertia? Incumbent suppliers as their customers are not susceptible to switching activity of competitors.

Influencing inertia

• Lowering it – demonstrate that you are different from the other suppliers and offer high incentives, benefits and assistance to switch from a competitor.
• Increasing it – convince customers that other suppliers offer no more than you do and that changing is difficult and time-consuming (eg. a number of pension funds make it quite difficult for members to roll their money over to another pension fund through onerous administration and heavy exit fees).  Tie as many other products and services to the base product as possible to increase the number of ‘hooks’ you have with your customer.

The more complex your target market thinks your products and services are, the less likely it is to get involved with your brand. Generally, people gravitate towards simplicity. They have busy, already very complex lives and their will and capacity to assimilate complex things is low. And perception is reality here. No matter how simple you think your products and services are, it’s what your target market thinks that matters.  Often, the perception will relate to the whole product category.

Who benefits?

• Perceived as simple? Any suppliers wanting to enter new markets or gain market share, suppliers with strong brand attributes beyond the basic utility of the product or service (as consumers feel they understand the product or service and will consume more emotive messages) or those not affiliated with adviser networks.
• Perceived as complex? The incumbent supplier as it is simply ‘too hard’ to change and any of these ‘complex’ financial services and products that are distributed by advisers as consumers  just want to be advised what to do.

Influencing Perceive Complexity

• Lowering it - through marketing that increases knowledge and familiarisation with the category, simplifies concepts and language and gives the target market confidence to become involved.
• Increasing it – through using complex vernacular and concepts and talking up the expertise required (just like lawyers do).

The more confidence consumers have in your industry the less they feel they need to become involved as they believe the industry is doing a good job and their interests are being adequately looked after. Increased regulation generally increases consumer confidence, but it also can act to commoditise brands.

Back in the 50s and 60s, brands flourished for reasons of quality and safety.  Consumers knew that if they ate brand X tuna, that it wouldn’t kill them. But the pursuit of quality and substantial increases in regulation in all categories (especially financial services) has promoted a general view of ‘whatever I buy will do its job and if it doesn’t, I am protected by law.’  Although the financial crises has shaken some of the confidence in the financial services industry and placed the big, established brands in a more dominant position.

Take banking - consumers have the utmost confidence in the banking sector to do its job and safeguard their money because they know the high level of regulation and extent of Government influence in the sector. This removes the fear factor and reduces involvement as a result. Financial planning, however, is not in the same light and consumers are less confident about this industry.

Very heavy regulation has contributed to creating the impression that ‘all banks are the same’. There has been safety in the ‘group-think’ of compliance and legal departments in their interpretation and application of the rules and regs. resulting in the same approach to many business processes and outputs being adopted by all players.  The same can be said for pension funds, managed funds and insurance.

The higher the active participation in consuming financial products and services, the greater the level of involvement. There is utility participation (such as using and ATM and internet banking) and active participation (such as learning more about the investment options of a pension fund). Utility participation is good as it provides convenience and inertia and aids customer retention (we get used to doing things a certain way and naturally resist change) and can help cement brand awareness through repetition.  But, active participation is better as it moves branding into more emotive areas to help you build brand equity.

As a default position, it is fair to say that many consumer financial services products and services have low active participation rates. Many are set and forget or looked at it once and rarely again like insurance, home loans, personal loans, deposit accounts and superannuation.
Interestingly, Superannuation has mandatory, utility participation (everyone must nominate a fund for SG contributions) but quite low active participation (not many members actively learn more about the investment options and group life insurance offered by their funds).

Active participation rates can be increased through elevating the perceived importance of your products and services, increasing the desire to control the process and/or outcome, reducing the perceived complexity of what you offer and improving the information and education available on your products and services.

Look at your product category, your competitors and your target market to see where you sit for each attribute of the financial services and branding involvement model.  Apply your marketing to influence where you sit on each attribute to increase your target market’s involvement with your product and put your organisation in a much stronger position to build brand equity.