July 26, 2017

Following the Two-Second Rule: Building a Brand in the Finance Business

Link to the article here.

Brands like Cheerios, Toyota and Coca Cola have become ubiquitous. Once confined to radio, television and print publication ads, they now follow us as we surf the internet, peer out from the margins of our Facebook pages and insinuate themselves into our Twitter feeds. Charlie Perer argues that small lenders need to establish their own brands to compete with industry giants. A strong brand can set a lender apart from the pack and establish an identity that will resonate with borrowers.

What is your two-second rule? If I asked you to close your eyes and say the words “Mercedes,” “Coca Cola,” “Hilton” and “Macy’s,” I bet their brands or products would instantly pop into your head. These firms have spent billions of dollars to ensure their names connote positive images in your mind within two seconds of hearing them. The two-second rule is important because in today’s age, you really do have two seconds fro a prospect to understand your brand and the corresponding service offering. So, what’s your firm’s two-second rule?

As finance professionals, we still work for brands. How else could we differentiate our firms when our product is commoditized? Our product per se might be money, but we are still charging a markup and hoping to establish brand and customer loyalty – some clients will pay more for service or other offerings. There is a clear reason why some firms have built successful businesses, even in a competitive environment. Differentiating their brands plays a big part.

The Two-Second Rule

Every finance firm should be asking itself this question: How do we separate ourselves and create a strong brand image so when someone hears our firm’s name, they instantaneously think of something uniquely positive? We will get to the fundamentals of how to do this later, but I would challenge all finance professionals to take a step back and think about their own personal two-second rule and that of their firm. If your next prospect were your last, what would you want to convey in two seconds? My two-second rule is speed, flexibility and service, as those elements are the key to my firm’s success. We have to be fast, flexible and serve our constituents – both senior lender and actual clients – flawlessly.

I’m sure very few lending professionals see the similarities among a finance company and hotels, restaurant and car dealerships, but they do exist. These companies especially nicer ones, target a certain clientele, and they are ultimately relying on separate, but distinct teams that must work together flawlessly to deliver a consistent services every day.

Creating Touch Points

Think of a Mercedes car dealership. Every “touch point” where an employee encounters a customer is thought out. Every employee is trained to deliver excellent customer service from the service department to sales. Finance firms should execute at every level or touch point in the same way. Ask yourself whether your firms meets the standard of a Mercedes dealership, where you rely on a repeat customers, product performance and referrals. If one aspect of customer experience breaks down, so does the brand.

The picture to the right best illustrates what our prospects feel like after meeting with senior lenders as they evaluate a new secured lending relationship. We do this for a living, so we know the drill. But does a business owner understand when they rarely shop for a bank or finance company? How do you or your firm stand out in a crowded field of options? I would argue it comes down to service and execution rather than lending at the lowest rate, especially given the banks are lending at historic lows. Clients do not always choose the cheapest rate for a reason.

We live in a world full of choices, and the exciting part about branding is that the people behind the brand can define it any way they choose if starting from scratch. At Super G, we take a “literal” branding approach by using the letter “G,” which stands for the founder’s last name. We want each client to know we are committed and that the :G: is an actual person who is a successful entrepreneur. Our branding goal is to be able to relate to business owners. This helps us connect when they realize we are a small team committed to financing their company.

Wells Fargo and Bank of America rely on institutional recognition to provide national and global reach. Another Form is literal branding, as in the case of JPMorgan where there is a historic behind the brand. These are just some of the ways to look at branding. I make these points to spur smaller firms to think about their own positions so they are not lost in a crowded aisle.

The Five P’s

I would argue the most successful firms are the big banks that have successfully executed the firms five P’s of marketing: product, price, placement (where your product is sold), people and promotion. They are able to accomplish this because they have massive capital bases, great marketing teams and a commitment to human resources that enable them to master all the key items. The rest of us are not so fortunate and must use our entrepreneurial skills to come up with creative ways to pick our spots.

How do regional banks compete with national banks? They win through placement of strategic locations and by being market incumbent and product heavy. How do national firms compete against regional players? They always win on price, sometimes by product offering and certainly by national exposure. Each has a competitive advantage. A regional has just one market whereas a national has a broad reach and can’t win everywhere.

How do alternative lenders separate themselves? Certainly not by rate, but their new products are more unique than ever and their placement (or distribution) is changing all the time/

We are currently in a competitive environment where money is a commodity and there has never been such intense competition. The firms that best execute the five Ps of marketing to create a clearly differentiated brand are the ones that win time and time again. What is your firm doing to build its brand?