In their book Made To Stick, the Heath brothers tell of a study that was done to understand the role of emotion in decision making. In this study, people were given $5 to take a survey. They were then given one of two letters about a charity that they were asked to donate some portion of that $5 to.
One version of the letter was the rational version — presenting facts and statistics about the need for contributing to the charity and what the charity does. The other was the emotional version — it told about the little girl in Africa that would benefit from the charitable contribution.
On average, people who received the first letter contributed $1.14. People who received the second contributed twice as much. Here’s where it gets interesting, though. As a follow-up, they gave some participants both letters — combining the rational and emotional appeal — but they only contributed an average of $1.43. The researchers concluded that:
Thinking about statistics shifts people into a more analytical frame of mind. When people think analytically, they’re less likely to think emotionally. The mere act of calculation reduced people’s charity. Once we put on our analytical hat, we react to emotional appeals differently. We hinder our ability to feel.”
My take: It’s not that financial firms don’t understand this. Instead, they: 1) don’t understand which emotions they should appeal to; 2) are inconsistent in their use of rationality and emotion in their sales and marketing processes; and 3) overwhelm customers with choices leading to analysis paralysis.
It seems like every financial services firm wants to be seen as an aspirational brand (btw, thesaurus.com doesn’t even recognize “aspirational” as a real word). Examples: Ameriprise with their Dennis Hopper-inspired “achieve your dreams” ads, and Bank of America with their “looking at the future” ads.
There’s nothing inherently wrong with playing to the “hope” emotion. But it’s not the only emotion that could be relevant to a customer’s decision. Security (the feeling of being secure) is an emotion that firms like Citibank have appealed to, but while that be an important emotion for some customers, I have to wonder how effectively that emotion can be played to in an ad. In fact, I would argue that in order to sell some financial products, both of these emotions are the wrong emotions to appeal to.
I believe — based on consumer research I’ve done in the past — that there are three primary emotional drivers driving consumers’ choice of financial firms:
1) Benevolence: The feeling, on the part of customers, that the people in the firm they’re dealing with is helpful, friendly, and kind.
2) Trust: The feeling, on the part of customers, that the advice, guidance, and recommendations they get are in their best interest, and not the best interest of the FI.
3) Convenience: The feeling, on the part of customers, that the firm they’re dealing with is as easy to deal with as possible.
Besides Citizens Bank (in the northeast), who has appealed to the first emotion in their branding efforts, I’m hard pressed to name firms that have appealed (effectively) to these emotions.
Why are firms ignoring these emotions? I’m inclined to put the blame on their agencies, who push their clients to be “aspirational”, but can only come up with “hope” as the only aspiration.
If it weren’t bad enough that financial firms are appealing to the wrong emotions, they’re often inconsistent in their sales and marketing approach when it comes to balancing emotion and rationality.
Walk into most any bank branch, and sit down with most any bank branch rep and start talking about products. What will you hear? Rates. Look up at the signage in the branch. What will you see? Rates. What happened to the emotional appeal? Maybe they think the emotional appeal is only good for getting people in the door, but that once they’re there, rationality takes over.
I don’t think so.
But this is what happens in the sales process — firms shift the prospect’s focus from emotional to rational. And then what happens? The bank either: 1) overwhelms prospects with choices (go ahead, count up the number of checking account or mortgage options your bank offers), or 2) only presents one option (usually the one the branch rep knows best, or worse, is incented the most to sell). In the first instance, the prospect is paralyzed and can’t choose, and in the second, being in an analytical frame of mind, they begin to believe there must be other valid options, and opt not to choose.
Bottom line: Sales performance suffers.
Emotionally tone deaf may not be the best term to describe the problem. If you’ve got a better description, let me know. But I do believe that regardless of the right description, there are a lot of financial firms out there — both big and small — that have a long way to go to becoming better, more effective marketers and salespeople.
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Emotionally tone deaf or color blind is an apt description. I think the reason for this situation is actually quite simple. The people who run financial institutions are analytical and rational people who are not swayed by emotional appeals (thank goodness that that is true). Therefore, since they themselves are not swayed by emotional appeals, they don’t think others are swayed by emotional appeals, and therefore aren’t involved with the emotional direction of agency work, nor set-up sales training with an emotional tone that is consistent with what advertising is occuring. Nor is having their sales team’s emotional offer consistent with the emotional angle being driven by advertising even on their radar screen as a thing that ought to be done. Do you think this could be why this is not even a blip on the radar screen?
Holy Cow! I am so glad that you touched on this. We were just having a discussion on the most memorable ads that we have been exposed to. Most notably were the Amnesty International series, The international Durex (condom) ads, and Beer ads (From Bud the Guiness).
All of these are emotion based ads. Even when you get down to anything statistical or directly beneficial, it is a side reference (Taste great/Less filling). People don’t want statistics, they want the greatest gratification offered. Haven’t we figured this out yet? Remember the mouse with the “orgasm button”? He pushed it until he died from not eating or drinking. We aren’t much better.
I think the main issue is that banks and CUs are run, predominantly, by folks who have to deal with numbers more than people – or lawyers. They tend to think that (like most of us do) everyone thinks like we do. If you always need the details, you think everyone else does too. But when they leave the office, they buy into the emotional marketing themselves.
Most people want to feel like they are in “Good Hands” with their insurance company. They want to think that they will be sexy by using a special body spray. What is it that your credit union does that makes your members feel special? If you don’t know, then you should go back to the branding drawing board.
Even when CUs do an awareness piece, they beat the dead horse of “Community and Service”. Those are completely ambiguous terms with definitions that shift from person to person. Plus, since almost every credit union slaps this positioning statement on whatever they are doing at the time, it loses whatever impact it had in the 50′s when it was conjured up.
Want to make a statement? How about “Saving the planet, one member at a time.” or “Crushing the inequalities of banking.” or “Watching your money so you don’t have to.” or “Integrity your family can count on.”
Credit unions are uniquely positioned in the marketplace. They have the opportunity to stand out and be seen. Unfortunately, thse who step into the spotlight, are usually watched most closely. And that scares a lot of number crunchers and pencil pushers.
The bottom line is, if you want to be a superstar, you have to step into the spotlight.
Ron, I really really really like this post. It gives me a lot to think about. That’s all I got — nothing to add!
Ron: Your phrase is spot-on.
Recently I’ve closely studied the deposit-account pricing decisions of a few large commercial banks during the recent rate downturn. IMHO, banks which have been real quick to “pull the trigger” downward on deposit rates are thwarting their efforts to cross-sell new products to their existing client base.
One well-regarded commercial bank I am familiar with – regarded as among the best in the world at product cross-selling – has played this game a bit too hard with its “premium relationship” account clients. Those “premium relationship” accounts include extremely low-cost or no-cost brokerage commissions, but the downside is the core bank checking product’s “premium” APY has been slashed to 0.40% except for clients with FDIC checking balances over $100k, which the APY is an okay 2.25%.
A consequence of this business approach is that bank may keep its “cross-sell” ratio of “products per customer” (through waived fees), but the depth of the client’s relationship with the bank side may be far less than if it offered a healthier APY for the folks who choose not to keep $100,000 in their personal checking accounts.
It struck me as totally a tone-deaf business decision, allowing the bank management to scrape off the barnacles of a few basis points of margin from clients but at the cost that many of those clients will keep much of their liquid cash in a higher-yield account at another bank or a credit union.