You brand your bank; why not brand your loans? The other day we attended a seminar on banking Millennials where a panel of Millennials was discussing how Millennials don’t believe the marketing hype like earlier generations did. We found this ironic as they sat there with Apple Watches, Stance socks (our favorite as well) and various other brands draped on their bodies in addition to the fact that all five were drinking bottled water despite a carafe right in front of each. Try selling bottled water to the Greatest Generation and you would be laughed out of the room. Over the last 20 years, thanks to the education from the bottle water industry we have been taught that bottled water is pure while tap water contains dangerous chemicals like hydrogen.
Our point today is that despite the earth being covered in 70% water (except in CA) and water is available free in every home and most public places, the bottled water industry sells more than 10 billion gallons of the stuff for an excess of $12 billion dollars per year. Consumers pay as much as $14 for a bottle full of what is essentially the most plentiful commodity known to man outside of air.
If the bottled water industry can successful brand water, banks can brand their loans in order to move out of the commodity category. We have talked to a dozen banks with wider than average margins about what they do (including our own) and have put together a definitive list of ways banks can differentiate their loans from the competition. Here are 10 ways in no particular order:
- Brand the service, not the loan: explain and market what makes your lending service truly unique – speed, expertise, consistency, availability, etc.
- Offer a superior range of loan types.
- Deliver the loan in a unique way such as online applications and processing.
- Integrate the loan in another process: Citizens Bank did this in excellent fashion where their loan application is integrated with the iPhone purchase contract so consumers can finance their smartphones.
- “Package” your loans in a unique way – one bank delivers their completed loan docs in a nicely bound set, while another provides a Lucite “tombstone” with every loan, while still another delivers their loan term sheet in a high-end leather folder for the potential client to keep.
- Specialty loan type – receivable financing, 2nd lien home improvement loans, office remodeling loans, etc.)
- Customize the loan to meet a specific industry need (medical equipment financing, loans to truckers, solar financing, etc.)
- Bundle the loan with other services (automated loan payments, alerts, etc.)
- Develop a “brand badge”: Like the “Intel Inside” campaign, banks could connect their loan to a psychological element such as the potential powers sense of community, elitism or power. Since identity theft is always a concern, a bank could have a “Security First” badge that certifies the loan as protecting the borrower’s information.
- Enhance the general brand of the bank so the loans get a “halo” effect and pick up the brand attributes of the bank.
Finally, as an added bonus for making it to the end, we highlight one last tactic that has also worked in the bottled water industry. Hundreds of millions of consumers prefer bottled water because we were made to believe it is pure. In bottled water commercials, we are shown pristine mountain streams that are clean of any impurities unless you count mosquitos and deer droppings. Mosquitos, we know, love water, yet are harbingers of death, while very few deer wear diapers. Both vectors of which we know are common in mountain water, yet somehow these facts get cut from the commercials and advertisements. You bring that up to a Millennial and they will surely start drinking tap water. But, wait, for even that is a marketing opportunity.
We bring to your attention a specialty set of waters that contain “fulvic acid” in it. Not only are “Fulvic” and “Acid” not great words to market around, but fulvic acid turns water black, the opposite of what we have come to be associated with “pure.” Fulvic acid is produced by the biodegradation of organic matter (still doesn’t sound refreshing) and is supposed to help with PH balance and a lot of other things we don’t understand and highly doubt (Here). Our point here is to not only underscore the power of marketing, but how banks can take what could be considered a deficiency and turn it to their advantage. If your bank has a slow loan process, maybe you play up how each loan is “handcrafted” or delivered with love? Sounds crazy, but like black water, crazy ideas sell if supported by branding and marketing. If you are worried about compressing margins, apply some of the above tested techniques to set yourself apart from the pack.
Submitted by Chris Nichols on October 19, 2015