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WHAT ARE BANKS FOR?

This article was published first in the Financial Services Forum’s Argent Magazine – Autumn 2011.


What are Banks for, if not to feather their own nests?

If we truly want to address the trust issues in financial services, I believe we need to ask some deeper, more fundamental questions about the nature of trust and what we’re here to do, individually and collectively.

 

The first step, especially following the turbulence of the past few years, is to recognise how complex an entity trust is – easy to feel but difficult to understand. The brand and industry trackers show trust going up, down and sideways – there’s little consistency. In reality, while we haven’t seen people pulling their money en mass from banks or more switching from one brand to another, it feels as if the standing of financial services brands is at a low point.

 

To understand what’s going on means recognising the distinctive layers in the concept of trust:

 

Functional trust underscores how well an industry or product group works to deliver a functional benefit. Here, banking actually continues to score highly and trust levels have actually increased – even more so since the government proved it would stand behind the banks. We all trust that a bank will work to deliver core commodity functions reliably.

 

Affective trust is where financial services companies have a real problem. Very few people have affective trust in financial services brands and virtually no-one trusts the top bankers who serve as figureheads for our industry. They’re seen as defensive and self-serving. All the TV and newspaper advertising behind the message “We’re ordinary people working for you”, doesn’t move the needle, despite what a brand tracker might say. These messages are perceived to be superficial, actually creating more mistrust and frustration with our industry.

 

It’s galling for a consumer to hear these advertising messages while also hearing a CEO defend massive bonus payments or threaten to leave the country when taxes are discussed. People integrate these messages. In our hyper-connected and hyper-transparent age, consumers assess brands and business on a range of competing dimensions to get very near the truth.

 

The trust in business, and the banking industry especially, that people used to have and that gave a legitimacy to our commercial activities has been decreasing alarmingly in the West. Business leaders are now seen as “doing the right thing” by only 20% of the population.

 

And there’s now clear evidence that commanding deep trust is a hard business issue, not a soft, intangible matter to be addressed through superficial communications alone.  It’s already directly impacting balance sheets and business models – just look at the cost of compensating for this lack of trust through vastly increased capital requirements or the ring-fencing of retail operations suggested by the Vickers report. All because we as an industry are seen not to be worthy of trust.

 

Against that background, most “normal” people are asking: What are financial services and especially our banks here to do, if it’s not just to feather their own nests? This assumption of self-serving goes to the heart of our business – and we will continue to suffer as regulators become more aggressive, spurred on by an increasingly frustrated and angry public.

 

However, those brands that truly commit to both social and commercial good, that contribute to social capital through their activities and that mobilise their workforce locally and authentically to take this message out – for them, these are the most exciting of trust-building times. Authentic, real, connected trust has always been at the heart of the profitable customer-financial services relationship. That’s why it receives so much attention, and why building it continues to be the right thing to do.

 

Read more about creating a sustainably trusted and trustworthy business and brand in Why Should Anyone Buy From YOU? (FT-Prentice Hall) by Justin Basini. It’s Available on Amazon and in all good bookshops.

Marketing Week: “The three bitter pills you need to take to restore brand trust”

Richard Madden, Chief Strategy Officer at Kitcatt Nohr Digitas wrote his column in Marketing Week (20th October 2011) on restoring trust in business inspired by my book Why Should Anyone Buy from You?

You can read the article by clicking below

PDF Richard Madden in Marketing Week writing about my book and brand trust

and

Online here:  Marketing Week column Richard Madden

Thanks

Justin

LISTEN TO THE ENGAGING BRAND PODCAST

…featuring a discussion about brands, business, trust and social capital between me and Anna Farmery who hosts the show. The podcast covers some of the thinking in my book Why Should Anyone Buy From YOU?

You can listen the podcast here. 

Thanks to Anna at The Engaging Brand website. You can follow Anna on Twitter at @engagingbrand.

UNDER COOK-ING APPLE

Today was a BIG day in the life of one of the world’s great companies and brands – Apple. “It’s a beautiful day in Cupertino” was the twitterers’ most frequent comment this afternoon as tension built for Apple‘s “Let’s talk iPhone” event scheduled for 1pm West Coast US time.

Would they? Wouldn’t they (announce the iPhone 5)? Hardware or software focus? How would the largely unknown Tim Cook’s first outing as CEO go down?

For months Apple has been dominating headlines: from Steve Jobs stepping down as CEO to their vying for the spot as the largest company in the world by market capitalization with Exxon to Android signing up 1m activations a day.

The pressure from customers, shareholders, employees and the media was and is immense.

So what was the impact of all this on the brand, reputation and trust that millions of customers, investors, and journalists have in this iconic brand? Well I’m going to go out on a limb, and I don’t get any joy out of this (even though I’m writing this on a PC), that based on today’s presentation there are definite blemishes appearing on the Apple shine. Whether these blemishes turn into rot for the business remains to be seen but they are worth delving into.

Firstly, the good-ish news. The presentation finished with a major flurry which was the announcement of Siri – “a humble personal assistant” – as she/he/it put it themselves. This is a voice activated assistant feature which has the potential to be a major breakthrough in human-machine interactions making life simpler for the many of us who battle with too large thumbs and “how do you do that again” forgetfulness. The demo was impressive and the functionality clearly class leading. The implementation of this technology for human benefit is where Apple is fantastic but the worrying element here was that this technology was gained through their acquisition of Siri in April 2010 for around $200m. It was a smart move to acquire but it’s not a home-grown innovation.

The major issue for Apple which will, I suspect, hammer their share price for the next few days was that they didn’t announce a new iPhone but an upgrade to the iPhone 4 called the iPhone 4s. They called it “a completely new inside” – based on the A5 chip but it looks identical to the iPhone 4. The lack of the iPhone 5 is bad given that they now haven’t launched a truly new model in over 16 months and that pent up demand is massive. Apple’s pace of innovation is slowing and I don’t believe that with the iPhone 4s they will give enough people enough of a reason to upgrade. This means that they are missing growth and market share protection opportunities.

In this first post -Jobs event they relied on software, namely Siri and iOS5 to carry them through. Whilst there are many good features included they are primarily just catching up to features already available on the latest Android handsets. The lack of true innovation here was underlined by the 5 minutes spent talking about a hardly earth shattering feature to send physical greetings cards through the post via Apple to anyone around the world.

These issues were compounded by the presentation being quite boring and more corporate than I’ve ever seen from Apple before (however I was only following it on Engadget and Twitter – maybe it was scintillating in the hall?). For the first 45 minutes from the reporting I read the loudest cheer seemed to be for an iPod nano clock face featuring Mickey Mouse! The now legendary presentation style was polluted – lines such as “integrated clip” as a major feature of the iPod nano made it through the editing process. Slides and slides of the A5 chip in the iPhone 4s dominated with stats such as “26% better this” and “7x better that”. After an hour Twitterers were clamouring for a headline announcement – the 140 character frustration was palpable. What was lacking were any real strides forward in terms of Apple’s core competence which is making technology beautiful and simply to use. I’ve no doubt the iPhone 4s is better than the iPhone 4 but I don’t want one enough to make me switch. That, for Apple, is a problem.

After all is said and done and the yards of coverage are analysed the deeper issue here is whether the Apple brand and organisation can continue in a post-Jobs world to deliver outstanding innovation and design that commands irrational loyalty, trust and price premium. What was delivered today was largely incremental improvement. Steve Jobs was said to have a “reality distortion field” that allowed the organisation space to create whole new paradigms with products such as the iMac, iPod and iPhone. They truly led the market by understanding consumer needs – not at a “focusgroup” level by responding to what is said – but by looking beyond the surface and harnessing this as a driver of wild organisational imagination.

I hope we haven’t seen the beginning of the end of the Apple of old and the beginning of a more “corporate” less outstanding company. Either way the pressure on Tim Cook and his team won’t be any less tomorrow than it was at 12.55pm today. I wish them luck.

If you liked this blog then why not sign up to my feed or leave a comment!

UPDATE: I’ve just been reading the first analyst reactions and they seem positive towards the iPhone 4S but not from an innovation perspective but rather because of increased distribution via the deal that Apple have struck with Sprint. Whilst this undoubtedly increases the addressable market my fear is whether this indicates that going forward Apple’s growth under new CEO Tim Cook will be less about game-changing innovation and more about business tactics. Is this always the way when a numbers led CFO takes over from a visionary founder?

Justin

justin@basini.com

MISSION STATEMENTS AND THE TRUTH

As rare as a diamond is finding a mission statement that reflects the real purpose of a business.

It is rare to come across a corporate mission statement that mentions making money.  But businesses have a responsibility to maximize return for their shareholders so why is it shied away from? Because most businesses have lost the honesty and bravery needed to present the value equation to customers transparently: we make a fair return when you get a good service. And that’s because many businesses don’t make a “fair” return but they “game” the consumer and make extraordinary, unjustifiable returns and in many cases they don’t deliver a “good” service but a poor one.

Even more unusual is a mission statement that actually inspires. Most corporate mission statements are complete and utter rubbish, full of stereo-typical and generic promises that mean little to anyone.  They rarely tell you what the businesses does or what it cares about but rather reflect what the corporation thinks we want to hear.

Perhaps it is time to sit back and think up powerful mission statements that represent the truth about making money for delivering new, exciting and good products and services to our customers. Then we can ask  ourselves whether this truth inspires us to get up in the morning and go to work.

For the complete guide on how to create trust in your businesses and brands get your copy of Why Should Anyone Buy from You? BUY NOW

“DON’T I KNOW YOU?”

My wife needed to buy a present for a christening a couple of weeks ago.

She wanted good quality and reliability and thought of a shop called Halfhide in Wimbledon which her mother used to visit.

She walked in and an assistant politely asked her if she could help and began to help her choose. It was up to this point a good, generic retail experience.

Then the owner walked in. He looked at my wife and said, “Now don’t I know you?”

“Don’t you have two sisters?

That’s right, you went to Wimbledon High School,

didn’t you marry a guy from Wimbledon College?

and haven’t you got children now?

And Judy – she has moved to Australia right?

Now when was the last time I saw you?”

My wife replied, “….about 20 years ago.”

“Well give my best to your mother and family, now how can we help you?”

This feat of mental CRM was so impressive my wife has told many people. This small business owners interest in and care for his customers has delivered loyalty through generations of families.

Now why can’t big businesses replicate this experience? Because they are big, aren’t interested and don’t care. They throw money at the problem and spend millions on complex CRM systems but it’s not just the knowledge that matters, it’s the attitude that goes with it.

The CRM relational database might be easier to manage, develop and measure, but it’s the relationship quality that makes the difference. Where is the balance of effort and expense in your business – on the system or the people?

If you have a great or poor customer services story please leave a comment below.

Thanks

Justin

P.S. If you liked this story then why not get my blog delivered FREE?

A TALE OF THREE LAMPS

This lamp is cheap at £7.99 and feels cheap

 

 

 

 

 

This lamp is expensive at £49.99 and feels expensive

 

 

 

 

 

This lamp is quite cheap at £12.99 but feels expensive

Why does it feel so expensive? Chrome styling helps but mainly it’s because of the addition of a VERY heavy base which makes it weigh alot. This makes it feel more luxurious and akin to the very expensive lamp. You feel like you are getting alot for your money as you lug the heavy box out of the shop.

It’s often the subtle, cheap to implement signals that you build into a product which break the price-value equation for the consumer giving your product an advantage in the competitive marketplace.

What subtle signals of product and brand quality are you building into your product?

If you liked this blog why not sign up to the Re:Thinking Marketing & Brands feed ? Got a view – leave a comment below.

Thanks for reading,

Justin

BRANDS: MORE THAN JUST PRODUCT QUALITY

Gone are the days when brands were just guarantees of product quality assuring the consumer of safety and efficacy.  Nowadays, given almost universally high product quality and often strong regulation to underwrite it, brands take on myriad other roles in consumers’ minds:

  1. Brand is a store of trust –summarizing a range of qualities and experiences that have been promised and delivered (or not) over the years.
  2. “Grease” for the transaction – brands and the trust in them reduce transaction costs between buyers and sellers – they make life easier. In our information rich world we are overloaded and brands certainly are a useful shorthand for the qualities we are looking to find.
  3. As a guarantee of consistent values – the best brands and the organizations behind them are always consistent. Through consistency the right expectations can be set with credibility and followed up by delivery. Consistency also allows the brand to become a tool that can engage, be shared and command loyalty from its consumers.

Trust has a central role that runs through all the other characteristics of a brand. Without it, brands have to try much, much harder, which means spending more and more to convince the consumer of their credibility rather than making promises that you can ultimately deliver.

How does your brand and business rate as a store and creator of trust?

For the complete guide on how to create trust in your businesses and brands get your copy of Why Should Anyone Buy from You? BUY NOW