Ultimately, a brand is the things people say about you when you are not there. With so much brand jargon and hype in Jordanian business these days, it is hard to understand what a brand really means to a business.
It is often associated with slogans, advertising campaigns, logos, and organizational names. However, a brand is much more emotional in nature since it is tied to ideas of reputation, trust, and quality of a firm. We follow the view that a brand is what a person feels after repeated interactions with any aspect of products or services. Since the brand is so connected to what your firm stands for in the minds of your key customers, it represents a promise that the firm makes with its clients to deliver a set of experiences.
Brands like Fine, Wanadoo, Fastlink and Aramex are successful because they deliver time and time again on the promises they have made to their customers. These companies have recognized that their brands are a strategic asset to be carefully managed over the long term.
The importance of brands in business
If brands are a strategic asset, then how do they impact business? "Strong brands affect business performance," said Ala Joseph from IBM Business Consulting Services. "Not only do strong brands result in better investment performance, but they also decrease acquisition costs since customers are more likely to repeatedly purchase a product that they have come to trust and to whom they have demonstrated loyalty."
Indeed, the strengths of these relationships directly affect the bottom line: evidence shows that it is much more expensive to acquire a customer than to keep one.
From my experience, there are multiple competitive advantages associated with strong brands. First, clients are more willing to pay a premium price for strong brands. Second, a strong brand simplifies client choices.
Once a client has purchased a brand, they will not need to go through the entire decision-making process again, but instead will rely on past experience to guide them. Strong brands, thus, help to reinforce clients' decisions to choose a firm and stay with them over time. The benefits of strong brands are not limited to external business performance; the organization benefits as well. People are naturally attracted to firms with strong brands, which translates to a better pool of talent applying for positions. Once employees join a firm, if they see evidence that the brand is managed well and is a priority within the company, they are more likely to have confidence in the firm and will consequently more strongly support management decisions.
This is particularly true and critical for the banking sector. Let's consider the recent re-branding hype within Jordan's banking sector, which was triggered by the Bank of Jordan re-branding initiative early in 2003/2004. This was followed by similar initiatives at the Housing Bank, Jordan Commercial Bank (previously Jordan Gulf Bank), Arab Bank and the most recent attempts by Jordan Export and Finance Bank to rename/re-brand itself as Bayt Al-Mal following the increase in capital in 2005, and by Jordan Investment and Finance Bank to re-brand itself as Istithmari. So, why are Jordanian bankers re-branding? One always wonders whether these are real strategic repositioning decisions or simply a matter of "everyone else is changing, so we have to change." Do they stem from a business need to differentiate, acquire new customers or retain the current base? Do they reflect a market necessity due to the entry of foreign competitors like Bank Audi and aggressive growth of foreign counterparts like HSBC and Standard Chartered?
The new brands are not unpleasant, but the positioning and image seem to have been left to advertisers without the supervision of a proper corporate brand manager, which unfortunately happens very often in Jordan's corporate scene. As windows to the world and to Jordanian customers, the new designs of certain identities connote a certain massiveness, absence of differentiated, well-thought positioning, and a lack of awareness of the client - all attributes that are probably not part of the desired positioning strategy. This is further complicated by the fact that boardroom decisions tend to be taken in favor of advertising mileage rather than a well-conceived branding process that could potentially maximize the return on investment, and hence, bring the bank closer to its target business objective.
Brand management challenges in banking services
While there are many business benefits associated with brands, it is interesting that so few local banks commit to actively and consistently managing their brands. In general, brand management poses several challenges in financial services:
Brand management is a relatively new concept for the industry
Brand relevance is difficult to maintain with so many client types
The similarity of product offerings makes differentiation more difficult
The client/advisor relationship, often the key to the industry, is hard to control
Industry trends have made brand positioning more complex
The idea of managing a brand is a new one for the sector in Jordan, as many banks and financial service firms have historically perceived brand management as only relevant to consumer goods. As a result, such banks and businesses are not likely to have strong brand management capabilities in-house. This is despite the fact that banks rank among the top three advertising spenders in the country. Thus, the opportunity exists for local banks to gain competitive advantage by investing in brand management, and enjoy the business performance benefits.
In addition to the challenge of the novelty of brand management, a bank faces the challenge of staying relevant to its many different types of clients in Jordan's financial services world. Banks serve a variety of clients with differing needs, which in turn makes it difficult to build a brand that is relevant to all groups.
However, financial service firms can transform this challenge into an opportunity to tailor a more comprehensive group of products to a specified client type. For example, the individual wealth management or private client at Jordan Kuwait Bank or HSBC not only benefits from the standard equity investments and ISA (Investment Savings Account) accounts, but also can take advantage of foreign exchange services and innovative products like equity-linked securities that were once solely the domain of business clients.
Another difficulty that Jordanian financial service firms face in brand management is the similarity of product offerings from firm to firm or bank to bank. Product innovations are short-lived since it is relatively easy to copy new product offerings. In fact, it was only a matter of days between the launch by the previous Jordan Export and Finance Bank (now Bayt Al Mal) of its special investment certificates offering that a couple of other local competitors followed. Another example refers to the different commercials trying to sell car purchase financing loans and offerings to the average Jordanian. All tend to have the same message and style, which only adds confusion to consumer choice and dilutes the impact of the bank brand in the customer choice decision. The result is that financial firms must find other aspects of their business, such as the client/advisor relationship, as a means to differentiate from the competition. The difficulty in differentiating based on product offering leads to the elevation of the client/advisor relationship to the most important driver of client loyalty.
This trend creates another challenge for Jordanian retail and investment banks, since the most influential way of reaching the client is actually the most difficult to manage. As a result, such financial service firms face the challenge of managing the process of educating client advisors and other staff who have direct contact with the client, to ensure that they deliver a consistent, branded experience. The investment in the advisor results in a virtuous cycle where front-line employees are more willing to engage clients, the brand is then strengthened, and employees become more enthusiastic about service delivery.
A final set of challenges in banking and financial services involves the difficulty of positioning brands in the face of industry trends such as the global/local debate and the recent hype around the need for consolidation through a series of mergers and acquisitions within the sector. The task of positioning a brand involves deciding which part of "what a brand stands for" will be actively communicated to the target audience. Many firms, from SMEs (small and medium-sized enterprises) to larger corporations, have encountered the challenge of highlighting global capacity and simultaneously emphasizing the ability to deliver locally tailored products. But can any entity compete with the HSBC claim? At the same time, the anxiously anticipated slew of mergers and acquisitions in the coming years would require financial service firms to make significant decisions about the relationships between their brands. For example, Arab Bank was tasked with integrating Atlas Investment Group in its portfolio. Both firms re-evaluated their brand positioning and thus, the components of their brand portfolios Arab Bank maintained the Atlas Investment name with an endorsement by Arab Bank.
Implementing brand management in banking and financial services
Given the opportunities to leverage brands in Jordan's financial services world, what are the basics to keep in mind when implementing brand management? The checklist provides a high level view to guide Jordanian banking executives.
Brand management checklist
Do you know what you want your brand to stand for?
Does the message your clients receive reflect your brand?
Do the messages your employees receive reflect your brand?
To what degree are the interactions with your clients guided by the brand?
Is the brand incorporated in organizational decision-making?
Although Jordanian banks face challenges the novelty of brand management, maintaining relevance to various client types, managing the client/advisor relationship, and the complexity of brand positioning the empirical benefits warrant investment of their resources, through building or acquiring the skills needed to achieve proper brand management.
© Jordan Business 2006
