A Boston Consulting Group exec was recently quoted in American Banker as saying that financial services firms could do even better if they raised the bar on innovation — a view shared by Matt at The Boulevard to Retirement.
What do consumers think? According to Forrester’s research, not a lot. Just 18% of the consumers they surveyed said they would use the word innovative to describe their bank. Investment firms scored a little higher at 26%.
Which banks had the highest percentage of customers considering them to be innovative?
In first was SunTrust with 27%, followed by Wachovia with 24%, and credit unions at 23% (note: Forrester doesn’t ask survey respondents to identify the specific CU they do business with, so responses are attributed to credit unions in the aggregate).
And in the ranking of investment firms whose customers consider them to be innovative, CUs again came in third, behind Ameriprise and Charles Schwab.
My take: These findings should make some CUs reconsider their marketing messages. By focusing their marketing on the service aspects of CUs (which, according to Forrester, CUs already score very highly on), their marketing messages are preaching to the choir — and doing little to convert the heathen. The Forrester data raises two marketing considerations.
First, it raises the question of how well CUs tout their (perceived) innovations and how aware bank customers are of what CUs are doing. I don’t mean to downplay CUs’ efforts by qualifying them as “perceived” because there are plenty of examples — from using biodegradable corn plastic for membership cards for new members at one CU to interest-free energy loans at another. But I’ve found out about these efforts on sites like CUES and Filene Institute — which I doubt are read by consumers looking for new financial providers.
Second, it raises the question of how well CUs really understand why their members perceive them to be innovative in the first place.
I’d bet that, with some consumers, it’s a halo effect. A member has a strong emotional connection to her CU and gives it high marks across the board — even if she can’t identify anything she would consider to be innovative.
But for other members, something about their CU is causing them to consider their CU innovative. And my hunch is that, in many cases, it’s not some big, earth-shattering, disruptive innovation, but something that CU execs wouldn’t have thought their members would even consider to be innovative. (For a good discussion of different types of innovation, go here).
CU execs need to better understand their members’ perceptions on CU innovation. Doing so could give them a much-needed opportunity to break away from the “this amp goes to eleven” marketing strategy many CUs employ today. (It’s a reference to a line in the movie “Spinal Tap”).
Here’s what I mean: Many CUs say that they “compete on service”. But when that strategy doesn’t deliver the market growth and profitability they’re looking for, what do they do? Change the strategy? No. They “turn the amp up to 11” and scream even louder about their superior service.
Successful marketing is about exploring — and exploiting — the opportunities hidden in the nooks and crannies of the marketplace. This innovation perception could be one of those opportunities for credit unions.