I’ve probably talked before about how important advertising is during a recession, and how research (specifically a study by McGraw-Hill) shows that companies who do advertise seem to come out on top when the economy turns around again. And conversely, “if companies cut deeply into advertising and communications in a down period, the cost to regain share of voice in the market once the economy turns around may cost four or five times as much as the cuts saved” (Knowledge@Wharton).
A recent article titled “Advertising to repair banking industry’s image?” on Fierce Finance brought the issue to mind again. According to a J.D. Power and Associates 2009 Retail Banking Satisfaction Study found that since 2007, there has been a 6% drop in consumers who feel “highly committed” to their banks.
That’s not surprising, especially considering this year’s events. Fierce Finance notes that, “As the numbers decline, you end up with more customers willing to switch banks.” If there’s an increasing number of people out there actively searching for alternative banking options, then this is a critical time to be advertising and ensuring the visibility of your brand, not only to catch new customers, but also to solidify the relationship with your current ones. The article quotes a Marketing Daily expert who says that, “moving just 5 percent of customers from low and moderate levels of commitment to high commitment can mean additional deposit growth of more than 2 percentage points higher than average.”
This is why we’ve seen bank brands like Chase rolling out massive, expensive, geographically targeted campaigns. They realize that:
A) Former WAMU customers are probably at their lowest commitment level ever, and it’s going to take some muscle to keep them and to re-establish loyalty with a new brand.
B) In both their old and new markets, there are a record number of “uncommitted” consumers looking for new banking options.
Peter Fader, a marketing professor at Wharton, has stated that as companies slash advertising in a downturn, they leave empty space in consumers’ minds for aggressive marketers to make strong inroads.
What kind of inroads is your bank making?