KQ Article

A few weeks ago, my wife looked at me across the dinner table and said, “I think we should switch banks.” After picking myself up off of the fl oor, I could only summon a “Huh?” in response.

My wife has been a patron of the same bank since she graduated from high school. She knows the exact location for each of the institution’s ATM machines within a four-state area, and she could recite her customer agreement backward. Until now, the mere mention of switching banks has always bordered on blasphemy in our house.

There are two reasons behind her 180-degree turn. First, it’s because brands no longer feel safe. Second, it’s because peer information does.

BRAND LOYALTY NO LONGER EQUALS SAFETY
Decades of research prove that roughly 75 percent of people prefer to avoid risk by sticking to the status quo. This is true even when we don’t particularly like the status quo. At least every other month, our bank found some creative way to irritate my wife. First came the fumbled online transaction, followed by the additional rollback to an already laughable “rewards program.” And our patience wore thinner each time a teller pushed CDs on us in a branch. Yet, our loyalty endured.

This quirk of human nature is the cornerstone of the branding movement. The idea was that if you could turn your brand into a security blanket for consumers, then those consumers would stick with you even when the blanket started smelling like sweaty feet. Clinging to that trusty old brand — stench and all — simply felt safer to customers than switching to some new, lesser-known commodity.

But there is another quirk of human nature that defi es the assumptions of branding: People like new things. We like buying new clothes or new toys, and even the most cautious among us get a little rush from novel detours in our daily routines. New is exciting. In fact, nearly 80 percent of people say they prefer new experiences over the tried and true, as long as no risk is involved. The only reason we don’t habitually try new things is because we like safety even more than novelty. Sticking to what we know simply feels safer. Until it doesn’t anymore.

The recent collapse of so many stalwart institutions — especially in the financial services sector — has obliterated the sense of security that consumers used to feel with their once-trusted brands. And here’s the thing: the sense of security is an emotion, and emotions generalize. This means that loyalty to any brand no longer feels safe, even if your brand didn’t fi le Chapter 11. And if brands no longer feel safe, then nothing is stopping consumers from unleashing their inner novelty-seeker. They start looking around.

The same thing happened to employees during the downsizing epidemic of the 1980s. When companies began routinely cutting jobs, they simultaneously destroyed the sense of security that had long prevented employees from job-hopping. Loyalty to any company no longer felt safe — and since we’re dealing with emotions here, it’s the feeling that really counts. That’s how job-hopping became the status quo for workers. It’s also how brand-hopping is becoming status quo for consumers.

WEB PEER NETWORKS: THE NEW SECURITY BLANKET
Despite the new propensity for brand-hopping, the basic psychology of the consumer remains largely the same. People still want to feel safe. But what has changed is that advice from other consumers now feels even safer than it did before. Not only are fellow consumers more trusted, but they also have more reach now than marketers do. Each customer not only has instant access to a handful of people in the offi ce or the neighborhood, but also to millions of people from around the world thanks to the Internet. 

If people hear enough good things from peers about a different brand, they probably won’t hesitate to jump ship and give the new one a try.

That’s the real lesson about the new, Web-enabled form of social networking: hype is dead and substance is king. Facebook, Twitter and other digital peer-to-peer networks are trusted because they provide a forum for discussing real experiences, not marketing ploys. For banks and credit unions, the only way to make customers and members feel safe again is to give their fellow consumers an experience worth talking about.