The Differentiation Gap

Recently I made the closing presentation to a financial services conference. All of the attendees worked in marketing.

One of the forecasts I emphasized was the role of differentiation in the field. I believe that many business to customer enterprises have deemphasized distinguishing identity in their markets until they have become virtual clones of one another.

Financial services is one of those fields where there is little differentiation. Market share is gained largely through one of two means: mergers and rate cutting. Customer loyalty is influenced largely by the pain of moving accounts. You don?t want to change your checking accounts because of the hassle.

The best performers in the sector have strong differentiation. Take Commerce Bank which operates in the Northeastern U.S. It bills itself as ?America?s Most Convenient Bank? and lives up to the description. It moves into new markets by covering the area with new brick and mortar branches run more like fast food franchises than your traditional, limited-open-hour, get-in-line, under-staffed financial institution. Deposits pour in. It?s almost as if banking customers were waiting for Commerce to come to town.

This is not the only model that works. In my work in the sector I?ve advised on strategy to organizations that differentiate through deep community involvement, multiple lines of complementary services, deep intimacy with customers, ?private labeling? alliances with the workplace, picking profitably niches, operational excellence, and a .

It?s not complicated.

But over 95% of financial service providers offer the same old lines in the same old way. Why?

One part of the answer was obvious to me as I stood in the meeting room after my presentation. Over 25 marketing firms paraded to the podium to give away door prizes and deliver a couple of sentence ?elevator speech? for their company. Every one, without exception, made a statement that had only two ingredients. ?We?re a full service marketing firm that specializes in financial services.?

If the advisors and so-called ?creatives? in a field don?t see or understand differentiation, how can the players be expected to grasp the concept?

In the next decade organizations that understand how to distinguish themselves in the marketplace by addressing and solving customer problems and providing the needs not met by competitors will thrive. Take an honest and direct look at your own strategy and consider how well your firm is differentiated in the market.