The terms “communications” and “marketing” are often used interchangeably despite being two distinct fields. Although they share some similarities, they serve different purposes.
At a high level, marketing promotes and sells a brand, product or service to customers. It includes market research, advertising, public relations, branding and sales. The main goal of marketing is to increase sales and profits.
On the other hand, communications involves creating and managing relationships between an organization and its various stakeholders. This includes establishing the communications ground rules that will influence the perception of a brand or product. The primary goal is to build and maintain trust and reputation.
Having worked in the communications field for more than 30 years, my time was primarily focused on the strategic communications side, while spending about a decade at least partially on the marketing side. Make no mistake, each field is important for the other’s success and often overlap in practice, but banks need to plan for both to achieve any larger strategic goals.
Communications and marketing are not the same but they are better together.”
Common misconceptions
When I speak to people unfamiliar with the two fields, a common misconception is to place a focus on building a marketing only strategy. People oftentimes use McDonald’s, Coca-Cola or another behemoth’s marketing or advertising budget as a case study in how to prioritize their own strategy, however this usually results in limited success at best. That’s because those companies actually spend enormous amounts of time and money on their communications strategy, though not in obvious ways.
For example, Coca-Cola was created by Atlanta pharmacist John Pemberton in 1886. Many marketing professionals today claim the taste, the timeless bottle, its beautiful script or creative marketing and advertising schemes really sold it. That’s not at all true though.
People first drank the product because Pemberton convinced experts the drink was a tonic for most common ailments that also happened to be highly addictive — of course, that was because of the liberal use of cocaine and caffeine-rich extracts of the kola nut in the original recipe. Although the cocaine was replaced by copious amounts of sugar from the formula around 1903, perception of the product had already been widely established. Today, their marketing is still fundamentally built around the satisfying perception from the original high and continues to sell that experience. Ahh.
What you don’t see is Coca-Cola updating and reinventing their communications strategy for new consumers, mostly away from the public eye. The New York Times revealed in 2015 that the company was funding academic research that would minimize the effects of sugary drinks on obesity. They also funded research that shaped public discussion on calorie intake rather than sugar consumption. While some methods are quite controversial, they are not unique to most industries or companies because of its effectiveness. (NOTE: Nothing against Coke products — I single handily support the Coke Zero trade west of Austin.)
Where’s the trust?
Here’s the problem statement for banks today: Why don’t more people use or trust bank services and products? Is this something banks should even be concerned about?
According to Gallup’s American Confidence in U.S. Institutions for 2021, two-thirds said they have some to very little confidence in banks. That confidence dropped from 33% in 2021 to 27% in 2022. FDIC’s 2021 National Survey of Unbanked and Underbanked Households also showed 21.6% of people don’t bank because they don’t trust them with their privacy or the institution outright.
Houston, do we have a trust problem?
Let’s assume most people have been exposed to some advertising highlighting the benefits of banking through any number of advertising channels out there. The follow-up question then is: Why is it trending this way? In my professional opinion, it’s because marketing isn’t enough.
Communications strategy
Banks need to have a communications strategy to win over new stakeholders. The good news is that implementing a strong and effective communications strategy is easily scalable — meaning you don’t need to chase a global strategy; you can accomplish one that is built for your hometown or area of operations. There is plenty of existing and ongoing data to support this strategy today, meaning there is no need to fund questionable research.
Banks have already faced this challenge successfully in the past. Large scale financial disasters have come and gone before. Customers didn’t just go back to banks the next day, they had to be convinced — something needed to happen to re-establish trust. Policy changes, assurances, accountability, FDIC, etc., something had to provide banks a new narrative to rewrite the ground rules that allowed them to rebuild trust, then market their products through that lens.
What has your bank done to build trust with new and existing customers? Keep in mind that when you are not actively establishing the communications ground rules, others are happily filling in that gap for their own benefit. For example, in his first Texas Banking Chairman’s Forum column, Ford Sasser wrote about a customer’s son who wasn’t interested in having a bank account because Venmo was faster. We have to wonder if this young man ever learned how much safer banks are with his money than FinTechs. This isn’t a marketing issue — this is a communications gap.
The important thing to remember here is that communications and marketing are not the same but they are better together — each enhances the effectiveness of the other.