According to one study, financial companies represent the third highest industry in number of mergers, only behind industrials and technology. When two companies merge, the challenge becomes navigating confusion with consumers and staff alike. That’s where a strong, predefined brand architecture comes into play because the worst thing to hear is, “So, what is it that your company does again?”
Brand architecture is a fundamental aspect of your company’s identity and marketing strategy. It shapes how your products or services are presented to the world and influences how customers perceive your brand and its sub-brands. In the financial services industry, which relies heavily on customer trust, a well-structured brand architecture is imperative as it fosters that needed trust.
Understanding brand architecture in financial services
Think of brand architecture as a blueprint for brand identity. It defines how various elements of your brand, including your company’s master brand, sub-brands, and individual product or service brands, relate to each other. Until you define the relationship between your brands and how they interact with each other, it’s hard to target the right audience for each product or portfolio. The ultimate goal of brand architecture is to create clarity, synergy, and leverage, optimizing the hierarchy, linkages, and identity systems within your brand portfolio.
The three primary brand architecture models
A successful brand architecture starts with an “umbrella” brand at the top like on a family tree. Building or maintaining this core brand should be your highest priority. After that, a decision must be made as to what type of brand architecture will be sheltered under that umbrella. There are three primary brand architecture models that companies often use and the main difference between them is the role the umbrella brand plays.
- In the Branded House Model, all products or services are commercialized under a single, powerful master brand. This master brand serves as a key point of reference, driving customer relationships and enhancing brand equity. This model provides clarity to customers because it offers an easily understood set of offerings with a clear message. Additionally, it provides synergy between products, as they all share the positive associations of the master brand. When deciding to use the Branded House Model, consider if your target customers are similar enough that they can be effectively targeted with one encompassing brand. Keep in mind that all brand-building efforts should focus on growing and enhancing the strength of the master brand.
- In the House of Brands Model, all products or services are commercialized under different, independent brands with little connection to the parent brand. This strategy allows for targeting unique customer needs, entering new markets, and distancing brand products from the master brand’s association to reduce risks. A prime example is Procter & Gamble (P&G), known for maintaining this brand architecture to focus on brands in growth markets or with substantial revenues. This approach offers advantages such as ease of positioning brands based on functional benefits and the ability to target multiple segments. However, it comes with the disadvantage of sacrificing economies of scale and the risk of stagnation or decline for segment-specific brands.
- The Hybrid Model combines aspects of both the Branded House and House of Brands Models. In this model, a company uses its master brand in a driver or endorser role for some offerings while maintaining stand-alone commercial brands for others. Companies use this model flexibly according to their business strategy. This approach can allow sub-brands to infuse the master brand with associations, expand into new businesses, and efficiently leverage the corporate brand. However, it also requires significant investments in managing multiple brands and can lead to issues when a crisis affects one brand, potentially harming the master brand’s reputation.
For this article, we’re going to talk about the Branded House Model (such as Apple as the umbrella brand and Apple Watch and AppleTV as the sub-brands) and how it relates to the financial services industry.
Benefits and strategies of the Branded House Model
A clearly defined branded house architecture, developed with a strong understanding of your market, customers, competitors, and employees, should perform well and build trust with your audience. The consistent user experience helps minimize confusion. Each sub-brand will both build and leverage brand equity from the umbrella brand. You can segment messaging to distinct audiences to enhance customer engagement, e.g., your high-net-worth customers probably aren’t interested in your auto loan division.
In today’s world where financial institutions are competing for customers on multiple fronts, the significance of a strong brand architecture cannot be overstated. This is particularly evident after a merger, where a mere logo update won’t suffice. Existing and potential customers must be educated about and reminded of your brand and what it offers as well as how it fits into the new organization. The Branded House approach enhances brand loyalty, drives customer relationships, and increases the overall brand value. Additionally, it enables efficient use of marketing investments and provides credibility and leverage for the master brand across various contexts, ultimately delivering a competitive advantage in the marketplace.
While many people think of brand architecture as externally facing, it also helps to ensure all your internal stakeholders are on the same page, reducing confusion and making it easier to work together toward common goals.
- Advantages of the Branded House Model in financial services:
- Clarity for customers.
- Efficient use of marketing investments.
- Credibility building for the master brand.
- Leverage of brand strength across different contexts.
- Challenges of the Branded House Model:
- Negative correlations can arise.
- Challenges in targeting unique customer segments.
- Requires consistent brand meaning and messaging across categories.
Best practices for sub-brand naming, visual identity, and messaging
Sub-brands typically possess their own logos, portfolios, products, and services but maintain the umbrella brand’s color palette, messaging, imagery, and brand strategies for a consistent experience across all touchpoints. We recommend using a messaging framework that holds your umbrella brand’s promise, positioning, and voice. Instead of just incorporating your sub-brands into your company website, consider also using a common customer relationship management platform (CRM) and a common content management system (CMS) for sub-brand landing page(s) and emails to ensure coherence and consistency.
Leveraging your financial services brand
Customers who trust and believe in a brand tend to be loyal. And trust is a hallmark of a successful financial services company. According to Forbes, your banking and financial customers are looking for three things to earn their trust:
- They want a personalized experience with your brand;
- They expect a seamless digital experience; and,
- They expect transparent, relevant, and empathetic communications.
In our experience, we would emphasize the third bullet with clarity around a brand. Let’s face it, within the financial services industry, there is a lot of commonality with color, slogans, and products. Brand confusion when customers mistake your brand for another company with a similar name or logo can damage your reputation, sales, or customer loyalty, especially if the other brand is inferior.
Holding your umbrella firmly over your sub-brand offerings will go a long way in recognizing a quality product or service because you worked hard to create a solid core brand. Your umbrella brand’s values and consistent message will present itself as reliable and credible, especially if it is through open communication, positive experiences, and creative marketing.
Evaluating brand architecture success
One way to measure the success of your brand architecture is to look for any gaps or overlaps. Are you missing out on potential customers or market segments? Are you competing with yourself instead of your competitors, or worse, confusing your customers? Once you’ve identified opportunities to enhance your brand, take it a step further by using your blueprint to see, hypothetically, what would happen if you made a change. It’s important to note that brand architecture is not static; it’s dynamic and flexible and should evolve as your business grows.
Let’s recap
In the financial services industry, recognition is important, of course, but trust is the real issue. And the best way to build trust is to be well-organized and transparent to provide a positive experience with your brand. A solid brand architecture highlights differentiation against competitors and allows growth. Whether you organize your sub-brands into a Branded House or House of Brands, make sure the structure helps everyone see the bigger picture so they can purchase confidently or work seamlessly with one another. The clarity of a brand blueprint doesn’t just happen on its own, it takes time and effort from within. The work you put in to building—and maintaining—a strong brand architecture will set your company up for success in the future.
We’ll leave you with one thought: Eliminate confusion by providing structure.
At ddm, we’ve been helping clients do that for over 30 years. We’d be happy to have an informational chat whenever you’re ready.