How sincere are brands, really?

What I find incredibly interesting is watching the attitude of brands during an economically challenging period. Recent months have seen media littered with talk of rising interest rates, inflation, global food and fuel crises, rising petrol prices, rising food prices, electricity rate hikes etc. etc. I believe we have only seen the start of a very new way of living or era of consumerism and one that we are certainly not accustomed to and are hence, under-equipped to deal with.

Bearing the brunt of the recession are consumers. While challenged to make purchases that once seemed regular, consumers are faced with companies or brands that are more dependent than ever on their loyalty, while still aiming to meet the objective of every business or brand: to grow and increase or maintain profit margins. The latter becomes a lot more challenging as consumers wisen up to their new financial limitations and are less likely to investigate new brands confidently.

What brands need to do is defend their existing customer base and prioritise the retention of loyal customers over immediate growth. This isn’t always easy and cost-effective, but it is certainly necessary in order to increase trust in a brand and hence commitment to it long-term, through economic instability and until conditions balance out.

I believe that it is imperative that brands take responsibility on behalf of consumers during times like these over goals of short-term growth and profits. However, I do not believe that all brands do.

First, it is evident that retailers are suffering the immediate consequences of an economic recession and continued customer support is necessary for sustainability. However, more aggressively than ever, retailers are attempting to encourage consumers to take out retail credit accounts. While this system allows a way for people to afford certain items by paying the value back over time, it is certainly not encouraging responsible consumer behavior, nor is it instilling any brand values into the minds of consumers that demonstrate care or consideration.

To accentuate this is the fact that a majority of account-holders are likely not in a position to be purchasing goods from the selected retailers, but credit or account systems make consumers feel like they are. Completely contrary to the mission of the Credit Act is this system, which subtly encourages consumers to spend in advance as opposed to helping train them to function the other way: save and then spend. Furthermore, the slight mismanagement of any retail account is monitored and recorded, affecting that person’s ability to make larger and often significant investments in the future. These systems are accelerating credit debt when the aim should be to combat it.

From a branding perspective, this demonstrates brand values that are irresponsible, profit-driven, selfish and uncommitted- essentially counter-values.

The second example I have is regarding one of South Africa’s leading banks. It is obvious that the business has been accelerating its marketing of a scope of products in order to subject existing customers to a larger offering, likely with the aim of customers extending their investment in one brand as opposed to across many. For example, banks offer savings solutions, investments, short-term insurance, life insurance, mortgages and bonds, loans, student facilities, car funding etc. A colleague of mine was contacted by his bank and told that he really should consider applying for a credit card. He said that he is quite happy with the way he spends his money currently and has no need for credit at this stage. The person who called him insisted that a credit card would benefit him because he has proven to be a responsible customer, who has managed his money effectively and responsibly.

We told him to tell the caller that it is irresponsible for a leading bank to be insisting that customers consider offerings related to credit spending during an economic recession. I stick to this and feel that it is a method of securing long-term spending with the bank in the name of profitable sustainability. From a business perspective this seems like a perfectly wise solution, but the brand will ultimately suffer and it will in turn affect the business in the long-term. Acknowledging a customer’s mature money management is a ridiculous way to disguise the blatant sale of credit. If anything, the brand should acknowledge good money management by discouraging consumers to change mature and successful patterns of spending. The brand would be a lot more respected and I wouldn’t have “Inspired to make money and motivated to get it” ringing sardonically in my ear.

It may seem very easy to comment on profit versus values, but I honesty believe that working hard through tough times to really demonstrate a brand’s values and entrench its commitment to customers will result in increased brand loyalty and ultimately more secure long-term sustainability.

Are we up for the challenge?