It’s been almost three years since Wells Fargo paid a $185 million settlement to atone for deceptive and illegal sales practices. Despite a new board chairperson, directors, and CEO (each of whom has pledged to clean up the bank’s act), the firing of 5,300 employees, and an apologetic new brand campaign, the bank remains in turmoil. While its stock price has increased by 16% since September, 2016, that’s paltry compared to its major rivals Citi Group, Chase, and Bank of America, who posted 47%, 70%, and 92% increases, respectively, for that same period.
William Keppler, Professor at Columbia Business School, described Wells Fargo as “Still trying to sweep up broken glass – but finding it all over the place.” Recent brand research conducted by Galapagos has discovered a few more shards – and a sobering example of the power of brand reputation.
Our Brand Awareness and Reputation Research project for a western states client revealed more depressing news for Wells, but a great opportunity for community banks that compete with the giant.
The survey indicated that, while consumer aided and unaided awareness of Wells remains strong, its reputation in the minds of consumers and small business owners has declined 25% from the previous year. The impact of this decline can be seen in two revealing KPIs:
Market Performance: Between June, 2016 (right before the scandal broke) and June, 2018, the western states market, as a whole, grew 11.9%, while Wells reported growth for that same period of only 2.4%. Wells’ market share was 23.7% in 2016 and has dropped 8.4% in the following two years.
Consumer Purchase propensity: Because of the drop in reputational value, far fewer consumers state that they will consider Wells for their next banking need:
The experience of Wells Fargo is an extreme example of the importance of brand reputation, for sure. Knowing what both your brand and your competitors’ brands say, and how they are perceived by the market, is important information to gather. In the case of our client – and any community bank competing directly with Wells Fargo – it also points to a wonderful opportunity to target a competitor directly and capture customers who have lost faith in their bank.
For more information on brand research – or for help in putting together a marketing strategy to target Wells Fargo customers in your markets — contact Galapagos.