Westpac compares rate rise to cost of bananas
Westpac has launched a PR campaign to its customers, sending them an email with an accompanying animated video justifying its interest rate rise by comparing it to the cost of bananas.
The email was sent after the bank lifted its standard variable mortgage rate by 45 basis points last week – nearly double the Reserve Bank’s 25-basis-point increase earlier that same day.
The voice over in the video tells customers that “once upon a time” there were big fields of banana crops, but a storm came and damaged the crops, diminishing supply. He goes on the say that because of the storm, the price of bananas went up and it then cost more to make a banana smoothie, in turn pushing the price to buy a smoothie up by 50 cents.
Wow – what a massive condescending own goal giving this story even more legs. Unbelievably they claim it was originally produced for internal use – no wonder the sector’s got problems if their own employees need kids explanations of their business.
I’m guessing they are ‘A bank you can bank on’ if you’re a shareholder – shame for the customers.
Disgraceful, condescending, contemptuous.
If you’re a customer of Westpace, I call on you all to visit a branch in nappies and sucking a dummy today, because that’s how the bank sees you.
At some point most companies make decisions that they know are going to be unpopular with their customers. Few support them with banana analogies. What the fuck were they thinking?
….although I suspect they wanted to ‘batten down the hatches’ rather than ‘baton’. Sub eds, these days, eh?
“We need to baton down the hatches but still ensure our foundations are safe for future storms.” Hmm, lets see their Profits and Cash status, shall we…http://www.asx.com.au/asx/stat.....d=01011329
It’s a little bit like comparing agency workers to dogs. I am still laughing at the posts relating to that article. For me it is my Mumbrella highlight of the year.
I think banks would get more sympathy about the cost of credit if they weren’t posting profits in the billions of dollars and effectively running a monopoly business guaranteed against failure by the government.
Not quite the same for banana producers.
Film no 2.
An allegorical tale about pouring petrol onto the dying embers of a fire, featuring the Wiggles
So what Westpac is saying here is that previously they had not battened [note spelling!] down the hatches to protect against grey animated storm clouds, but had assumed that red animated dump trucks would magically solve their problems.
Curiously, the Macquarie Dictionary lists another meaning of batten, “to become fat”, and a phrase “to batten on” meaning “to live in luxury or prosper at the expense of (others)”. Indeed.
Fark… what a steaming pile of condescending sh!t. I don’t know many milk bars that turn $3.4 billion profit…
This video comes across as though the bank is crying poor…. while still making $3.5 BILLION during the “crisis”. Poor Wespac.
I know there’s some shyte out there, but who at Westpac actually approved this?
And which agency did it? The Palace? Lavs? Or someone else?
We need answers – and at least one scapegoat!!!!
Am sorry, that is a big L
Hah! Crikey has just published Crikey clarifier: the difference between home loans and banana smoothies by Adam Schwab.
A sample:
At the time of my earlier post, I’d yet to see the actual video, and was commenting on quoted lines and context.
Now I’ve seen it, I feel like I’ve just been spied through the magic mirror on Romper Room. How old and simple do you think your customers are, Gail?
This is one of the most reprehensible ways of communicating an issue that I have ever seen as a marketer.
I find it mind-numbing that executives, paid very well indeed by the very profits that are boosted by their rate rises, actually signed off on this as a right strategy to engage and communicate with their customers.
Westpac really have shown contempt for their customers by saying that they needed to weather the storm by stealing their socks so generations beyond can also hear how much after tax profit they’ve banked.
It may contain facts (although the comparison to banana prices is so far off to be laughable), but the tactical execution really is appalling.
Tim, this surely must go down as a massive PR disaster and beacon for how never, ever to deal with negative public sentiment.
I don’t know about everyone esle, but was the sound as muffled as the logic?
Sure I understand that A+B =C. It’s just that when A+B = 2*C that I get confused. I wish they would use that sort of maths when making deposits!
wasnt it the case that interest rates increased as the economy got better?.. and the red trucks were helping them to keep the rates artificially low..
You can bank on the fact that they all came up with that one.
Yes, it was presented in an extremely condescending way, compounded by the simplistic graphics and horrible analogy, but I have to ask:
Does anyone here really believe that a similar over-simplified explanation is unwarranted? Perhaps it’s your own view of the world which is somewhat restricted by the people you deal with every day, because I can tell you, the world I see every day is packed full of some mighty simple people.
Some of them might feel slighted by the ‘play school story time’ nature of this video, but if you asked them to explain the concept prior to seeing it, I’m willing to bet mortgages to bananas that they couldn’t.
I wish for a minute that this site were frequented by the kind of person I’m talking about. The kind whose idea of financial planning is putting $40 aside for a slab on the weekend. You all would be in the extreme minority.
Is it a hit? was it well done? was it even particularly accurate? No… obviously not… but I do believe the occasional over-simplified message is necessary, as I think /most/ people glaze over between the sport and the weather forecast, when watching the news.
Most people are disengaged and therefore ignorant. I won’t say stupid, even though that’s the word that first comes to mind.
let’s get one thing straight – this was not a PR campaign – it’s direct marketing
the lack of PR sensibility by the marketing people is astonishing and provides solid evidence as to why marketing should report to corporate communications within organisations
Of course Westpac expected to cop flak over the 20bps rise, but probably thought this would pass
What they didn’t expect is that marketing would ensure people remembered being shafted
The email video is a good way to make a direct point re moving in lock-step with official rate rises, because as Milorad said the target audience is unsophisticated
The problems are the banana smoothie analogy, which trivialises the importance of rate rises to the average mortgagor, and the timing – it comes at least 6 months too late in the cycle and right now it only highlights that the most recent rise is just greedy
Marketing may have assumed that the average punter won’t read the bourgeois press – but the extra 20bps story got carried everywhere in print and online
oh, and it makes marketing’s spend on millions in prime time TV look incredibly stupid as well
research studies conducted in the late 1990’s in the US by AT&T’s Public Relations research department suggest:
* when there is ‘normal’ news coverage, news and advertising work together, and incremental advertising has a positive impact on attitudes
* in times of widespread and extremely positive news coverage, the incremental positive impact of advertising is much less than in normal times
* in times of widespread and extremely negative news coverage, incremental advertising does not have a positive incremental impact, and may even have a negative effect
* advertising can, and should in some circumstances, be ‘turned up and down’ according to the level of unpaid news coverage
This makes me very angry. For, they knew that securitizing loans out of sub-prime mortgages was fanning the growing storm. F-wits!
Aidan – part of the problem was that sub-primes were not being reported as sub-prime by the (American) lender, and therefore attracting more investment than they would have otherwise. Off-topic I know, but important.
I also think the popular assault on their 3.5bn proffit margin is misunderstood. Shareholders are only shareholders because the shares remain attractive. If they were a co-op instead of a company, their profits would be extremely low and customers would be better off in the short term, but they would attract no investment whatsoever. Nobody would buy into westpac if there was nothing in it for them, and soon enough there would be no westpac.
“but why do the profits have to be so high?”
Because that is what attracts from the market. To beat this poor stinking analogy to death: If you were buying a banana, would you rather a fresh bright yellow banana, or a spotted brown one? The bank needs to keep itself looking nice and appealing in order to avoid rotting.
Believe it or not, that IS better for all of us.
Aside from the obvious condescending tone, it did make me wonder if all Bananas were indeed produced on small island’s located in the tropics…
after some a brief bit of research apparently not…India takes the (banana) biscuit http://en.wikipedia.org/wiki/Banana
Or was that ‘small’ island supposed to be a graphic representation of Australia – a relatively small banking market (island) by international standards in which they (man with watering can) control, along with the other 3, the majority of the market (the 2 x banana trees)…
Do they really believe that the customers care? Fail!
Westpac is my mortgage lender and I am outraged at its condescending BS about its over the top rate rise.
Bananas go up in price when there is a major weather disaster or crop failure and that’s understandable as it’s all about supply and demand since we are on a remote island.
The banking sector is 100% responsible for the recent world recession, and their ill-thought out financial decisions have brought some of the most respected financial institutions in the world to their knees (RBS in the UK)! This rate rise will add a reported $235 million to Westpac’s multi-billion dollar profits this year. When will banks start caring about their customers and not just their shareholders? And why is it that home owners are the ones that have to foot the bill every time the government and the RBA want to control inflation?
The quote from one of Westpac’s senior execs yesterday that “Westpac is not the Jetstar of the banking world” outraged me even more than this direct marketing campaign crap, though I haven’t actually received it from them – I wonder why?
I have been in contact with other lenders to seek a better deal and I will take my business elsewhere, which I have told Westpac today. NAB is looking likely to get my vote since its increase was the lowest.
i got a letter from Peter Hanlon, says “The money we lend comes from two sources.” bla bla bla Hey Peter the money i borrow can also come from more than one source. so i will be changing loans asap
So that’s why bananas are so expensive. At least I have learnt something. Thanks Westpac! (Note sarcasm).
As a home owner paying off a mortgage, i find this completely insulting. I may not be an economist, but having been through the process of comparing banks on home loan rates, making applications, and jumping through the thousand hoops they put up to get approval, i like to think i know enough about interest rates to not be spoken to like a mong with crayons.
B – A – N – A – ANUS