Trust, and the perception of trust, is critical to Goldman Sachs. The recent civil suit brought by the SEC against Goldman Sachs is damaging for Goldman, not for the money involved, but for the perception of trust. Goldman’s motto/slogan/tag line is “Our client’s interests always come first.” The suit alleges that Goldman positioned a product that benefited one client while potentially harming others. While the facts will come out in court, the ongoing impression is that Goldman reneged on their slogan, showing favoritism to one party at the expense of others…perhaps exposing that only some of their client’s interests come first.

For any business a negative perception like this can be disastrous, in the banking business, which is built on trust, such a perception can be fatal, see the collapse of Bear Sterns as Example A.

Many other firms have similar advertising slogans:

• Wal-Mart – Wal-Mart. Always low price. Always. (What if someone undercuts them on price?)

• Southwest Airlines – Southwest Airlines. THE Low Fare Airline (What if there is another carrier with lower prices? Ryan Air?)

• Dell Computers – Dell. Purely You. (What if someone else, not me gets something from Dell?)

• IBM – IBM. Computers help people help people. (What if their computers hurt people?)

A significant investment in time and money has been spent by these companies in developing and honing these messages. In many cases it is part of their culture, embraced by the employees and often driven back to the company’s suppliers. As a result, the company is identified with the slogan by customers, investors, analysts and other stakeholders.

Dick has talked about branding here, and stresses the importance of a message or symbol and its relationship to a company. The concern for the CMO is when outside forces or his/her company’s practices run counter to the message. He/she is then faced with the problem of trying to reconcile the event/issue to the investment.

Looking at Goldman Sachs specifically, they appear to have two choices. One is to admit that they favored one client at the expense of others, settle with the SEC and risk additional civil suits. The other is to contest the suit, which will be litigated over months, with the publicity surrounding each step re-inforcing the tainted perception and with the risk that they might not win in the end. In either case they will probably have to review their slogan before it becomes a catch-phrase for Wall Street and/or appears on Saturday Night Live as a joke.

Compounding the issue for Goldman’s CMO is that they continue to show up on surveys of “10 Most Hated” or “10 Most Disliked” companies.  See here, here, here and here. GS’s image was already suffering before the SEC suit, and now it faces additional hits.  I have mentioned about the power shifting from to the buyer from the seller, which in the long run will influence the marketability of Goldman’s products.

Goldman is a seller of financial instruments, which ultimately are based on trust.  With a tarnished reputation, which won’t go away soon, their CMO and management team faces some difficult, near term decisions. If you were GS’s CMO, what would be your advice? Are you fully aware of any forces either inside or outside your company that runs counter to your advertising slogan/message?

Related Posts:

1. Right and Wrong, Wall Street Bonuses and Reputation: http://firealarmmarketing.com/2010/01/14/right-and-wrong-wall-st-bonuses-and-reputation/

2. 2010 Fun or Fear: http://firealarmmarketing.com/2009/12/17/2010-fun-or-fear/

3. How Gen Y’ers Establish Trust: http://firealarmmarketing.com/2010/02/18/how-gen-yers-establish-trust/

RHM 4/22/2010