Improved Marketing Can Make a Difference

Banks rely on a legacy of friendly service and close, personal relationships to promote customer loyalty. In many ways, they have been so focused on this concept they may not have noticed the degree to which large national banks have improved their service. Big banks offer a wider variety of services than ever before, causing many people to question their loyalty to community banks. Increasingly, new generations are sacrificing the personal, friendly service of community banks for impersonal financial services that are less expensive, more convenient, and fast.

Today, customers want ATMs on every corner and banks with one-stop shopping. Banks are often not meeting this growing demand. Customers may use their community bank for a small percentage of their financial needs and not hesitate to go elsewhere for others. In these cases, community banks are missing opportunities to do more business with existing customers. Unfortunately, community banks lack the infrastructure that the big banks can leverage to create intimate connections with their customers and deliver the one-stop shopping they are seeking. Leaders of large banks often have sought marketing talent from the retail industry who see their organizations as retail outlets. This mind-set has kicked off a revolution in the banking industry that threatens to undermine the way many community banks market themselves. The most competitive ones have responded by focusing on boutique services and avoiding competition with larger institutions for more traditional customers. The niche strategy is effective, but the banks that take this route really are not full-service community banks by traditional definition. To compete more directly, banks need to redefine the way they interact with customers by creating a convergence of banking, insurance, and other third-party products, strengthening customer relationships and cultivating new ones. This is done by offering a wider array of products and services targeted to individual customer needs – supported by personalized marketing and cross-selling.

Changing the way banks market themselves is essential to seizing market share. As banks expand the services they offer and non-banks move into the banking industry, it becomes harder to retain customers. To boost competitiveness, a bank must:

• Find a way to promote and deliver additional services.

• Identify the changing needs of customers.

• Differentiate itself by selecting nontraditional products that meet these needs.

Many competitive banks are looking at technology to perform a number of services, including integrating customer data, preparing deposit account valuations and risk assessments, executing predefined marketing campaigns, and managing and creating customized statements for each customer. The main value in such technology is that it lets users differentiate themselves from competitors. It also provides a system for scoring and evaluating pools of accounts using histories from banks’ core systems and other third-party sources. Analyzing and assessing this data can open new markets and revenue streams. One way of using this data is to customize statements, one of the primary links banks have with customer. Many banks rely on including inserts with their statements, but these advertisements, which most customers see as junk, have not yielded the desired results.

Customers need more personalization in their statements, especially if they are being asked to purchase a new product or service. Generic, black-and-white statements with glossy inserts are no longer effective tools for reaching an audience. Modern statements are written in a newsletter format and tailored to each customer’s interests. For example, if data indicates a customer has teenage children, including ads for a car dealership and insurance agencies can be an effective way to market products and services. With the right technology, virtually any product or service that might interest a customer can be offered. Examples include deposition production coverage, neighbor-to-neighbor lending through the bank’s web site, coupons to a grocery store or pharmacy, and any customer loyalty program. Some of the promotions can require customers to visit the bank’s web site, further enticing customers to consider online banking, which provides additional cost savings to banks. Competition within the industry continues to strengthen, and competitive banks are now showing they can beat the industry’s giants. Although technology plays a role, the real secret to boosting competitiveness is changing the way community bankers think, redefining the way they interact with customers, and refocusing on enhancing customer relationships.