2007 ABA NCCB - Question and Answer

During the ABA's National Conference for Community Bankers in Palm Desert last week, we received a number of questions from attendees specifically regarding differentiation and messaging (in addition to other topics). We thought it would be valuable to share some of these general questions with you, as well as our responses. Below is a summary of some of the things we were asked about.

Q - What’s the difference between how we view ourselves as different from the competition and how our customers perceive us as different from the competition?

A – The customers’ perception of how your bank is different is really the most important aspect of differentiation and can be tied directly to emotion in most cases. You know how your bank is different from your competitors, but if your customers don’t perceive your bank as different and can’t connect with you emotionally, than you really are no different. An example of creating this perception on the emotional side would be Bank of America’s “Bank of Opportunity” campaign. This campaign identifies America as the land of opportunity and says “fortunately it comes with a bank, Bank of America”. This helps create an emotional connection with customers and ties it directly to what Bank of America can offer them.

Q – Our market is fairly small, and we feel it is over-banked because there are a relatively large number of competitors within the market itself. How can we really measure whether the market is over-banked or not?

A – There are two primary ways to help identify whether your market is over banked or not. The first is to look at the quantifiable measures “households per branch” and “businesses per branch”. The more households and businesses that are available per branch location, the less competitive the market (generally speaking). The second is to examine how competitors are positioning themselves and which niches they are pursuing. It doesn’t matter if there are 10 banks or 20 banks in the market if yours is the only bank that is offering a specific product or service (i.e. lending to small business owners with low credit ratings). If you are serving a niche that no other bank in the market is serving than you will have less competition from the other banks. Likewise, if you are trying to offer the same services and serve the same niche as those 10 or 20 banks, then there may be little room for you in the market and it can be viewed as an “over-banked” market.

Q – We are not exactly sure what our competitive position (or niche) should be. Historically, we have not focused in one particular area over another, and we feel that we have always been good at serving our customers, no matter what the need. This being said, how do we identify our niche and begin to differentiate our institution?

A – In order to differentiate, institutions must communicate a message and deliver an experience other than “we are all things to all people.” This requires focusing on your target market, emphasizing your institution’s unique strengths and positioning yourself differently from the competition. While some institutions can easily identify and target a specific niche (i.e. Hispanic population, Generation Y, Doctors, etc.), many institutions simply can not narrow down their focus to one or two particular niche segments. It is important to take something that your institution does that is seemingly inconsequential, blow it out of proportion and turn it into wow. It may be inconsequential to you because you do it everyday, but it may just be that one factor that sets you apart from your competition. If you can identify it, embrace it and promote it then you can in fact differentiate your institution.

Q – How do we get our staff to “buy-in” to the changes we are trying to initiate, and the ways we are trying to differentiate our bank?

A – It all starts at the top. In Joe’s speech at the ABA's NCCB Conference in Palm Desert last week he talked about how leaders are not born, they are created. You can easily get your staff to “buy-in”, but it must start at the top. It is most important to get the leaders of your organization to first “buy-in” to your initiatives and truly believe in what the bank is trying to accomplish. Only then can this successfully trickle down to the other layers of the organization, including front-line staff. The reality, though, is that not everyone in your organization is going to buy-in to what you are trying to do, but those people will migrate out of the organization on their own if you create a culture where leadership is embraced. Specifically getting your staff involved and “buying-in” to your initiatives involves another key aspect of what Joe talked about during his speech; Passion. If you can awaken Passion among your staff, and then allow them to translate that Passion to their work, then it will create an environment where employees feel empowered and can “buy-in” to what you are trying to achieve. Little things like creating an innovation committee comprised of various employees from different levels of staff (even front-line tellers) can help your employees truly feel valued. Getting the staff involved and supporting them is the most important thing. It all comes down to the five key aspects of a leader that Joe discussed; Vision, Passion, Communication, Connection and Support.

Q – We are having a hard time finding something about our bank that is different and becoming frustrated in trying. What can we do to effectively identify and create our differentiation strategy?

A – Differentiation is not skin deep, it runs much deeper than that. Differentiation is the underlying foundation for the culture in your organization. To create a differentiation strategy, in essence, is to create a shift in the corporate culture or thinking. Every bank is different even if it may not appear so on the surface. Creating a successful differentiation strategy is to find the story behind the bank and the values it possesses, and every bank does have a story. The most seemingly inconsequential aspects of your bank are, in actuality, what truly make you different. Most importantly, though, to create a successful differentiation strategy you must truly WANT to be different. It’s about getting under the “skin” of your organization and uncovering your story.

If you have any further questions, or would like more more information about any of the questions listed above, please don't hesitate to call any of us here at Market Insights or visit our website at www.formarketinsights.com.