Change Your Mindset #15 – Think Strategically, Do It on Purpose

How often do you make a financial decision based on a free gift? For that matter, when was the last time you were truly excited to get a free set of barbeque tools or a mousepad as a gift? These tchotchkies provide no real value to the consumer, so why do financial institutions insist on giving them away?

Typically associated with free checking accounts, the displays of these free gifts are an eyesore in branches across the country. They look cluttered, cheap, and they inevitably detract from whatever brand image an institution has created. The odds are also pretty good that most of these items end up either re-gifted, or in the trash somewhere (which, by the way, is probably for the best). Customers who are attracted by these free gifts are not likely to be committed to their relationship with the bank.

The concern here is not that institutions are giving gifts, but rather that there seems to be no thought put into what gifts are given or to whom. Promotional products are a $17.8 bil./year industry (more than outdoor advertising, Internet advertising or TV advertising). What began as a free toaster, has now become a giant game of “keeping up with the Jones’,” and in the process, none of it seems to be done on purpose.

In order to be effective, a gift has to have some value to the consumer. It should help to further the connection and the relationship between the institution and the consumer. Today’s typical college-bound student probably uses (or at least would prefer to use) a laptop, which requires no mouse. So, what message does Bank of Pontiac send to that student by offering them a free mousepad with their new account? How in tune with those customers’ wants and needs is that bank?

Another problem with the free gift phenomenon is that it focuses almost exclusively on new business. Research has proven time and again that new customer recruitment is far more expensive than retaining and cultivating current relationships. Every institution needs new business to be profitable in the long term, but new customer recruitment is tough work. The marketplace is saturated with noise, with institutions shouting about their products and rates. Instead of spending time and money trying to shout louder than the institution down the street, why not spend that time and money treating your customers so well that they can’t help but tell someone about you.

Try directing some of the dollars you spend on those free gifts at your current customers, and make use of those word of mouth referrals. Customer evangelists are some of the most powerful marketing personnel you’ve got, but you have to give them something to talk about before they can go to work for you.

Instead of offering an iPod to a new customer (who hasn’t yet proven their loyalty), why not offer something useful to your current customers? If you employ Certified Financial Planners, you could offer a free consultation with one of them. This serves two purposes:

1) It provides something of value to the customer, something that will hopefully help the customer manage their finances.
2) It showcases a service that customers might not even know existed. It’s a free sample of a service that the customer might later buy for the long term.

A gift like that presents your institution as a resource to be consulted throughout life, but more importantly, it’s strategic; it’s done with purpose. What else could you give your existing customers to show them your appreciation for their business? What would be valuable to them?

While we’re at it let’s look at another situation where the strategy and purpose seems to be seeping out of banking – branch design.

When institutions build new branches, the teller line typically ends up along the back wall. Why? Maybe the better questions are: Do we even need a teller line, or can we bring our people out onto the lobby floor where they can more easily interact with customers? Did we choose the way our branches look, or are we just following “what a branch should look like?” How could we do this differently, better?

Take a close look at your institution from head to toe. Take some time to turn over all of those unturned stones. Look at every bit of your day to day operation, and ask yourself: Did we choose this? Are we doing this on purpose? Is it strategic, or are we doing it by default? You might be surprised at how much “has always been done that way.”