Feb 26, 2007

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.

Feb 23, 2007

Bank of Opportunity

Bank of America is ready to elevate its marketing efforts. As reported by the Wall Street Journal yesterday, and confirmed in a press release issued by the Bank, B of A is adopting a new tagline, investing big money in advertising and pushing forward with its most aggressive marketing campaign to date. The theme of the campaign “Bank of Opportunity” definitely positions the Bank to appeal emotionally to customers and, as WSJ reports “The campaign underscores the company’s strategic need to squeeze more business from existing customers.”

The new tagline “Bank of Opportunity” will be introduced as the replacement of “Higher Standards” during television commercials that will run first during the Academy Awards on Sunday night. The campaign will take shape on Monday morning as representatives dressed in B of A red aprons will be passing out coffee vouchers to commuters in select markets; the vouchers will emphasize opportunity with the message “Wake Up to Opportunity.”

Perhaps the most interesting part of this new campaign is the fact that it shifts the focus back to the customer. “Higher Standards,” as discussed in the WSJ article, was more about how Bank of America conducted business, while “Bank of Opportunity” is clearly more focused on value-added to the customer.

This value-added message is an excellent example of how financial institutions, especially community institutions, must move away from talking about themselves only in terms of products or rates. The commoditization of financial products and services demands that institutions establish and cultivate an emotional relationship with their customers, which can ultimately support the development of customer loyalty. Bank of America has certainly built a strong physical presence in many markets across the country, and it will be interesting to see how this campaign is leveraged to maximize organic growth for the Bank.

Feb 22, 2007

Outside the Box: 2007’s National Conference for Community Bankers

I just returned from Palm Desert, California - where I participated as a speaker and exhibitor at the American Bankers Association’s National Conference for Community Bankers. While I have attended this conference many times in the past, this year’s theme was more interesting to me than most:

“Not Business as Usual: Community Banking Beyond the Box”

We have all heard the term: thinking outside the box – but what does that really mean to you and your financial institution?

I will tell you the same thing here that I said during my presentations at the conference: there are NO magic bullets when it comes to outside the box thinking. There is not one great universal idea that can be applied at any institution, and there are no easy buttons. Too many institutions fall into the trap of trying to copy other institutions’ successful outside the box initiatives, but just because another institution has achieved success from a certain initiative doesn’t mean that your institution can expect the same success as a result of implementing similar initiatives.

Furthermore, the industry is constantly changing to meet the demands of customers - and that which is considered outside the box today, will not be outside the box tomorrow. This constant change demands continuous attention and a commitment constant innovation. I spoke with several people who attended my presentation about my innovation committee idea. During my presentation, I suggested that some institutions could consider creating an innovation committee, composed of three energetic, young and creative individuals – with the responsibility of generating innovative ideas and encouraging other staff members to do the same. This is just one easy idea that could be considered outside the box at many institutions.

I would like to challenge you to do things differently – truly differently; because today’s most successful institutions are not those that continue to do business as usual. I bring you back to my examples of Starbucks, Whole Foods, Clif Bar and Trader Joes - these successful businesses have a story, their leaders have a story, and you can bet that they won’t let up in their quests for continual improvement – and neither should you.

I asked you for your questions during my presentations at the conference, and I intend to post my answers to those questions right here early next week. Please email me with any additional questions and feel free to share your comments about the conference.

Feb 20, 2007

Redefining Bankers' Hours

Today’s customers are demanding. They want access and they want convenience; and they want it on their terms. And in an industry flooded with customer-centered value propositions (which often times end up being little more than hot air), many would expect that customers’ demands for access and convenience would translate, at the very least, into extended operating hours - beyond the traditional 9-5, and certainly beyond Monday-Friday and Saturday mornings.

It’s surprising that more institutions haven’t adopted similar extended-hour strategies like those of TCF Bank ($14.4bil.; Wayzata, MN) and BankAtlantic ($6.2bil.; Ft. Lauderdale, FL). These two institutions obviously understand the value of their customers’ time; they have adopted non-traditional operating hours (for banks); and, most importantly, they allow this convenience to drive their value propositions.

“Open 7 Days” and “Florida’s Most Convenient Bank – 7 Days a Week” clearly communicate real value to the customer or prospective customer; and, because many financial institutions are still operating with “normal” business hours, TCF Bank and BankAtlantic have a clear differentiator that will truly set them apart from the competition.

Throughout Chicagoland, TCF Bank has taken substantial steps to incorporate its tagline: “Open 7 Days” not only into its marketing materials, but also into its branch signage – indicating that this is not temporary; and institutions should take note. I recently saw an advertisement for TCF Bank which expands upon the message of being “Open 7 Days” to include the message: “Redefining Bankers’ Hours,” and this statement couldn't be more true.

In addition, while many institutions can’t comprehend staying open later than 5:00 or 6:00pm, BankAtlantic has many branches that are open until midnight. Jarett Levan, the Bank’s president had this to say about the initiative: “we remain extremely committed to redefining bankers’ hours…As time increasingly becomes a precious commodity for our customers, we hope we are providing a convenient alternative to help with our customers’ busy schedules.”

Let’s face it – change can be difficult, especially when it means that you and your staff will be working weekends or working later than 5:00pm. This isn’t to say that every institution should be open 24/7; but rather, that institutions must adapt to their customers’ needs – and, more often than not, this will mean stepping outside of your comfort zone, changing the way you do business and offering real value to your customers.

Feb 14, 2007

What you can learn from Madonna

This morning, I sat in on a webcast presented by Oren Harari, author of Breaking from the Pack: How to Compete in a Copy Cat Economy, and much of what Harari discussed can be applied directly to differentiation in the financial services industry. Perhaps the most interesting topic of discussion was how Madonna has, and continues to break from the pack – and of course, how this relates to the business world.

As Harari explains: Even though she is successful with what she is currently doing, Madonna is constantly scanning the market for the next emerging trend; she finds it; she leaps on it; she builds it up, she owns it, she brands it – and she is once again a success. She is still Madonna, but she continues to innovate and create new perceptions about herself. Highlighting another concept from Harari, Madonna’s successes are the result of radical innovation – not incremental improvements. Incremental improvements have to happen; radical innovation has allowed Madonna to experience one success after another.

Radical innovation is severely lacking in the financial services industry. Most executives like to play it safe and they are comfortable with slow, incremental improvements. However, these incremental improvements can at best give incremental results, especially in today’s commoditized financial services industry. Harari’s presentation also included discussion around a question that many of today’s financial executives are asking: “How do we stand out in a sea of white?” In other words, in an industry where financial institutions are looking more and more alike, how can we differentiate?

Not surprisingly, Harari’s response is very similar to our observations in working with our clients: This is where leadership comes in. Without leadership in place to both recognize the need to differentiate and to execute a differentiation strategy which influences customers to perceive an institution as truly different, institutions don’t have a chance.

I’d like to close with the same Jack Welch quote used to close the presentation: “You cant’ behave in a calm, rational manner. You’ve got to be out there on the lunatic fringe.”

Feb 9, 2007

Problems with Stock Photos

In theory, stock photography is great. It’s a cheap, easy and fast way to select just the right photograph for your marketing collateral from millions of available images.

In reality, however, stock photography can pose some pretty big challenges:

  • When used in a series of marketing materials (i.e. set of product brochures), using different stock photos can result in the series of pieces feeling inconsistent. The same holds true for using different images for various pieces in an ad campaign or together on a page. If using stock images for a series of materials, the images should also be part of a series.
  • Stock photos are often times out of date. It is important that the image appears to be current, and that the technology (i.e. ATM machines, cell phones) pictured are up to date. Outdated images have a negative impact in creating customer perceptions.
  • Many stock photographs, especially the royalty-free/cheaper images, can be sold to more than one company. This can have a negative impact on your efforts as well; for more, see the November 2006 WSJ article: When Marketers See Double.
  • Stock photos can seem staged. This can hurt a campaign, especially when a campaign is customer-focused, and the image is obviously not a photograph of an actual customer of the institution. People can connect on a different level when a campaign features photos of real customers, or at least photos of people that could be customers.

Feb 2, 2007

Actions Speak Louder Than Words


I completely agree with Seth Godin's post about this picture: "Just because a marketer says something is amazing, exciting or just plain wow doesn't mean it is."

And just because a bank says it provides excellent customer service, doesn't necessarily mean that it does. Today's financial services customers are smart, and when they hear claims of "excellent customer service" they expect a level of service that exceeds (not merely meets) expectations.