Two years ago, we started writing this blog to share our insights, ideas and experiences. Over time, we’ve realized that we’re due for some changes – for two important reasons:
We do a lot of work with credit unions, and we know that the “grow your bank” title doesn’t sit well with our credit union friends.
We like the wordpress platform more than the blogger platform
If you’ve included the grow your bank blog on your blogroll, please note the change. We appreciate the links and expect to create a blogroll on our site as well.
This past Saturday there was an article in The New York Times about the merger talks between GM and Chrysler.
I am both amused and skeptical about a merger of these two auto giants and, from my perspective; two wrongs do not make a right. It speaks volumes about trying to fix a systemic problem (products that don’t resonate with the American consumer) with outdated solutions (assuming that manufacturing efficiency is the magic bullet to change things). In an industrial economy that was the US was during the 1950s, and even until late in the 20th century, economies of scale could be gained by combining operations.
This is not to say that economies of scale are not still possible, but what would be the result of two merged auto giants that are both out of touch with what their customers want? An efficient and streamlined auto behemoth that makes vehicles that its customers do not want.
I say all of this to point out the fact that the successful companies of today and tomorrow maintain a razor share focus on the customer needs and keep improving what they deliver and how they deliver it. By way of contrast, take Toyota for example. It focuses on a few models and it does so very well. They make two of the best selling sedans in the country, the Camry and the Corolla; they obtain continuous feedback from customers about how to keep improving it, and then implement many of these improvements to keep the customer interested in buying.
Until the American auto manufacturers learn the lessons that this time in history provides, I suspect that a merger may do little to position them for the long term. The financial services industry can learn by the example of the auto industry woes that cost cutting and operational efficiency will only get them so far. Only a sustained commitment to planning and positioning itself for the future, understanding the needs of current and future customers and balancing out short term and long term needs will keep customers coming back.
After spending the last two days at the Partnership Symposium, I’m convinced that this conference is one of the best in the financial services industry. Here’s ten reasons why:
10. Many of the attendees wore jeans.
9. After seeing that many of the attendees wore jeans on the first day, more people wore jeans on the second day.
8. Admission to the conference was only $125.
7. The dinner reception managed to combine Oktoberfest and Rock Band.
6. Smart use of technology. The presentations were broadcast live over the Internet, and twitter was used to allow audience members to pose questions throughout.
5. There was definitely a sense of community among the attendees. The conference served as an extension of an online community in some respects – giving people like me the opportunity to meet people face-to-fact that I’ve only talked with online – and it managed to bring other attendees into the mix.
4. The Q & A session with presenters was the best I’ve seen at a conference. Rather than opening the floor to audience questions after the presentations, each presenter was asked some really challenging questions from Ron Shevlin – and these points spurred additional conversation and really enriched the conversation.
3. Instead of handing attendees a binder with session handouts at the registration table, conference organizers gave each attendee a small piece of paper with the wi-fi access code.
2. I’ve never seen so many macbooks and iPhones in the same room at the same time.
1. The speakers were really smart - they are among some of the most innovative and involved people in the industry. And the respect among the speakers really showed – especially as some of them prefaced their presentations with how nervous they were about talking such a highly acclaimed group.
If you have the opportunity to attend the Partnership Symposium next year, I highly recommend it. Besides, aren't we all looking for an excuse to travel to Fishers, IN?
Today, National Public Radio (NPR) interviewed Jean Ann Fox, Director of Financial Services at the Consumer Federation of America, about the impact of recent bank failures, mergers and buyouts. The story suggested that with the consolidation of some of the larger banks, consumers have an opportunity now to “reshop the market and see if you can get a better deal at lower cost at a smaller bank.”
There is no doubt that the turmoil in the world’s economic markets and high profile bank failures will contribute to customer churn, especially in some markets. But are small community banks prepared to take full advantage of that churn, or are they approaching the ocean of opportunity with a teaspoon? Many community bankers haven’t taken the time to understand their market; or ensure that their brand is relevant to that market...so they don't know how to reach out to their potential customer in meaningful ways. In fact, in this very moment fearful leaders are busy cutting marketing budgets and putting off strategic growth decisions. They could benefit from advice offered today in Seth Godin's blog:
"Growth is frightening for a lot of people. It brings change and the opportunity for public failure. So if the astrological signs aren't right or the water is too cold or we've got a twinge in our elbow, we find an excuse. We decide to do it later, or not at all.
What a shame. What a waste.
Inc. magazine reports that a huge percentage of companies in this year's Inc. 500 were founded within months of 9/11. Talk about uncertain times.
But uncertain times, frozen liquidity, political change and poor astrological forecasts (not to mention chicken entrails) all lead to less competition, more available talent and a do-or-die attitude that causes real change to happen.
If I wasn't already running my own business, today is the day I'd start one."
Earlier this week at the ABA Marketing Conference, I had the opportunity to join Jeff Stephens from Creative Brand Communications in an episode of his bi-weekly Banktastic podcast Blow Up Your Marketing. Take a look at what conference attendees had to say about the conference.
Blow Up Your Marketing episodes can be seen on the Banktastic blog. Check them out, and watch for future episodes.
On Monday, I had the opportunity to attend the round table discussion “Going Green” at the ABA Marketing Conference. And, having seen a number of institutions jump on the green bandwagon over the last year – I think the conversation missed some important points.
First of all, the complete name of the session was: “Going Green: It’s the right thing to do – so how do we do it right?” While many consider adopting green practices to be the right thing to do from an environmental standpoint, the session focused instead on it being the right thing to do so institutions don’t get “left behind.” As we’ve talked about before, making choices so you don’t get left behind only contributes to the commoditization and sameness we’re seeing throughout the industry. And, these kinds of efforts, especially when tied to “going green” (with the increasing awareness and sensitivity to greenwashing), can really do more harm to your institution than good – a point that was never made during the session.
During the conversation, the point was made that going green can be used as a competitive differentiator – in large part because most institutions aren’t pursuing such efforts. But, this conversation quickly shifted to emphasize the fact that institutions that don’t pursue green initiatives will be at a competitive disadvantage. Once again, rather than encouraging institutions to determine on an individual level whether green initiatives makes sense at their institutions – within the context of their markets and their brand positions, attendees were encouraged to pursue these initiatives as means to stay on a level playing field. This was a big red flag for me.
The most important takeaway from the session was: take incremental steps, and be honest and transparent.
I’d qualify this suggestion though – first, determine if becoming a green business makes sense for your institution. And second, recognize the important differences and implications associated with being a green business versus those associated with an institution working to become moreenvironmentally friendly or sustainable.
While allowing customers to sign up for paperless statements certainly reduces paper and the environmental impact of shipping them (not to mention the cost of postage), it’s simply not enough to promote an institution as green. Take a look at institutions like New Resource Bank, Green Bank, and Alpine Bank (the featured bank during this session) as examples of those that have taken significant steps to become more environmentally sustainable – and they did so before promoting it in their marketing materials and campaigns.
Over the past few days at the ABA Bank Marketing Conference in Denver, we've heard quite a few ideas and concepts being talked about repeatedly. Some of what we're hearing includes:
Experience - a concept that we heard a lot about at last year's conference is still on many attendees' minds. Joseph Pine's opening keynote discussed the progression from businesses selling commodities to goods; goods to services; services to experiences; and experiences to transformations. While some institutions certainly pay attention to the complete customer experience, many are stuck simply selling services or goods - which raises concerns regarding commoditization.
Transformation - as I mentioned above, Joe Pine emphasized the importance of transformation in today's competitive environment; the idea was mentioned in many of the presentations. As Pine described it, beyond creating a customer experience, successful companies will be those that are transformational - those that are able to transform their customers' lives in some respect. The emphasis here raises concerns for me, as many institutions havn't fully grasped the concept of creating and managing the customer experience - which needs to happen before trying to become transformational.
Differentiation - we've heard much more discussion around the issue of differentiation than we did at last year's conference - which is encouraging. While the marketers here seem to understand the importance, we are hearing a lot of frustration around how to convince senior management and boards that differentiation needs to be part of the overall marketing strategy.
Segmentation - a topic we didn't hear much about last year, segmentation has certainly become a much more well-known concept, and one that seems to be working its way into many institutions' strategies. I'm impressed with the level that people are talking about the topic. As an example, people were talking about the many segments that make up Generation Y - where last year, the broad group of Generation Y was talked about very generally.
As attendees return home from the conference, I hope that these concepts can make their way into next year's marketing strategies. It's a departure from years past - as none of these concepts offer a turn-key solution - they will vary from market to market, and from one institution to the next.
It isn't easy being a bank or credit union today. Institutions are faced with a series of increasingly pressing challenges - from aggressive competition and shifting demographic characteristics, to changing consumer behaviors and the impact of commoditization within the industry. These challenges are complex; and they require that banks and credit unions think differently about their markets, their brands, and how each impacts their strategies for growth.
Recognizing these challenges, and the impact they have on today’s financial institutions, has prompted us to partner with Creative Brand Communications to offer banks and credit unions a new service called Own Your Market. Over the past few months, we’ve worked together to help a group of institutions take the first steps towards owning their markets. And today, we’re pleased to announce the formal launch of the new service for banks and credit unions.
Own Your Market is an innovative service to help forward-thinking financial institutions align market opportunities with brand strengths to develop market dominance. It is designed to help institutions:
· Understand their markets and their opportunities in those markets · Create a brand that is relevant to their markets · Position themselves for competitive advantage · Convey value added through the customer experience
Tommy Thompson, president of iNSPIRE!, has posted a great article this morning on Advertising Age's blog regarding the mistakes often made in marketing to the Hispanic community...its worth a read!
In reading the news and visiting the site, I initially thought the Texas initiative would generate the same kind of buzz and success, if not more, that it did for Commonwealth Credit Union in Alberta. This is especially true as we havn't seen other institutions going to equal lengths to target Gen Y.
But it looks like Texas-based Resource One Credit Union is launching an extremely similar initiative this week: my life, my money. Not only are these initiatives both targeting members of Generation Y in Texas - but also use social media in their marketing, are offering a similar checking/savings account, and are intending to hire a spokesperson - with nearly identical perks.
It will be interesting to see how both are received and talked about during their respective searches for spokespeople - and in the months that follow.
Update: there are a couple great discussions discussing both of these accounts/initiatives in depth, one on Everything CU and another on The Financial Brand.
According to a feature in the latest ABA Bank Marketing Magazine you should be. The title of the article You Should be on YouTube raises huge concerns, as it implies that all readers should have a presence on the website. While I was a bit surprised to read such a definite statement, I was more alarmed by the statement that followed:
“If you are not, your competition might beat you to it.”
Who cares if your competition beats you to it? If a YouTube video doesn’t support your marketing efforts and overall strategy, you shouldn’t waste resources developing, posting and managing content – especially for the sake of having a video online before your competition does.
Overall, the article does make good points about blogs and podcasts, but sends the wrong message in being so definitive about being on YouTube. We can all think of institutions who have no business posting videos online; and there are plenty of wildly successful institutions who aren’t on YouTube and aren't worried that their competition is – for many institutions it just doesn’t make sense.
The issue of relevance is on my mind again this week as the world prepares for the summer Olympic Games in Beijing. If you scan through the list of corporate sponsors of the Olympics you’ll see the venerable name of Kodak. What you may not know is that last October the company whose name was once synonymous with film and cameras announced that it was ending its role as a top corporate sponsor of the Olympics after this summer's games – an ongoing sponsor relationship that began over 100 years ago with the first modern games in 1896.
At the time of the announcement, Elizabeth Noonan, Kodak's director of brand management, stated "As we complete the transformation of Kodak, it makes sense for us to take a new direction." What she didn’t say was that Kodak hasn’t transformed its business model as fast as the changes in related technology or consumer expectation. They simply didn’t adjust to the transition from film photography to digital photography as it was happening. When was the last time you dropped off a roll of film for developing? Professional and amateur photographers alike have numerous options today including digital cameras, digital printing and online photo management applications like Flickr. As Kodak scrambles to compete, they have experienced massive net losses and its workforce has dropped to half what it was in 2003.
What can the financial services industry learn from this example? A great deal! Look at how new technology within this industry has already changed consumer behaviors across the demographic spectrum. By paying close attention to the shifts in your industry and your market, and proactively adapting to those changes, you have a greater likelihood of remaining relevant to your customer and avoiding the same fate as Kodak.
In a recent Retail Delivery Insights newsletter from BAI, Gary D. Stein stressed the importance of attention to details in selecting sites for new branch locations. Not a surprise, but important nonetheless.
“Stein recommended that banks conduct a thorough analysis of the specific site and surrounding trade area. He advised banks to consider market potential, population demographics, financial product usage and demand, population density and the competitive landscape.”
And while these elements certainly go above and beyond simply relying on intuition, I’d also add the importance of psychographic data and an in-person assessment of the proposed site location to the list. Drilling down to this level of detail is necessary in today’s increasingly competitive landscape – especially as institutions adopt more specific target markets and the average new branch is likely to require a multi-million dollar investment.
An article from July 5th’s Chicago Tribune discusses the approach that allowed Starbucks to identify successful locations: “In evaluating locations, Starbucks looked past commonly used community demographic information to analyze nitty-gritty specifics, like the education level in various neighborhoods. It also studied traffic flow on both sides of the street, to make sure drives could make an easy right turn for their java fix on their way to the office.”
The commonly used community demographic information is a good starting point, but doesn’t provide the specifics relative to consumer behaviors, access or local draw which could dramatically impact the success of a new branch location. Starbucks strayed from the more scientific and detail-focused approach in recent years - which resulted in its recently announced decision to close underperforming locations.
Stein echos a point we've heard before: "branch placement may accounting for as much as 65% of its success." With so much hinging on location, you'd think the same attention to detail would be a part of any institution’s expansion efforts.
Recently we saw evidence of two starkly different approaches to business in our changing economy, how it creates opportunities for some businesses and can negatively affect other businesses.Almost at the same time, you saw images of people standing in line to withdraw their deposits at Indy Mac Bank, while also seeing long lines snaked around just about every Apple store in the country, in anticipation of the release of the latest and greatest iPhone.
There was, and still is a huge emotional component in both of these situations.I believe that emotional connection is the key ingredient in keeping customers happy and wanting to do business with you.Apple knows this.Of course, they are positioned as the provider of technology which is easy to use and fun.But, they have also created almost what I would call a “movement” where customers simply “must have” the latest and greatest version of their products.So while we could say that Apple targets only upscale techies, we would be wrong, because they appear to target people who respond to easy and fun, words which speak to emotion.
Indy Mac Bank, on the other hand, also has some emotional content occurring with its customers at the present time.People are concerned about their money, and, more importantly, the emotions that are tied to their deposit account.Emotions surrounding retirement security, resources to take that dream vacation or having the piece of mind of financial security.All of these are emotional situations and bankers have proven expertise in addressing them with customers.Now is not the time to be shy.
So what does all of this mean from my perspective?Bankers should be using this time of perceived uncertainty to make a deeper connection with their customers through education, discussion and outreach.For bankers, using their knowledge and expertise to help quell customer’s fears right now may be the very best thing they can do to create an even more loyal customer base.Fear is a powerful emotion, one that is running far too rampant right now, and bankers have the opportunity to use their expertise to help customers face these fears.
Last Friday I had the pleasure of speaking at the 14th Annual Senior Management Summit sponsored by the Texas Bankers Association in Austin and that is the very question I posed to my audience.
I spoke on what I believe to be the single most important topic facing the financial services industry: Relevance.I must say that I am truly jazzed up by this topic and at the same time a bit concerned that more bankers nationwide don’t see it as important, or even believe that it will affect them. That is just plain scary.
This is not just about the banking industry.Any business that serves the public, directly or indirectly, must see that change is the only constant; that we cannot rely on the traditional play book of the past for solutions in a changing world and that now is definitely not the time to be fearful.
Richard Tedlow, in his article published in this summer’s Harvard Business Review entitled “Leaders in Denial” states that you may be riding the express train to oblivion if you are not asking yourself if you are on the right path. I could not agree more!
At Market Insights we are all about helping clients to remain relevant and to grow their businesses.We are constantly seeking creative, innovative businesses and leaders, including financial institutions that are doing great things.I would like to hear your thoughts on Relevance, what you are doing at your business to move ahead, and any other feedback or ideas you care to share.
Over the last year, we’ve talked a lot about love, hate and indifference relative to how consumers feel about the companies with which they do business – and specifically how consumers feel about their financial institutions, and how that impacts brand loyalty.
With so many institutions trying to be “all things to all people”, the industry has become commoditized; and in many cases, it’s become difficult for consumers to easily tell the differences between one institution and the next. As a result, many consumers are motivated by price or convenience factors, and lack the kind of strong emotional connection with their financial institutions that we see with other companies outside the industry like an Apple, Starbucks or Whole Foods for example.
As many financial institutions continue to take the safe approach marketing to the mass-middle-ground - or the indifferent, opportunities present themselves for others who are willing to take steps to truly differentiate their institution from the competition. But this requires a clearly defined target market and taking steps that will align your institution with their needs, values and preferences – you want to make it easy for your target to choose you over the competition, to feel that connection with your institution, and love doing business with your institution as a result. On the flip side of this, and the reason why many institutions don’t take these steps, is that you have to be willing to allow other consumers - those that aren't part of your target, to make the choice not to do business with you. In most cases, this means thinking differently about your pool of prospective customers - focusing your efforts on those that will love what you're doing while allowing others to hate what you're doing. During the past week, I’ve seen two examples in television campaigns of companies embracing this love / hate concept: Crocs (the ugly slip-on plastic-looking shoes…as you can tell, I’m on the hate side of the spectrum) and Scion(the Toyota spin-off for those looking to express their individuality through their cars).
First, during the AVP Pro Volleyball Tournament sponsored by Crocs, I was introduced to the company’s “love ‘em or hate ‘em” campaign. Crocs shoes are very popular in my neighborhood, as I’m sure they are across the country; but the company’s marketing team understands that there are plenty of people like me who don’t like the shoes – and, it's embracing and promoting the love / hate feelings with a new crocslovehate.com website. The site is working to build buzz around the fact that people either love or hate the shoes, and draw people from the indifferent middle-ground to one side or the other.
Second, I was intrigued by commercial with a similar concept for Scion. Once again, Scion understands that some people love its cars and others hate them – and this is by design. The commercial includes the obvious message “love it or loathe it” to drive home the point.
What does the love / hate concept look like with banks and credit unions? Sure, we’ve seen our share of hate websites, blog posts and other commentary about bad experiences with financial institutions, but we don’t hear the kind of rants and raves from both sides of the spectrum like we do with these and other examples outside of the industry. While we hear executives and marketers talk about their ideal customers and target market, we never hear them talk about the customers or members they don't want - or those that they're willing to lose in an effort to build a stronger connection with their target segments. So, if you know of an institution making strategic choices with “love us or hate us” attitude, I’d like to hear about it.
On Thursday afternoon, just about the time when many of us were wrapping up business to break away for a well-deserved holiday weekend, Newsweek’s Howard Fineman was posting a web exclusive story from the Aspen Institute Ideas Festival in Aspen, Colorado. In case you missed this article entitled “In Search of Optimism”, it recounted comments by JPMorgan Chase CEO Jamie Dimon to PBS’s Charlie Rose:
"The economy is virtually unfathomable," he began. "I hope we have hit bottom, but I can't really say." On the upside, he said, we all need to maintain some historical perspective. In 1987, he reminded the crowd, the stock market had dropped 25 percent in one day. The current depressing run was months in the making. Nor is the situation like 1982, when we faced a recession driven by sky-high interest rates. By historical standards, unemployment is relatively low at 5.5 percent. But as a country we face rising economies elsewhere around the world—trading partners increasingly turned competitors—energy costs and above all a lack of political will to use government well.
These cautionary comments from a man who many call “America’s top banker”, should remind us about the importance of perspective in times of great uncertainty. While most community bankers and credit union executives don’t have the advantage of Mr. Dimon’s unique situation, they can certainly benefit from his point of view.
Too often, current events and market news prompt us to make hasty choices. But perspective and context can counteract fear and help guide choices that will shape the future of the financial services industry.
It seemed like a no-brainer for some institutions’ expansion strategies: build branches near or adjacent to a Starbucks store; or better yet, take full advantage of the foot traffic generated by the coffee chain and share a retail space. Given the rapid growth and much-discussed success of Starbucks in recent years, it certainly seemed like a viable strategy.
While most of the planned Starbucks closures will be those stores opened since 2005, it doesn't sound like the institutions referenced in this Wall Street Journal article from 2005 will be impacted. But what about those institutions that may have followed their lead and teamed up with Starbucks with a shared-space since then? Or, what about those that were influenced in some respect by a Starbucks location when selecting a site for a new branch during the past few years?We've talked to quite a few institutions, especially those with branches near college campuses, who have aggressively pursued such partnerships with Starbucks.
It's easy to see how the shifts in traffic patterns can certainly benefit many businesses, especially those that follow retail magnets like Starbucks or Wal-Mart, but what happens when they close their doors? I suppose we’ll find out which institutions, if any, will be impacted when Starbucks makes its announcement to its employees later this month about which locations will be closed.
I suppose it was only a matter of time before the musical greeting cards concept was adopted by marketers for a direct mail piece; we received one yesterday at the office from Harris Bank.
The mailer leads with the message: “business banking in Chicago has become a game of musical chairs”, and plays “pop goes the weasel” when opened. While the music was unexpected and grabbed my attention, I had to read the content a couple times before I fully understood the purpose of the mailer.
Inside, the piece talks about how “While the rest of the Chicago banking community plays musical chairs – old familiar names disappearing, bankers moving on- Harris remains rock solid. We have had the same name for more than 125 years. We’re here to stay.”
Granted, we did just see the major acquisition of LaSalle Bank in Chicago by Bank of America - which is certainly an example of an “old familiar name” disappearing, but is that enough to make customer think about switching institutions? Bank of America did an excellent job handling the transition for LaSalle Bank customers in the months leading up to the acquisition – sending personalized letters, providing answers to FAQ’s, setting expectations, and welcoming them as B of A customers. These efforts undoubtedly put many of LaSalle’s customers at ease about the acquisition – and it’s these kinds of efforts that we’re seeing the major national and regional players deploying during acquisitions in markets across the country.
And if having the same name for 125 years isn’t compelling enough to switch to Harris, the mailer also carries a $250 promotional offer for opening a new business account; but even then, I doubt it’s enough to move a significant number of accounts.
With a lot of uncertainties around the success rates of direct mail initiatives by financial institutions, I have to question how much Harris paid for each of these pieces – and what it expects as far as a return. And with the amount of money the campaign must have cost for production and postage, I’d like to think that the marketing team would have taken the time to ensure that the pieces were addressed to a specific person at our office - but the piece was simply addressed to “Market Insights”.
Over the last couple years, we’ve seen quite a few institutions promote stability and longevity in markets where acquisitions and mergers are happening – and in most cases, the expected customer run-off from the acquired institutions just doesn’t follow. I expect that the same will hold true in the Chicago market, especially with the well-managed transition of LaSalle Bank to Bank of America. The Harris piece just falls short.
So I went to the bank today and found that the ATMs had been upgraded - they now have check imaging capabilities. And while I’ve heard about the technology that allows checks to be deposited at an ATM without an envelope, I hadn’t yet used one until this afternoon. It’s a pretty slick process: tell the ATM that you want to make a deposit and insert the check directly into the machine. An image of the check appeared instantly on the screen; the computer displayed the deposit amount and asked me if it was correct – I was surprised that the computer read the hand-written amount on the check. After approval, you can select to have a receipt printed with or without the check image, or chose no receipt at all. All of this in a matter of a few quick prompts on the screen.
This was in sharp contrast to an experience we had last week with a community bank in a small town in North Carolina – where a teller told us that the bank was “old fashioned”. Old fashioned is an understatement. Here’s an institution with a large geographic footprint, promoting free checking at its branches, and it doesn’t offer an ATM or ATM card. And, after looking online after our visit, the bank doesn’t have a website either.
While I realize that today’s financial institutions don’t necessarily need to have the same products, services or delivery channels as their competitors, I had considered ATMs to be an expectation rather than an option – especially with institutions like mine upgrading machines that are already fully functional and feature more bells and whistles than most ATMs out there.
So, how long can an "old fashioned" bank continue to conduct business successfully (without ATMs, a website, or online banking) in an environment where consumer expectations are rapidly changing?
On Thursday afternoon, just about the time when many of us were wrapping up business to break away for a well-deserved holiday weekend, Newsweek’s Howard Fineman was posting a web exclusive story from the Aspen Institute Ideas Festival in Aspen, Colorado. In case you missed this article entitled “