Buzzwords at the ABA Bank Marketing Conference

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.

Love / Hate Revisited

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.


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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.

Is your institution committing a “deadly marketing sin”?

The latest issue of BAI’s Banking Strategies magazine features the article Six Deadly Marketing Sins – Financial marketers need to get out of their rut to break through the market’s clutter.

Many of today’s marketers definitely do need to get out of their rut; they need to break through the clutter. And while I agree with the six sins outlined in the article, it doesn’t discuss what I would consider to be an underlying factor of each: the overall lack of meaningful and strategic points of differentiation.

When you have clarity about what distinguishes your institution from the competition, and those points are both meaningful to your target and are leveragable against your competition, you should be able to avoid each of these six sins. As an example, sin #2 is “an avoidance of marketing messages with some personality and attitude.” True points of differentiation convey the unique personality and attitude of your institution. At the end of the day, your marketing messages should all link back directly to your points of differentiation. This linkage allows people to easily see the value added by your institution; and should make it easy for your target market to chose your institution over the competition.

The other sin from the article that I really like is #6: “The illogical view that one print ad, one e-mail or one piece of direct mail is capable of gaining quick attention. The fact is, you need repeated, high-impact communication to build awareness.” While we know that some ads are capable of capturing quick attention – a single print ad isn’t likely to generate the results that many institutions hope for; this is especially true when we’re talking about sustainable results. When we talk about “meaningful” points of differentiation, we’re talking about the kind of points that can be used to develop “high-impact” communications – the kind that build awareness and lets people know exactly what your institution stands for. Another point to be made about this sin is the fact that “repeated” communication shouldn’t translate into simply placing more ads or sending more emails and direct mailers. Rather, your points of differentiation should be reflected in everything from your marketing collateral to your customer experience; from your products & services to your community involvement - giving your customers and the community repeated exposure to your message through multiple venues.

Think about how your institution is different from the competition. Are those points meaningful to your target market? Could they be leveraged as an advantage over your competition?

Tom Broughton’s small bank is striking it rich

This was the byline from an article about Birmingham, Alabama based ServisFirst Bank that appeared last Friday on CNNMoney.com.

Now, replace Tom’s name with yours in this statement – sounds good, doesn’t it. How are you going to “strike it rich?”

Tom Broughton is striking it rich because his bank is clearly different from the competition; and, most importantly, ServisFirst Bank is offering distinct and real value to a specific target.

The target: “busy small-business owners who want fast, personal service and are willing to pay for it.”

Now, we all know that there are plenty of financial institutions that specifically target small-business owners. And, many of them promise fast, personal service. But much like Starbucks has demonstrated with high-priced coffee, ServisFirst knows there are people out there who are “willing to pay for it” – they’re willing to pay for the real, personal service offered by the bank. And, the bank has used this focus as a framework that informs everything from its products and services to its marketing efforts to its delivery channels.

“At his Birmingham, Ala., company there are no tellers. No ATMs. No advertising. No teaser-rate CDs. No fancy offices. No lollipops in the lobby. In fact, dear customer, these bankers don’t even want to see you in the lobby. Stay in your shop. ServisFirst will come to you.”

ServisFirst serves a specific target with a specific value. And this is a great example of a team that has looked critically at all the elements of the bank and its brand – even those that are often times considered to be an expectation (i.e. ATMs, rate ads, tellers, etc.), and has made some tough, but logical choices to organize around its core value – service for small-business owners at their place of business.

Two Questions Bankers Should Be Asking Themselves

Two recent posts by Bill Taylor (co-founder of Fast Company Magazine) on his Game Changer blog have really grabbed my attention. Both posts pose questions that every financial services executive and marketer should think about.

The first question, discussed in the more recent post, deals with benchmarking – “Why copy the competition?” Bill frames this up using Commerce Bank as an example, saying “They (Commerce Bank) didn’t evaluate the company against Citigroup, Bank of America or Wachovia. They looked to Starbucks, Target and Best Buy.”

More people in financial services should follow a similar approach. Rather than looking at how your institution stacks up against your peer group, bankers should be looking to apply some of the thinking used by companies outside of the financial services industry.

And, I think this question should be asked anytime someone proposes adding/developing some kind of copy-cat product or service. All too often, new products are developed and introduced in response to a competitors’ new product offering. This kind of reactionary thinking only contributes to financial institutions looking more like one another – and does nothing to differentiate your institution.

The second question is my favorite: “As a customer, why should I choose your bank over the competition?”

Financial institutions need to establish relevant and meaningful ways to differentiate themselves from the competition. And, they need to communicate those differences in ways that everyone can understand. Think about what members of your team would say when asked this question.

Taylor’s post continues to say: “How can any business expect to outperform the competition when its own employees can’t explain – simply and convincingly – what makes them different from the competition?”

Some of the most innovative ideas in financial services are borrowed from other industries – and, in many cases, they can give financial institutions a clear and differentiated competitive advantage. It seems as though the most important step is often times the most overlooked – employee training. Every member of your staff should be able to talk “simply and convincingly” about the differences between your institution and the competition.

Relevancy in Points of Differentiation

The Today Show ran a story yesterday highlighting Whole Foods and Coldwater Creek as retailers that have taken steps to differentiate their retail experiences by adding spa services to their stores in select markets. And for these retailers, it seems to make sense.

After watching the segment, I looked into the Whole Foods Spa and found that the services are offered at the grocer’s Preston Road store in Dallas, Texas; and that this location was chosen as the test-store for spa services. And, as I read this, I was reminded of the Wal-Mart store in Plano, Texas, which offers higher-end products and foods to better serve the Plano market.

Well, it turns out that the Whole Foods store in Dallas and the Wal-Mart store in Plano are in essentially the same market – they are less than ten miles from one another.

This is a great example of making points of differentiation meaningful to the markets served. Both Whole Foods and Wal-Mart understand this market’s specific needs and preferences, and each has taken steps to address them in crafting their in-store experiences. John Flemming, Executive Vice President and Chief Marketing Officer for Wal-Mart is quoted as saying "With the opening of this store, Wal-Mart is adopting an active approach to understanding and meeting customer needs, particularly those of the selective female shopper.” It’s this “selective female shopper” that Whole Foods also seems to be targeting with its spa services and free-concierge shoppers.

As differentiation gains traction in financial services, executives and marketers must remember that relevancy can be the difference between success and failure. It’s critical that differentiation strategies be rooted in a solid understanding of your target market’s needs and preferences, and your competition’s position, messages and points of differentiation.

It’s also important to point out that in this case, Whole Foods and Wal-Mart have recognized an opportunity within one market to enhance their traditional in-store experience. The retailers understand where to draw the line – and that the initiatives of offering spa services and higher-end products may be received well in this market, but probably won’t be in every other market they serve. Financial institutions with a larger footprint can do the same.

Whether it’s offering spa services or investment services, financial institutions pursuing a differentiation strategy must be relevant to their target market – and this starts with understanding the market you serve.

Change Your Mindset #2: Stop Trying to Be All Things to All People

If I were to ask you “What is the one thing that your institution does better than anyone else?” – What would you say?

It’s been our experience that when asked this question, many financial services marketers and executives will answer in one of the following ways:

1. We provide excellent customer service.
2. Our people care.
3. We do a good job doing at everything.

While each of these answers may hold some truth, in most cases these are just unsupported claims. Perhaps more importantly, these are the same safe and boring claims made by your peers and many others throughout the industry.

We are all aware of commoditization in financial services, yet, so many marketers and executives either fail to realize the importance of differentiation, or are too set in a traditional mindset to make any meaningful changes. As a result, while most financial institutions continue to look more and more alike - it’s those institutions that go against the grain, those that truly stand for something that are able to stand out from the competition.

This gets back to a previous post: Love, Hate and Indifference where we discussed the importance of clearly communicating the characteristics of your institution that make it different from the competition. The goal of this exercise is to make your institution the most appealing choice for your target market. Because of this, it’s important to understand that this will also allow some prospective customers to more easily decide that your institution is not the best choice for them. And, over the long term, it’s better for your institution’s customers to be enthusiasts, as in many cases, this group can also be the most profitable.

We realize that this challenge can be a daunting one, but don’t be discouraged. Today’s financial institutions must be as dynamic as the marketplace, and as a result need to address change to remain relevant. Here are a few points to keep in mind when taking your institution in a more focused direction:

• Identify your strengths. While offering a diverse selection of financial services can add value for your customers, striving to be a “one stop shop” also has some drawbacks. Rather than touting the extensiveness of your product offerings, emphasize your area of expertise in your communications. For example, an institution specializing in mortgages should clearly communicate their expertise in this area; this can work to attract a specific target market (those looking to buy homes), which ultimately allows the institution to leverage its strengths.

• Define your target market. Rather than trying to serve anyone within a certain distance from your branch location, narrow your target focus. This may mean identifying your most profitable customers and pursuing those that have similar characteristics; it may be targeting those people that are likely to benefit from your strengths; or it could be targeting an underserved segment in your market. Whatever the case, more focused efforts allow you to communicate more directly to your target.

• Make it easy for people to decide that your institution is right/wrong for them. Don’t worry about attracting everyone; let those that aren’t a good fit with your institution make a different choice – in the long run, you want to attract customers that are receptive to what you have to offer.
  
  
  
  

What does Customer Service look like?

We were asked to write an article for the Financial Managers Society discussing the issue of customer service and the role it plays in today’s financial services industry. You can read the article here.

The article emphasizes the importance of focusing less on traditional definitions of “customer service” – which often times include nice, friendly and accurate service - and clearly defining what customer service means at your institution. Customer service is such an overused term in the industry that it has lost its meaning to your customers as a result; so, you need to make it mean something to them. And, while you’re at it – use this exercise as an opportunity to create points that differentiate you from your competition.

What does customer service look like at your institution?

It could be:

• That no one ever has to wait in-line at your branches because they are greeted and directed to the appropriate office or to a comfortable waiting area and asked if they would like a cup of coffee and a magazine.
• That your personal bankers routinely make visits to your small business customers so they don’t have to leave their place of business to conduct their banking.
• That your greeter knows and addresses each of your customers by first name every time they walk into your branch, and that the greeter can anticipate the reason why repeat customers have stopped in.

It could be anything; but, clearly defining what it means at your institution and what it means to your customers will have a far greater impact than assuming that they know what you mean when you say that you provide “outstanding customer service.”

Three Words

It’s a very simple question; yet, it proves to be a challenge for many community bankers to answer:

What three words best describe how your institution is different from the competition?

We love this question because it is a challenge. It’s even more challenging when we let people know that their answers can not include words like: local, good service or community bank. And this was exactly the question Joe Sullivan posed to the audience this morning during his session: “How to Differentiate Your Bank” at America’s Community Bankers’ Great Exchange Conference in Orlando.

The question encourages people to get down to the core; to emphasize their institution’s strengths; and it starts to inform the first steps of a differentiation strategy. The session was very well-attended this morning, which is an indication to us that differentiation is becoming a more pressing issue among today’s community banks. In addition, the participants asked some great questions which I hope to post here with respective answers within the next few days.

Until then, what three words best describe how your institution is different?

Next week in Orlando

I am looking forward to America’s Community Bankers’ Great Exchange Conference in Orlando next week, and wanted to get a pulse from anyone who is also planning to attend. We’ll be exhibiting and Joe Sullivan will be presenting two sessions during the conference; we would like to give you the opportunity to ask us questions before the conference – which we will answer here and incorporate into the sessions where appropriate.

Session Details:

Monday, April 23, 2007
10:30-11:45am

How to Differentiate Your Bank

Find out how to determine the key factors that differentiate your bank and communicate effectively to employees, customers and other stakeholders. Defining your brand is more than a logo, it’s key message points and action that supports making your bank standout.

Wednesday, April 25, 2007
8:00-9:15am

Life-Cycle Marketing: From the First Account to Retirement Plan

Learn how to build a life-cycle marketing strategy that delivers financial services targeted to key life milestones from saving for that first new bike (or iPod) to going to college, buying a car or residential property, and starting a family. Find out how to obtain and track important data to anticipate financial services needs to match each customer’s evolving needs.

If you’re planning to be at the conference and would like to talk to us about the sessions, our services and/or your unique challenges, send me an email at bwalen@formarketinsights.com or stop by and see us during the conference – I’d be glad to set aside some time for a conversation.

We’ll look forward to seeing some of you in Orlando.

Love, Hate and Indifference

Jeff Stephens’ comment to my post yesterday makes a great point about refining your message enough to allow customers and prospective customers to “clearly determine that you’re not what they’re looking for.” The flip side to this, of course, is that a refined message will allow others to clearly determine that your institution is exactly what they are looking for.

If you think about it across a spectrum with love on one side, hate on the other and indifference in the middle, we see too many banks seeking the comfortable middle ground with generic and all-inclusive messages – and this does nothing more than create a large group people who don’t really care about you one way or another.

Herein lies a challenge for many institutions – make a decision: decide who it is that you really want to love your institution. Then, hold that up to the messages you are putting out there. Do your messages resonate with this group; encourage them to establish and build a relationship with you; and make it easy for them to refer their peers to your institution?

At the end of the day, the customers that really love your institution will still be your most valuable customers – even when your competitor offers a little better rate or the latest iPod for opening a new account. And once you can take a stance and add real value to a focused target market (decide who should love you and who should hate you) you can differentiate your institution from the “all things to all people” competition, and allow your target to easily see that you are the best choice for them.

Your Institution's Personal Ad

If your institution had a personal ad, what would it look like?

There’s an interesting article in April’s issue of Fast Company that equates a brand’s message to personal ad headlines on match.com. Frankly, there are some strong similarities between the two: they have to be short and to the point, they should be written to attract your target, and – in reality, most of them are boring, safe and ineffective.

The article “Polarize Me” offers insights from Made to Stick authors Dan Heath and Chip Heath. The first of which is “If you want people to like you, first decide who needs to hate you.” While financial institutions really don’t need to focus their attention on deciding who needs to hate them, they should be clarifying their target and crafting a message that resonates with that target. Essentially, this is the start of a differentiation strategy; and in today’s industry where so many institutions are trying to be “all things to all people,” differentiation is more important than ever.

The article refers to this as the “Hey phenomenon,” where companies are too general and all-inclusive in their messages. In comparing brand messages to the personal ad headlines, the authors say “Why do these headlines suck so much? Fear. Fear of saying too much. Fear of saying something clever that someone might think is stupid. Fear of saying something revealing that might turn someone off. The headlines try desperately not to exclude anyone. In doing so, they succeed at boring everyone.”

Nowhere do so many companies “try desperately not to exclude anyone” than in financial services. The industry is flooded with generic value propositions which usually include promises of outstanding customer service and quality products. Many of today’s successful financial institutions are those that have clearly defined who they want to be and, perhaps more importantly, who they do not want to be. This clarification allows them to make decisions which ultimately contribute to a more focused message, a more carefully crafted experience and a targeted value proposition that actually communicates real value.

How are you different from your competition?

Last Monday, I spoke at ACB’s Seminar for Presidents in Naples, Florida. I was impressed by the turn out of about 40 bank CEOs; especially considering that the session began at 7:00am. During the presentation, titled Profitable Growth Strategies, I stressed the importance of differentiation and leadership as viable strategies for growth, as opposed to the more traditional strategy of simply building branches.

Once again, I did not offer the non-existent “magic bullet” that most CEOs want, but, instead I challenged the attendees to assess their own leadership styles and how they communicate the differences between their institutions and the competition.

Most of the questions following the session revolved around the topic of differentiation. I was not surprised, as I pushed the audience to stop talking about themselves as the “local bank, with good service, and friendly people,” which is difficult for many bank executives. Instead, I asked them to think of three words that describe how their institution was truly different from the competition.

I would like to challenge you to do the same. What three words describe how your institution is truly different from your competition?

Would your customers and prospective customers agree?

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.”

Great Idea: HSBC BankCab

I was reading trendwatching.com’s “Being Spaces & Brand Spaces” today, and as I read about the innovative being spaces and brand spaces that companies like Starbucks, J. Crew, and Nokia have created, I began to think about how this type of thinking could be applied to the financial services industry. Then, as I scrolled further, I was presented with two great examples of how financial services have applied these ideas; and, not surprisingly, the examples showcase ING and HSBC.

We are always stressing the importance of communicating your message consistently and effectively, and after reading about HSBC’s BankCab program, it’s obvious that Renegade Marketing Group (the brains behind the idea) had the same thing in mind when developing the campaign.

The campaign seems pretty straight forward on the surface. HSBC branded some 1982 taxi cabs in signature red and white colors, and sent them out to drive the streets of Manhattan; the cabs not only exposed the HSBC brand to a countless number New Yorkers, but offered free rides to HSBC customers to anywhere in Manhattan. The idea was developed to support HSBC’s tagline “The World’s Local Bank,” and this translated into having the taxis driven by New Yorkers who not only knew how to get around the city, but also were knowledgeable about restaurants, shows and all things local.

Another article on brandchannel.com tells of the calm experience in the cab, where the taxi drivers exhibit patience and politeness that would otherwise be non-existent in any other NYC taxi. And if this wasn’t enough, after the buzz was created, HSBC offered the free cab rides to non-customers as well for a twelve day period to give them a taste of the HSBC experience.

This is the type of innovative thinking that separates ordinary companies from the extraordinary; and, I agree with the statement from trendwatching.com, in that “we think this is an idea still ripe for copying.”

Even Kleenex has to Differentiate

Everyone knows Kleenex; the popular brand name is practically synonymous with facial tissue. However, as reported in today’s Wall Street Journal, even Kleenex has to take steps to differentiate. The recent influx of generic, low-priced tissue products has put the pressure on Kleenex to do something different. Sure, Kleenex has been around for a long time, but in this case, customers aren’t driven by the amount of time the product has been around – especially when they can’t identify real value added between Kleenex brand tissues and lower-priced generic tissues. As a result, Kleenex shifted focus to innovation and added real value to a commoditized product by introducing an anti-viral tissue.

The issue facing Kleenex is essentially the same as an issue facing many financial institutions, especially community banks. Longevity alone does not necessarily translate into a competitive advantage. Many community banks attempt to use their length of time in a community as a way to communicate value added; while this may have worked in the past – it’s becoming less important to the customer and prospective customer, especially with younger generations. Just as Kleenex’s answer to the pressure involved product innovation; bank’s need to look for ways that will differentiate their institutions from the rest, while providing real value added to the customer.