Change Your Mindset #20: Pay Attention to Marketing Outside of Financial Services

Today’s most successful companies are those that market themselves effectively; they connect with their target audience, communicate a clear value proposition and deliver with consistency. And in today’s crowded marketplace where consumers are exposed to thousands of messages a day, financial services marketers must pay attention to marketing initiatives both inside and, perhaps more importantly, outside of the industry in order to stay relevant and effective.

Many financial marketers rely heavily on the traditional marketing playbook with initiatives like local newspaper-ads, sports team sponsorships and in-branch flyers to promote products; and while these initiatives may contribute to success at some level, they are often-times predictable and easily overlooked by consumers. In order to create the kind of buzz that will generate real results at the bottom line, institutions need to get noticed and focus on integrating their efforts effectively across various channels; this works to introduce, reinforce and keep your message in front of your audience.

While buzz can be generated in a number of ways, it’s important that you remember that you want to be noticed for the right reasons. This begins by identifying what message or characteristics you want to emphasize in your marketing efforts and ensuring that all of your initiatives work to support them.

An example of this kind of thinking can be found in many of Umpqua Bank’s marketing initiatives where it has borrowed from the retail industry in creating an environment that is much more like a retail store than a traditional bank branch. Umpqua generates buzz with initiatives like its Discover Local Music Project where the Bank supports local musicians, creates compilation CD’s and sells them in their branches and online. This initiative reflects Umpqua’s dedication to being involved in the communities it serves and is in-line with their brand and messages; this allows the initiative to both create and sustain a buzz over time.

Overall, financial services marketers need to watch for trends and shifts in their target audience and reflect those shifts in the marketing initiatives. We see great opportunities for institutions to expand upon their online presence with social media like blogs and podcasts; to run campaigns that connect emotionally with the audience as opposed to emphasizing product and/or rate; and to leverage community involvement as means to reinforce an institution’s messages and brand. And while many of these kinds of initiatives have had successes in other industries, there’s no reason why they shouldn’t or couldn’t be successful in financial services. With that, we ask that you pay attention to marketing outside of financial services and be open to the kind of unexpected initiatives that can get you noticed and have a real impact on your bottom line.

Innovation Leaders: Change Your Mindset

This month’s Community Banker Magazine is accompanied by a supplement featuring articles from service providers considered to be innovation leaders in financial services. Market Insights has a well-earned reputation for promoting change and innovation in the financial services industry; so we were both flattered and pleased when we were asked to contribute to the supplement.

When developing the article, we tossed a few ideas around and realized that the most pressing issue facing today’s financial services industry is the reliance on doing business as usual and the need to approach issues with a different mindset. And, as the title of the article suggests – if you want different results, you have to think differently.

While the article stresses the concept of approaching today’s complex issues with a different mindset, we feel it’s equally important to provide you with practical examples and ideas of what thoughts and behaviors you can shift. We also want to demonstrate how changing your mindset can actually impact bottom-line results at your institution.

So, we developed a list of the top 20 ways you can change your mindset. Our team will post one reason, example or idea every day in June on our blog. While we realize that there are more than 20 issues that should be approached with a different mindset, we feel that these 20 are the most pressing, widespread and worth bringing to your attention. Let us know what you think.

To request a reprint of the article Change Your Mindset - If you want different results, you have to think differently, contact me at bwalen@formarketinsights.com

The Disconnect Between Better Service and Growth

Today’s Industry Insights newsletter from creditunions.com features an article that offers an interesting strategy for growth – better service. And while many institutions could benefit from better service, I see a major disconnect between simply offering better service and realizing the growth objectives you’ve defined for your institution.

The author states: “Not many people (in the credit union industry) seem to be talking about providing better service,” and continues to suggest that focusing on better service is the “recipe” for growth.

I would take a different stance - the issue within financial services is not with institutions talking enough about providing better service, but with institutions making generalized statements that assume traditional definitions of service.

Institutions looking to grow have much more to consider than their level of service. Perhaps the most important priority for these institutions is taking the time to fully understand their markets, their customers and their competitive position. Many institutions fail to look further than demographic data and peer group studies in attempts to identify growth opportunities. And while these pieces of information are helpful, they do not paint the whole picture and fall short of providing any substantive strategic direction.

If you’re really looking to grow, start by assessing your market. This means quantifying available dollar potential; identifying available niche opportunities; projecting dollar growth; and taking a good look at your institution relative to your competition and your customers' needs.

Better service is not the silver bullet that will allow your institution to acheive and sustain growth; and while there is no silver bullet - any institution can take the first step of assessing their market to determine unique opportunities for growth.

Citi Let's Get it Done

Citi's new campaign let's get it done looks a like Bank of America's Bank of Opportunity campaign. And, while the two are similar in nature, they are both doing exactly what needs to be done in today's industry - they connect emotionally with the customer and work to establish and build a relationship with them.

Notice that the focus of these campaigns is not on products or rates - the campaigns allow customers and potential customers see themselves in the people in the ads. Each campaign also does a great job incorporating their respective logos into the campaign - in Citi's case, the red arc ties together dreams and realities. This kind of careful attention to the message will have an impact, and it will reinforce these brands - and this is exactly the kind of thinking that should be applied to so many community-based institutions' marketing efforts.

Hispanic Marketing Mistakes

Marketing to Hispanics is one of the most pressing issues facing financial institutions across the country. The fastest growing minority group in the United States poses a huge opportunity for institutions; however, it seems as though so many institutions simply don't know where to start, or have no interest in targeting the Hispanic segment.

Joe Sullivan and Jim Perry recently gave a presentation to the Illinois Credit Union League titled "The Hispanic Market: Myths, Facts and Untapped Opportunities" which highlighted some common misconceptions of the Hispanic segment and the opportunities that are available to financial institutions that can effectively target this segment.

In addition, today's issue of BAI's Retail Strategies has a great article "Common Mistakes Marketing to Hispanics" - I would encourage that you check it out, as the mistakes described in the article are issues we address in many of our client engagements.

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.”

Stuck in Time

From “Who Do You Love?” in this month’s Fast Company:

“Chris Bangle, BMW’s Design Director, contends there’s a universal explanation for why successful brands stumble: They fail to evolve. Bangle calls them ‘fortress brands.’ Deeply rooted in their heritage and values, they are inflexible, unmovable, and ultimately stuck in time. ‘That’s the problem with a dogmatic, static brand,’ he says. ‘The competition will outflank it, and the world will pass it by.’”

This is extremely relevant to financial institutions – especially the countless number of community-based institutions that are deeply rooted in their values and seemingly stuck in time. We all know that what got us here won’t get us to where we need to go. And with aggressive regional competition, increased customer expectations and shifting consumer behavior, successful financial institutions will be those that are flexible, relevant and willing to step away from the same-old way of doing things.

Attracting the Younger Employee

We have been having quite a few conversations lately about attracting younger employees to work at financial institutions; and, as a member of Generation Y, I would suggest the following as a very simple way to think about attracting younger employees. This is suggested as a starting point and will hopefully challenge your thought process as it relates to hiring at your institution.

First of all, think about “coolness” – and I realize this is difficult for many of today’s financial institutions as most members of Generation Y wouldn’t consider many financial institutions to be cool (or attractive) places to work. For reference, think about today’s high profile companies like Google and Starbucks that are attractive and considered “cool” places to work by many younger people. Sure the perks are great at each of these employers, but perhaps more important is the environment that each has created for their employees. These environments are modern, sophisticated and fun places that are conducive to self-expression and creativity - characteristics that wouldn’t normally be associated with banks.

So take a look at this graph and think about the coolness that would be associated with your bank - by someone under the age of twenty-five. It’s probably fair to say that there is an inverse relationship between coolness and compensation required to attract the younger generations of employees; and that if you rank low on the coolness side, than your compensation offering would need to be higher to attract valuable employees in this age group. However, the flip side to this is more important. Banks need to shift focus to make the workplace more attractive to younger generations – this then has a rippling effect as a bank with younger employees becomes more easily marketable to younger generations as well.

This topic is deserving of more careful attention by banks around the country – and I plan to revisit this topic in future blog posts, articles and presentations.

The Great Exchange

As I posted earlier, we spent the first few days of this week in Orlando as participants at Americas Community Bankers Great Exchange Conference. The conference was great, and I would like to thank all of those that we met, talked to and shared ideas with during the conference.

While we were involved in two presentations: “How to Differentiate Your Bank” and “Life-Cycle Marketing,” perhaps the most interesting session we participated in was Tuesday’s peer group session, where we discussed three issues that attendees identified as most pressing to them. While a majority of the people in the room held marketing positions – these most pressing issues extend well beyond marketing, and are issues that many institutions across the country are currently facing:

Attracting Younger Customers
Many community banks are faced with an aging customer base; and, as a result are under pressure to attract younger customers to feed the new customer pipeline. I found it interesting that people in the session couldn’t understand why the younger generations would be attractive targets. Their reasons included everything from low incomes to irresponsibility; but, these are pretty big generalizations, and if younger generations aren’t targeted in some capacity, who’s next in line? It’s critical that community banks first realize the importance of targeting the younger demographic segments and follow that with the development of an aggressive strategy – which has implications well beyond the marketing department.

Growing Core Deposits
We have heard this one before – and growing core deposits will continue to be an issue for community banks. Especially in the wake of investment firms like Edward Jones and Charles Schwab continuing to market themselves more aggressively to a wider audience. As with most industry-wide issues, there is not a universal answer here. Real sustainable growth in deposits is more likely to come as you communicate and deliver a real value to your customer – and move away from rate or product driven promotions. And, growing core deposits requires a thorough understanding of your market, the potential within your market and, ultimately, a strategy for achieving that potential.

Training Your CEO
We found this issue to be one of the more interesting issues to arise in conversation – but, once again, the room was largely those in marketing positions; and it’s been our experience that there is usually a disconnect between marketing personnel and the CEOs of financial institutions. So, we discussed ways for marketing heads to better communicate the value of marketing to their CEOs who, in many cases, think of marketing as too “touchy feely.” Some of the more convincing ideas involved discussions of best vs. worst case scenarios, and conducting thorough research into costs and projected ROI before presenting ideas for approval.

Overall, the conference seemed to be a success. I would like to invite anyone to share their thoughts, ideas and comments about the conference right here. And, as always, if you have any questions about our sessions during the conference, please feel free to email me at bwalen@formarketinsights.com.

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?

Reality Check

Most financial institutions state growth as one of their goals every year, and 77.8% view branching as their chief avenue to grow. Institutions are seeing mixed results; however, because branching is no longer an automatic success. Instead, many institutions are turning to organic solutions such as differentiation. We at Market Insights are encouraged by this, because it’s something we’ve been talking about for years.

Still, most institutions are spending a lot of time, money and energy pointing out the differences between organizational structures and ownership, and virtually no time pointing out the things that make their institutions unique. They haven’t seen the results that they expected, and now they’re wondering, why?

CALLING ALL CREDIT UNIONS AND LOCALLY OWNED COMMUNITY BANKS

It’s time for a reality check. It’s time to check in with how consumers view you. Step out from behind the teller line, away from your desk, out of the office and separate yourself from everything connected to your job.

Now ask yourself:

Do you care what type of institution holds your checking account? Does it matter who’s paying that 5% on your CD? How much of the interest from your loan do you expect to benefit from through Community Reinvestment?

The simple answers to these questions for most consumers are: No. No. and Huh?

It’s time to take that rare, proactive approach to answer the public’s age old question of, “What does that mean to me?” Customers, members, and clients alike have a hard time connecting with the classification of any institution, because quite frankly, they don’t see how it affects them. If you can show the general public some real value (in their eyes, not yours), then you can start to build a case for your institution.

Where do you start? Avoid the Credit Union vs. Bank and the Community Bank vs. National Bank comparisons; and instead, focus on how your individual institution is different from every other institution in Bankland. Figure out what you can provide that is truly unique to your institution. Then figure out how to communicate your uniqueness to the public. After all, your most compelling case for Community Banks is also a compelling case for your Community Bank competitors.

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.

CUNA Marketing and Business Development Conference

I recently presented a concurrent session at the CUNA Marketing and Business Development Conference in Las Vegas. What a fun, innovative and energetic conference.

I found the attendees completely pumped about being challenged to think and do things relative to marketing – differently. I spoke of the need to consider what I call the 3 additional P’s of marketing (beyond the 4 traditional P’s of marketing), to help transform their businesses.

My three P’s are: Make it Personal, Make it Product Free and Do it with Passion! It became the new chant at the conference!

Gone, MUST be the days of impersonal service and lack of connection with the member or customer, gone MUST be the days of the product of the month and pushing what the consumer does not need, and gone MUST be the days of people who do not live and work from passion.

All of the great marketing in the world will not get any type of business anywhere, unless we create a personalized experience for the consumer, we connect with them at a deeper level and we embody passion.

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.

Branching Update from ABA Competitiveness Survey

This month’s ABA Banking Journal includes the organization’s annual Community Bank Competitiveness Survey which, once again shows that branch expansion is considered to be community banks’ main source of growth. More than three fourths of those surveyed (77.8%, up from 76.7% in 2005) view expansion as the chief source of growth.

I am not surprised by this; but, what does growth mean to the people surveyed? Does growth have more to do with physical location, presence and size of footprint than deposits, share of wallet and profitability? If this is the case, then I would have to agree that branch expansion could be considered the most viable way to grow in terms of a physical presence. However, if we were to talk about growing deposits, share of wallet and profitability – I would challenge the thought that expansion is the best way to grow, and propose that organic strategies are the most viable way for many community banks to achieve and sustain growth.

We all know that expansion is an expensive commitment. Perhaps this is why 71.7% of this survey’s respondents said that their networks have stayed the same in terms of size between 2005 and 2006. It’s interesting to think that more than three fourths of those surveyed said that branching is viewed as the main source of growth, and only one fourth of the respondents said that their branch network has grown over the past year. Branching is expensive, but it is not the only way to grow. Community banks have to consider organic growth opportunities in order to remain viable.

The survey also discusses the issue of convenience. Once again, this issue was one-dimensional, as convenience was based only on physical branch hours. And, once again, there were really no surprises: less than one quarter of those surveyed offer evening hours; a quarter of those surveyed are not open on Saturdays; and forget Sundays – only 5.4% of those surveyed have Sunday hours.

The biggest red flag about convenience in article came in the author’s summary, saying “With more deposit volume arriving in the electronic in-box instead of in bags in the branch; more transactions going to plastic; and increasing sophistication seen on all banks’ websites, “bankers’ hours” won’t have to expand further to meet the demands for convenience, in spite of the Commerce Banks of the industry.” In markets around the country, customer demands are changing – and traditional “bankers’ hours” aren’t going to cut it. Sure, we are seeing an increase in electronic banking; but we are not seeing increasing sophistication on ALL banks’ websites – and we certainly can’t be made to believe that electronic channels will replace some customers’ demands for convenient (i.e. before 9am, after 5pm and weekend) branch hours.

Electric Orange

“America's first all–electronic, paperless checking account is going to change the way you do your banking.”

Can a checking account really “change the way you do your banking”? This is precisely how ING Direct begins its description of Electric Orange, the institution’s recently launched checking product.

The account is positioned to target those who want a high interest checking account (4.00% - 5.30%, depending on the balance), and the conveniences of a sophisticated online experience and an extensive ATM network - ING has teamed up with the Allpoint Network to offer account users free access to over 32,000 ATM’s across the country. The account compliments ING Direct’s popular high yield savings accounts and is directly in-line with its strengths as an institution capable of delivering high rates, a great electronic experience and straightforward, easy to use products.

The account is definitely a departure from traditional checking accounts in that it encourages electronic check writing and bill pay as opposed to using paper checks and check books. It’s not surprising that this is the case given ING Direct’s online delivery focus and target market.

Electric Orange isn’t for everyone; it’s targeting those who don’t necessarily value the “benefits” of traditional checking accounts. ING recognizes that this target doesn’t necessarily value a free order of checks, or a checkbook at all for that matter; and as a result, they have created a product with a different, more focused value-added that can definitely change the way that its customers do their banking.

Keep It Simple

Today’s competitive landscape is changing; and as regional and national players become more aggressive in their marketing efforts, it’s time that you do the same. Marketing today’s financial institutions isn’t easy; but, in an industry where institutions continue to look more and more alike, and traditional “bank/credit union marketing” doesn’t work like it used to, marketing is more important than ever. Some institutions clearly understand the importance of marketing; however, many are employing reactive and unfocused strategies which often produce lackluster results and do little to add to the bottom line.

When it comes to your advertising campaign message, I suggest that you keep it simple.

Financial institutions are notorious for text-heavy, product-focused marketing that can seem random at times. Often times, these initiatives attempt to say too much, and can do more to confuse a customer than to encourage action and/or build a relationship. Today’s consumer is bombarded by as many as 3,000 advertising messages a day; and they want to know quite simply what’s in it for them – beyond the expected free checking account or great CD rate. So, rather than delivering a series of product-focused or rate-driven advertisements, complete with all the fine print, financial institutions can become more effective in marketing themselves by allowing one simple and compelling message to drive their efforts.

The first step in keeping it simple is letting go of the traditional financial services marketing mindset where every advertisement highlights the latest product or rate promotion. Sure, many customers want the latest products and the best rates, but no one has the time or patience to read every last detail about them in an advertisement. Keeping it simple is about communicating your unique value quickly in one powerful and easy to understand message.

Think of the messages used by Citi over the years: Live Richly; Where Money Lives; and the Citi Never Sleeps. Each of these messages is simple; none of them mentions a product or rate. Furthermore, each works to establish a deeper connection with the audience, beyond the latest product or rate promotion, and each was/is used as an organizing principal around which all marketing efforts were based.

The idea of keeping it simple can also make individual advertising and marketing efforts more cohesive when it is applied to an entire campaign, as opposed to just individual ads or marketing pieces. As mentioned in the Citi example, once your message is established, it should be used as an organizing principal that informs all of your marketing efforts.

Another great example of allowing one simple message to drive an entire marketing campaign is Harris Bank’s “We’re here to help” campaign. The message is simple and compelling. The advertisements that support the marketing campaign feature clever help tips and advice for the audience. The help tips include everything from driving directions to subway information; they do not discuss product details or rate promotions.

Consumers have been conditioned to expect text-heavy advertisements from financial institutions who offer the latest giveaways for opening new accounts and great home mortgage rates. Because of this, the audience tends to ignore these expected messages. Effective marketing in today’s marketplace demands that you communicate a simple but compelling message that can stand alone – without all the details and fine print.

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?

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.

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.

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.

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.

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.”

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.
  
  

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.

Great Idea: The Boardcast

So, what really happens during Board meetings at your financial institution? The Board of Directors is responsible for making decisions that not only affect the institution, but also those that affect the customer. Yet, as customers, we are rarely exposed to topics of discussion in these meetings, and even more rarely given the opportunity to bring up issues directly to Board members. Well, this has changed at UFirst Federal Credit Union (Plattsburgh, NY), where the Board of Directors has created an open forum with its very own blog.

The blog, called The Boardcast, looks to have been established on January 1, 2007 and is giving UFirst members the opportunity to not only learn what topics are discussed during meetings, but to also learn how the Credit Union is addressing problems and changing to meet member needs. In addition, and perhaps the most impressive feature of doing this through a blog, is that members have the opportunity to post comments and ask questions directly of the Board members – for everyone to see; individual Board members can also be contacted directly from the blog.

In today’s financial services industry, where many people have no idea what a blog is, institutions with blogs are defiantly amongst the more progressive. UFirst Federal Credit Union is taking innovative thinking a step further by creating an open forum between members, management, and the Board which offers a real opportunity for connection and could be leveraged to create a more loyal following.

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.”

BankerSpank.com: Credit Unions Continue to Push Customer Service

If you haven’t yet checked out BankerSpank.com, you should. The website has been established with the purpose of communicating the message that Credit Unions provide a better level of customer service than banks. This is the story that Credit Unions have told for quite some time; and, while it used to be enough to separate Credit Unions from Banks – it isn’t anymore.

In today’s industry, with talk of Banks using customer service training from the likes of Walt Disney and Ritz Carlton, it’s obvious that Banks realize the importance of customer service – service that goes above and beyond “good” or “expected” customer service. In fact, many financial institutions are raising the bar on customer service and striving for customer delight, not mere satisfaction.

The customer service gap that traditionally gave Credit Unions a competitive advantage over Banks has essentially disappeared. The bottom line is that customers demand more from their experiences with you, and this starts with customer service that does more than simply get the job done.

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.

Will that be cash or credit?

We all know there are fundamental differences in the way various generations use cash, credit and debit purchasing options. But how much are you really aware of what these differences are, and why the different generations use the products they do?

As I was reading the Monday January 15th edition of the Creditunions.com newsletter, there was an article called: “Gen Y vs. Gen X: Is There a Wallet Difference?” The article explained that the employees at Creditunions.com took a quick poll around their office of employees under the age of 30 and over the age of 30. This poll asked a few key questions about how these employees spend money. One of these questions was “how much cash is in your wallet right now?” and the other was “how do you pay for everyday expenses?”. They then asked why.

These are two pretty basic questions but it makes you think, how often do financial institutions (or any other service companies for that matter) actually check in with customers and ask meaningful questions like these? I am not just talking about running customer satisfaction surveys, I am talking about asking actual, meaningful questions about customers’ banking habits, want, needs and spending behavior.

It is often overlooked, but actually being in touch with customers and asking questions will provide a wealth of information about what types of products and services they use. What is the point of offering 10 types of checking accounts if you find out, after asking the customers, that 90% of them use only two different types?

Communicating with customers is a great way to help tailor product and service offerings to what they are actually using. You may begin to see trends emerge with the types of customers that bank with you and the types of products they are using. These trends might tell you some valuable things about who you are as an organization, and how you are different from your competitors.

The alternative might be monitoring competitors to make sure you are matching their product offerings. But, wouldn’t that defeat the purpose of differentiation?

Find out what customers are using, find out what they want, talk to them; after all, you do provide the best personal and friendly service right? Well, it seems to me that the best way to offer personal service is to find out what your customers want by talking to them…personally.

The Silver Bullet

I have been hearing a lot about it lately; the highly sought-after, and non-existent silver bullet. Recently, it seems to be on the minds of many management teams looking for the quick-fix to the complex and pressing issues facing today’s financial institutions.

Whether it’s marketing to a younger demographic segment, growing deposits or differentiating your institution from the competition, there is no one size fits all solution. In fact, addressing these issues demands careful evaluation of factors that are unique to your institution. Your situation, as it relates to your position, your market, your targets and your competition, is unique – and you have to consider these factors before letting someone else’s successful initiatives drive your institution’s growth strategy.

We would all like an easy button that actually works like the one in the Staples television commercials; but, that would be too easy. The pressing issues facing today’s financial institutions are just as complex and involved as their solutions need to be; there is no silver bullet.

Does your ATM have more personality than your tellers?

The New Year is here; and with the New Year comes new desk calendars. Upon returning to the office on Tuesday, I opened my desk calendar from the Onion to January 2nd to find this brief article.

Automated Teller Has More Personality Than Human Teller

SEATTLE—Waugh Street Washington Mutual's new ATM has more personality than Janine Byrd, one of the branch's human tellers, sources reported Tuesday.

While it is the Onion, the situation is one that I am sure we can all relate to; unmotivated bank personnel that go through the motions without exhibiting any kind of personality. Sure, this may have worked in the past, but today’s demanding customers want personal interaction; they want an environment that is welcoming and stimulating.

Furthermore, the advancements in technology are allowing ATMs to personalize the customer experience. It makes sense that the heightened personalization of the ATM experience would be reflected in a heightened personal experience with real bank personnel. Personality is important and your customers expect it; take a look around and pay attention to the “personality” of the ATM machine next time you use it – it shouldn’t have more personality than the bank’s staff.

Who is driving the bus?

The issue of sales culture is nothing new to financial services. We buy books about sales culture; we attend presentations about sales culture; and we read articles about sales culture –yet, many executives are left trying to figure out how exactly to build their own effective sales culture.

The November issue of ABA Bank Marketing Magazine features an article about sales culture, titled: “Is Everybody on the Same Bus?” The article highlights the efforts of two banks: Bank of Smithtown and The National Banks of Central Texas, as they developed two distinct and successful cultures of sales. The title of the article poses the question: “Is everybody on the same bus? – but, before we answer that question, shouldn’t we be asking ourselves: “who is driving the bus?”

This article, like many discussions about sales culture, fails to mention the most important foundational aspect of building a successful sales culture – leadership. Without first developing a culture of leadership within your institution, a cohesive culture of sales is difficult, if not impossible, to establish. The “driver” of a sales culture must be a leadership team that has the foresight to recognize the need to unite the team in an effort to sell.

So, before investing valuable time and resources in developing a sales culture to “get everyone on the same bus” – make sure you know who is driving.

What is good service?

Some will tell you that good service is greeting each customer with a friendly “hello” when they walk into a branch; some will tell you that good service is answering a customer’s questions; others will tell you that good service is service with a smile. While these all may be considered aspects of “good service” – they certainly will not give you a competitive advantage among today’s aggressive financial institutions.

In order to use service as a differentiator, it must actually be a different, and better, level of service than that offered by your competition. Furthermore, the service must be clearly defined and it must be communicated at all levels within your institution; the service must be noticeably different from that of the competition and must be considered valuable in the eyes of the customer.

Consider an article in the December 4th issue of the Chicago Tribune titled “Community banks find niche.” The article highlights Barrington Bank & Trust Company’s efforts to differentiate itself based on a high level of service targeting physicians with a program called Physicians Financial Care. As the article states: “Its Physicians’ Financial Care program, launched Nov. 15, aims to provide comprehensive financial services for doctors, helping them plan for all stages of their careers and run their practices…From eliminating medical school debt to running a practice and planning for retirement, the bank’s program aims to give physicians information and tools to make sound financial decisions.”

This is a great example of a community bank identifying and targeting an underserved niche with a specific service that is indeed different from the services offered by the competition. This is the type of differentiation we are talking about when we say, “In order to differentiate yourself, you must be different – truly different.”

The Color Red and Rubber Bands, who knew?

By now you've most likely seen the (Red) campaign created by Bono and Bobby Shriver. You may have seen coverage of Bono and Oprah's shopping spree at the Gap, Armani, and Apple stores on Chicago's Magnificent Mile. Maybe you've seen a bright red iPod nano floating around. Portions of the profits from all (Red) branded products will fund AIDS relief programs in Africa.

The concept is really no different from Lance Armstrong's "Live Strong" bracelets and the off-shoots from those. Who would have thought a rubber band could be such a fashion statement?

What the (Red) and Live Strong campaigns have done is simple enough. They've taken something as everyday and simple as red products or a rubber band, and used them to create an incredible buzz around world-wide campaigns to fight AIDS and Cancer.

What the marketers behind these successful campaigns knew is that the general public needs a reason to take action. A worthy cause is not always enough. Combine a worthy cause with something the public already wants and then you’ve got something.

The public may never actually want a checking account. But, the public does want the advantages of a checking account. It also wants the house that comes with a mortgage and the interest income that comes with a CD or IRA. Still, few people want to talk about these things. By default, that means no buzz unless, that is, you give them something worth discussing.

We all know that word of mouth is a valuable tool to any organization, so how can you get people talking about your institution? Instinctively we all probably look at our products first. Don’t. Products can be copied, and there are no intellectual property rights to 5.4% APY on a CD.

Challenge yourself to look deeper than that. Look at the experience of doing business with your organization. Find and reward champions of your institution, and make it a priority to continually improve and enhance your customers’ experiences. What about your institution is exciting and different from the rest? Have you created something that people will tell their friends and family about? Find that, or contact us and we’ll help you find it. Then, talk about it until you’re blue in the face (or Red). Better yet, ask your customers what they want; then give it to them, and encourage them to share their fabulous experience with everyone they know.

Make it Simple. Make it Work.

I recently opened a CD and a high-yield savings account online in less than 25 minutes. I understand that this is not typical, as my previous three attempts at opening the accounts left me frustrated, confused and looking for another institution with an easier application process. This should interest you, because you need to know what you’re up against. You need to know that there are institutions that have found ways to make account openings quick, simple and secure despite regulatory woes. You need to know that if you can’t open accounts easily and quickly, deposits are being lost to those that can.

The first attempt was with ING Direct, one of the more recognizable online banks around. The initial application process took about 30 minutes though, wanting to make sure to read the fine print, I was admittedly working rather slowly. Still, having taken longer than I expected, I decided to save my application and finish it later. When I tried to complete the application the next day, it was nowhere to be found. My application (personal information and all) had vanished somewhere into Cyberspace.

Frustrated, I searched for another option.

I found Capital One’s Direct Banking at the very end of the application process (after I had saved my information), I clicked what was to be the final “submit” button in the process. My computer lost connection to Capital One’s server. My account had been locked, because I had “abandoned” my application. Despite my pleas to the customer service representative, I would need to wait 30 days and start from scratch.

Third time’s the charm, right? Nope.

I tried my luck with Corus Bank in Chicago. If I had problems this time, I would be able to walk into a branch and sort it out. With that in mind, I reluctantly clicked on their online application. The online portion was smooth and quick. The problems came after that portion was complete. In 5-7 business days, I was to receive an information packet with my account details and instructions for completion of my account opening. It was 10 business days before I received my packet of instructions, and the rest of my application. My online, paperless application included paperwork.

You’ve got to be kidding me. Is this really so difficult? Doesn’t anyone want my deposits?

In true Generation-Y fashion, I put down my iPod, picked up my laptop and visited www.bankrate.com. In a matter of minutes, I found AmTrust Direct which had the products that I needed, paid higher interest rates than the previous three, and had a guaranteed 10 minute application for each product. In twenty five minutes I had found AmTrust, completed both applications, and gone back to enjoying my day. My accounts were opened the next business day.

Alone, my deposits are too small to make an impact on the bottom line of a behemoth like Captial One. But, how many other people, with much larger balances have had similar problems? How much of this low maintenance deposit money is walking out the door? More importantly, has money like this walked out of your institution’s doors? Have your customers or prospects had these or other problems with your institution? Ask yourself, have we made it easy to open an account, to switch to our institution, or to manage our accounts?

Does your process work seamlessly every time? If not, how can it be improved? Either way, can you make it quicker and simpler? Can you provide a process to bring accounts to your bank in 10 minutes?

Make it simple. Make it work. Or, in 25 minutes, every deposit dollar in your institution can be gone.

On Leadership

Facing New Realities in the Financial Services Industry

A chilly, damp Sunday morning in October found me with about 40,000 other men and women participating in the 26.2 mile Chicago Marathon. This was my fifth marathon so I knew what to train for and I knew what to expect; but I also knew that each race was different and offered new opportunities and challenges.

As you might imagine, there are countless thoughts filling your mind during a run of that length – my pace, the next water stop, the cramp in my leg, my personal best. But along this year’s course my thoughts were interrupted by a spectator at various points along the course who was yelling “Just get it done! You’ve committed, just get it done!” And while his message had clear meaning for so many of us that were running; his unsolicited encouragement also prompted me to think about the topic of leadership.

“Why leadership?” you ask. It is really rather simple. Leadership is the capacity to create a compelling vision and translate it into action. And within the financial services industry, top management teams may talk a lot about growth, profitability and competition – but they often fail to flex their leadership muscles and translate the talk into meaningful action. They need someone on the sidelines reminding them to “Just get it done!”

Read More Here

Issues Facing Your Institution

As we prepare our presentation Hot Topics for 2007, we would like to invite your suggestions regarding the issues facing your institution that you would like to see addressed in our upcoming presentations and/or articles. The consultants at Market Insights are constantly seeking fresh ideas - so let us know what you would like to see discussed in the coming months.

Industry Focus: Differentiation

The BAI Retail Delivery Conference is right around the corner, and Market Insights is looking forward to participating in an event that will focus on the themes of innovation, strategic clarity and differentiation – as we have supported our clients in these areas for quite some time. Upon reviewing the program for the conference, which takes place in Las Vegas from November 14th-16th, it’s obvious that the industry as whole is facing many of the same issues; BAI’s program sites the following as “your challenges:”

- Respond the forces of commoditization
- Escape the trap of old ways of doing things, and
- Transform your organization

Market Insights has recognized these “challenges” in many of our projects, and has been involved in many Differentiation and Messaging Programs to help institutions respond to the ever-present forces of commoditization. In addition, our approach promotes action – and is definitely designed to help organizations transform their thought and business processes.

It comes as no surprise that the November/December issue of BAI’s Banking Strategies magazine focuses heavily on the issue of differentiation; the conference is all about it. The conference description starts: “It’s not easy to differentiate. To do it right, you need to change your perceptions and challenge how you think about your business.” I would encourage you to read the following articles from the magazine:

- Generating Customer Delight Across a National Franchise
- How Umpqua Sustains and Builds On Its “Pretty Cool” Status
- Customer Experiences Rule

“All banks and credit unions are the same.”

We spent a great deal of time in 2006 researching bank and credit union value propositions, messages and taglines – and most of them are mediocre at best. Today’s customers don’t want to hear you talk about your “great service,” they expect it. That being said, here are five over-used value propositions that will not differentiate your institution from the competition:

1. We provide exceptional service
2. We are your community bank/credit union
3. Our decisions are made locally
4. Our people make the difference
5. Come see what makes us different

Success in today’s commoditized financial services industry depends heavily on value added – value that is truly different from the competition, and the effective communication of that value. Until a unique value proposition is communicated, most consumers will tell you that all banks and credit unions are the same.

Does your value proposition look like any of the five listed above? These may have done the trick in years past, but do little in today’s financial services industry to differentiate based on real value. Remember, in order to differentiate yourself you must be different, truly different – and not just say that you are.

Learn more about Market Insights' Differentiation and Messaging Program.

Would you like some new music with your deposit?

When is the last time your bank offered you free music downloads for opening a new account? - And when is the last time you put on headphones at a listening station to hear new music - at your local bank branch? Well, this is exactly what Umpqua Bank is doing as part of their new "Discvoer Local Music Program."

In fact, Umpqua Bank has released the first compilation album “Local Music: Vol. 1: Sacramento to Seattle” as a result of this program which highlights various local artists from Umpqua's markets; the album is in its branches, on its new website: www.UmpquMusic.com, and through iTunes.

The idea is simple, yet unexpected from a bank - and that is why it works. Umpqua Bank is supporting local musicians in its markets (which include areas of Northern California, Oregon and Washington), by selling the artists’ CD’s in Umpqua Branches and selling songs on the Bank’s website. The program seems to be a win-win: It exposes Umpqua Bank customers to new local music, and more importantly for the Bank – It exposes fans of the artists to Umpqua Bank.

This “Discover Local Music Program” is one of the many innovative marketing initiatives that the Bank has undertaken – and it is this type of innovative thinking that has allowed for the Bank to grow into a $6.6 billion institution.

Packaging Products by Lifestage

Take a look at how First Independent Bank of Southwestern Washington is approaching its customers by lifestage. The Bank has defined four unique lifestages that it uses to classify its customers:

- Ready, Set, Grow!
- Ready for Anything.
- Ready to Explore.
- Ready for Rewards.

First Independent has designed a quiz that allows customers to determine their own lifestage - which is extremely easy to use, and is only six questions long. The link to the quiz is on the homepage, which makes it that much more of an effective tool. Most importantly, once a customer's lifestage has been identified - First National Bank's website displays a series of questions typically asked by customers in that segment, financial considerations for that segment, and how First Independent can help.

Packaging products by lifestage is a great tool for the customer and for the front-line staff. It exposes customers to products that they should consider, gives the staff members an idea of what customers may be likley to purchase - and sets the stage for the successful cross-sell.

Seeing Red: B of A Reps “Concentrate to Dominate”

Whether it’s the red backlit ATM storefronts or the branches popping up at some of the most visible intersections in the city – Bank of America is certainly taking Chicago by storm. And Chicago isn’t the only city seeing red; this weekend’s Wall Street Journal included the article: “Branching out – Bank of America Uses Retail Tactics to Raid Manhattan,” profiling B of A’s aggressive strategy (discussed below) – which has included the building of 41 Manhattan branches in the last two years.

While the banking giant has an extensive branch network and marketing budget to match, it still manages to focus on the customer experience – or “customer delight,” a difficult task for many financial institutions. The article sites the “‘Bank of America Spirit Program’ – welcoming everyone who walks in, cleaning up clutter and measuring ‘customer delight’ by calling people each night who were in the branch that day for feedback. Bank employees were not assigned offices, but instead were told to wear comfortable shoes – because they were expected to spend significant time in the lobby greeting customers.” The Bank of America customer experience is undoubtedly enhanced when a follow-up call is placed to inquire about the branch and quality of service.

In addition, Bank of America’s branch officers are well equipped sales people. The WSJ article also sites: “its branch officers learn scripted sales pitches and the company mantra, ‘concentrate to dominate.’ They carry laminated pocket cards listing key points of company philosophy. They start each morning with ‘Daily Connect,’ a huddle in every branch to receive a sales-motivation message from Charlotte, N.C. headquarters.” Each of these initiatives suggests a strategic focus and a clear message that has undoubtedly contributed to the success of the Bank’s aggressive branching.

While deploying a team of 200 people in branded t-shirts to pass out 82,000 packs of branded M&M’s and Starbucks gift cards is well out of reach for most financial institutions, some initiatives undertaken by B of A are certainly worth consideration:

- Welcome everyone who walks into your branch
- Clean up clutter throughout the day
- Call customers to thank them for coming into your branch, and inquire about their experience – take their comments seriously
- Create a “cheat sheet” for bankers with your bank’s strategic messages
- Hold daily meetings to motivate your team to sell
- Reflect your brand in your marketing, don’t be afraid to be bold

Say it with me: “Podcast.”

Targeting the younger generations is an issue facing financial institutions across the country; as a result, we are constantly asked: “How do we market to Generation Y?” One tool, which seems to be gaining popularity in every industry except financial services, is the Podcast. When we suggest that a client use Podcasts to educate and attract younger customers – we are usually met with blank stares, utter confusion and the question: “Podcast? – What is a Podcast?”

Essentially, a Podcast is an audio file that you record and post online for others to download; the goal is often times to educate, inform, entertain and/or answer questions as audio – rather than as simple text. This allows your audience (customers and prospective customers) to download the file and listen to it at their convenience.

American Banker recently featured Financial Center Credit Union as an example of an institution taking action to target Generation Y - using Podcasts. FCCU has developed a Podcast series called “Talkin About the Benjamins” which addresses issues important to Generation Y, and is reported to receive over 1,000 hits a month – primarily from the younger generations.

The Podcast is just one of the many changes in marketing media and avenues. While Generation Y commands attention, the most successful institutions are well aware that this segment deserves attention, and are willing to take on new initiatives, like Podcasts, to serve them.

Differentiation: the "Art Effect"

This fall, Park Avenue Bank plans to unveil a truly unique point of differentiation. Business Wire reports: “Charles J. Antonucci, President and CEO of the Park Avenue Bank has announced plans for the construction of a museum quality art gallery within its first retail branch in Manhattan at 350 Park Avenue.”

American Banker - Community Banking Magazine recently published an article titled: “Staffing a Branch: Tellers, Managers and a Curator.” The magazine quoted Antonucci as saying: “In New York, there are branches on every corner, and every bank is doing the same thing. We wanted to create something unique” In addition, they reported Martin Mullin, the director of the art gallery, as saying: “the idea behind the gallery is to promote the museums, enhance the neighborhood – and, of course, attract more potential customers to the bank.”

Community Banks should take note of this example. Park Avenue Bank understands its competition and is committing to a true point of differentiation, one that is truly different from the highly competitive landscape of New York City. In addition, the Bank obviously understands its customer base and its market; its efforts will compliment the other galleries and museums in the area that already exhibit art from around the world. Perhaps most important, Park Avenue Bank understands that in order to attract new customers to the bank – they must go above and beyond providing good customer service and a wide variety of products; the gallery concept will attract PR, appeal to existing and potential customers – and allow the Bank to stand out from the rest.

Keep an eye out for this type of thinking – and we’ll see what kind of results the “Art Effect” will have at Park Avenue Bank’s new branch.