Check Out the ING Cafe in Chicago

So, I finally made it down to check out the new ING Direct Café this weekend – and I was very impressed. The Café, which opened last month in Chicago, is the fifth physical “branch” location from the internet-focused institution, and if you have a chance, you should check it out yourself.
As the name implies, this isn’t your typical bank branch – it’s set up as a café serving coffee from Peet’s Coffee and the baristas double as personal bankers who probably spend more of their time making cappuccinos than opening savings accounts – but that’s exactly how ING intended it.

In an industry where financial services executives and marketers are looking for ways to drive traffic to their branches and get customers to stay a while, ING seems to have figured out what works for them – as the place was packed when we stopped in.

First of all, the café is in a great location with tons of foot traffic; it’s near Michigan Avenue shopping, an el station and a Loyola University Campus. And, the café is impossible to miss – as the orange façade screams ING to anyone within two blocks.

Once inside, it definitely feels more like your local coffee shop/internet café than your typical bank branch. Teller lines are non-existent; instead, you are greeted by the baristas – mine happened to be the branch manager. There are no personal banking desks – but, there are tables and chairs, lounge chairs, and about a dozen internet kiosks for anyone to use free of charge.

My wife and I had intended to take our drinks to-go, but, after ordering our drinks the manager said “I hope you’re planning to stay and drink these here – we have cool espresso glasses…and it always tastes better from a real glass.” So, we decided to stay. And, as our drinks were prepared we continued our conversation with the manager, who let us know about the weekly specials. On Fridays, customers’ drinks are free if you wear orange (the ING brand color); and, on Mondays your drink is half-price if you use your reusable ING travel coffee mug.

Me with my "really cool, real espresso glass"

In my conversations with the branch manager, I learned that the café also has a community room that is available to anyone to host presentations/seminars at no cost. And, that the entire facility is available to anyone after hours if a larger space is needed – this is also available for free. The entire space is carefully planned out – with a good mix of entertainment and merchandising, and the brand is reflected everywhere.

I told the manager that I was surprised that he didn’t ask us if we were ING customers or try to pitch us any banking products – and he said “that’s not what we’re here to do; we want you to enjoy yourself and we know that you’ll ask us about our services when you’re ready.”

Perhaps the most interesting part of the experience came as the customer in front of us at the coffee counter tried to tip the barista – to which the barista said “thank you, but we’re a bank – and we want you to save your money.”

ABA Discussion Point 3: Developing a Message to Appeal Broadly

When asked about the most pressing branding issues facing financial institutions, one participant in the roundtable discussion at this year’s ABA Marketing Conference responded:

“We need help developing a message to appeal more broadly.”

In an industry where so many institutions are striving to be “all things to all people” with messages that are already very general and safe, financial institutions should be taking steps to narrow (rather than broaden) their messages – and to clearly communicate the value they bring to their target markets.

Rather than addressing the issue of creating a message with broader appeal, I think the question that more bank marketers should be asking themselves is:

“How can our message be refined to speak more directly to our target market?”

While I can understand the interest in trying to attract more people to an institution, it’s important to remember that the industry is full of so many other institutions trying to do exactly the same thing. And, from the consumers’ perspective, this can only make it more difficult for them to distinguish between institutions in making a choice.

As a result, institutions should be looking to clarify their target market. And, after the target market has been established, it’s important that marketers take the time to understand the needs, values and preferences of that target. This level of understanding will allow messages to be created that have the ability to cut through the noise of other institutions’ more generic messages.

Keep in mind, that while your refined message may resonate loud and clear with your target – it may not be well received by everyone. But this is exactly what you are trying to do – allow people to easily see that you are the choice for them…even if this means that others will have to keep looking.

Be sure to keep your eyes out for Jeff Stephens' insights relative to this topic on The Story.

ABA Discussion Point 2: Branding Beyond Graphic Design

Our conversation from the ABA Bank Marketing Conference continues as we discuss the issue of branding beyond graphic design. Jeff Stephens offers his insights relative to the topic in his most recent blog post, and I would like to expand upon a couple points he made yesterday.

First of all, it’s important that we remember that graphic design most definitely plays a role in creating perceptions about our brands, but it is only one contributing factor in creating those perceptions. At Market Insights, we recognize your brand to be composed of three major elements: the visual, the verbal and the experiential. Graphic design addresses the visual; it may influence peoples' experience with your brand – but it certainly does not address the verbal element of your brand.

Jeff uses the concept of touch points to illustrate this point – which suggests that any interaction with your organization contributes to the perceptions people have about your brand. Perhaps the most important point to keep in mind relative to touch points is that “only a few of them are created by your bank marketing department.”

This is especially important when considering any kind of overall branding initiatives. All too often, bank executives and management teams are quick to place responsibilities relative to branding in the hands of their marketing departments. And while marketing departments should certainly drive these efforts, powerful brands require the involvement of everyone within an organization.

The expectation that marketing departments can handle the entire process relative to branding initiatives may be based in peoples’ belief that branding is all about graphic design (i.e. brand being equated to a logo and tagline). But, like Jeff pointed out, elements of your brand such as your choice of carpet and the way your employees shake hands with your customers don’t involve graphic design at all – and probably are not considered to be the responsibility of your marketing department.

Powerful brands are created when the visual, verbal and experiential elements work together. And, this is usually accomplished when they are deliberately crafted and carefully managed. Graphic design obviously plays an important role in creating pieces that support your brand visually, but don’t let the verbal and experiential elements fall by the wayside.

Continuing the Branding Roundtable Discussion

After returning from the ABA Marketing Conference last week, we decided that we would continue the conversation from the branding roundtable session with our friends from Creative Brand Communications on our respective blogs. Each of us have addressed the first point of discussion – the definition and process of bank branding, and during the coming weeks, we each plan to offer our take on the following discussion points:

• Branding beyond graphic design
• Developing a message to appeal broadly
• Branding and ROI
• Branding across business units and market segments

Jeff makes some great points relative to the definition of your brand. Namely, I think the point about your brand being the total sum of experiences anyone has with your company anytime is one to remember as you consider your institutions brand.

As we have discussed before, it’s clear that the concept of branding is unclear to many financial services executives and marketers. To illustrate that point, I want to use an example that was brought up during the roundtable discussion at the conference.

At one point during the discussion, one of the participants made a statement like:

“I don’t understand why people consider Commerce Bank as having a powerful brand and value proposition – their customers are always coming into my branch and complaining about the service they receive; and, I always see long lines in their lobbies. How does this translate into having a powerful brand?”

And, the point was made that Commerce Bank’s position is not based on service or short lines – it’s based entirely on convenience. The bank touts itself as “America’s Most Convenient Bank”, not as “The Bank with the Best Service” or “The Bank with the Shortest Lines” – the bank’s marketing, branding and delivery choices are made within the context of being the most convenient bank in America.

Commerce Bank is focused on creating the perception of being the most convenient, what perceptions does your brand create?

Branding Roundtable Discussion at the ABA Marketing Conference

Earlier this week, I attended the branding roundtable discussion at the ABA Marketing Conference in Baltimore – which reinforced my belief that branding is still one of the most misunderstood initiatives in financial services. The session was short and the issues presented for discussion were not covered in sufficient depth; so, I would like to continue the dialogue and offer some insights relative to the topic of branding as it relates to today’s financial services industry.

The first issue that was brought up for discussion during the roundtable was defining exactly what branding is; and, clarifying what the process of branding looks like.

While branding has a variety of definitions, we understand effective branding to be the process whereby consumer perceptions are deliberately created and carefully managed. And, this creation and management of perceptions extends well-beyond your name, logo and tagline.

It’s important to remember that people already have perceptions of your institution and your brand. This is important, as many people involved in the branding discussion were talking as if they don’t have a brand because they hadn’t yet addressed the issue or undergone some kind of formal branding process.

With that, the process of branding your institution will look different depending on who you talk to. And, people in attendance at the session gave me the perception that they were trying to compare apples to apples with a discussion of costs relative to a branding project – at some point during the discussion, it was decided by the facilitators that a number between $50k and $150k should be considered a “good deal” in hiring a branding firm to work with you.

While there are plenty of firms out there that are capable of helping financial institutions create more powerful brands, it’s important to understand that their processes are likely very different. And, institutions that simply look at bottom line costs involved in a branding program are likely overlooking very important issues like how much time a firm will spend getting to know you or the scope of work involved (many creative firms will sell you a logo and tagline and call it “branding”).

It’s encouraging to see the issue of branding being discussed among bank marketers and executives – but, I think a presentation, as opposed to a roundtable discussion, could have brought some much needed clarity to the topic.

Targeting the First-Time Home Buyer Mindset

Many institutions target first-time home buyers in some capacity; but, I wanted to draw your attention to ING Direct’s Move Out, Move Up! campaign, as it really works to tap into the mindset of first-time home buyers.

The frustrations associated with renting an apartment are well-known. And, ING plays on three of them in their humorous animated website – having a baby, moving in together and getting away from bad neighbors. The site establishes a connection with these renters by stating what they are undoubtedly experiencing “Paying rent isn’t just getting old, it’s getting expensive.”

It continues to say that “Now may be the time to move out and move up.”

The site has games and videos associated with each of the three scenarios – and really does a great job in appealing to those first-time home buyers looking for an fresh and approachable presentation of mortgage products. ING does a great job in presenting a solution to a need, in this case it’s the need for more space that comes with having a baby or moving in with someone; or getting away from the hassle of bad neighbors and apartment buildings.

Perhaps the greatest value of the site is the fact that ING will pay the closing costs for those people that find a hidden code on the website (it’s not that difficult to find). This encourages the user to search throughout the website for both the code and the prompt where the code should be entered. After entering the correct code, ING issues a certificate which covers the closing costs.

Overall, this site does a great job tapping into the needs of first-time home buyers, rather than simply telling them what mortgage products and rates you can offer them – and it’s presented in a fresh, appealing and fun way that’s easy to navigate and understand.

Ask Us Anything

If you’re looking for a good bank website, check out Irwin Union Bank’s site. While it’s visually appealing, it’s also extremely easy to navigate and has a few elements worth pointing out.

First of all, the featured message on homepage is not static – it changes when you refresh or revisit the site. But, I was impressed when I visited the site and was greeted with a photograph of Brad Kime, President of the bank, with the message “Experience Easy at IrwinUnion.com.” And, after checking out some of the site’s features, I must say I am impressed. Easy is exactly the word I would use to describe my experience in navigating the site.

I think it’s also worth pointing out the Irwin Life section of the website which discusses areas of interest that aren’t typically associated with banks. These areas include: travel, food & wine, design, entertainment, wellness, and luxury & leisure. The content in these areas is intriguing to say the least. Like, when you look at entertainment for example – there are two music album suggestions as “summer soundtracks.” This is expanded upon by offering sample tracks from the albums and the artists’ bios. It also includes links to buy the album from amazon.com, the artists’ webpages, myspace pages and youtube videos.

Irwin Life is clearly a departure from typical bank newsletters – and has certainly captured my interest, and I wouldn’t be surprised if it captures the attention of people looking for a refreshing banking experience.

And, whether you have a question about their services or why they are featuring Ray Lemontagne as a featured artist in Irwin Life, at the bottom of each screen you’re invited to “Ask Us Anything”– it’s just the icing on the cake.

Brass Magazine’s Bryan Simms Gives Us 5 Gen-Y Characteristics to Think About

On Wednesday afternoon, I attended an excellent presentation given by Bryan Simms, CEO of Brass Magazine about Generation Y. The presentation “Generation Y Revealed” included five different characteristics that financial institutions may consider tapping into as means to target this young segment. And while this set of characteristics doesn’t apply to every member of Generation Y, it does provide a starting point for financial institutions to consider when marketing to this group.

First of all, and not surprisingly, this group tends to be tech-savvy. Generation Y uses all sorts of technology – everything from social networking online to text messaging with their friends, Simms highlighted the fact that today’s youth is able to do 44 hours worth of tasks in a 24 hour day because of their ability to multi-task. This is certainly an issue for financial institutions to address as this group demands sophistication, speed, ease of use and fun.

Secondly, Generation Y is very entrepreneurial, and this group is not likely to work for the same company for the duration of their career. Therefore, financial institutions must address both the personal side of this trend (i.e. making it easy to transfer accounts during job transitions) and the business side (i.e. offering small business loans to start-up companies).

In addition, Simms suggested that financial institutions consider the large number of New Americans that are a part of this age group. The average age of many immigrant groups tends to be younger than the average age of the American population; therefore many can be considered part of Generation X and Y. Financial institutions should consider how they target New Americans when they are looking to attract a younger demographic.

Also, this segment tends to be socially conscious. Financial institutions can attract the socially conscious members of Generation Y by taking an active role in areas of interest to this group – this could be anything from Habitat for Humanity home building to participating in community green initiatives. Or, institutions may support the socially conscious efforts of local groups through donations and/or fundraising for the efforts.

And, many members of Generation Y are considered to be underserved. While underserved segments exist across the age spectrum, Simms emphasized the importance of not necessarily associating “no credit” with “bad credit”. One approach to this market for financial institutions could be hosting financial education programs and offering services that are designed to help the underserved build a better financial future.

Overall, the presentation brought out some great points about attracting Generation Y to today’s financial institutions. I would also encourage you to take a look at Brass Magazine’s website for more about how financial issues impact young people. And, if you have the opportunity to see Bryan Simms speak, don’t miss it – he was excellent.

Change your mindset-revisited

From time to time, we will be posting our thoughts in video form. In this first video, I revisit changing your mindset as a means to survival in the financial services industry. I welcome your comments and suggestions for future video topics.

Canora Credit Union’s Name Change

I recently came across a document from Canora Credit Union inviting its members to help change the credit union’s name by submitting their suggestions. The document sites the Board of Directors’ interest in re-branding itself as the reason for the name change. In addition, the document also states that “a new name will help the credit union continue to grow and prosper for years to come.”

While I would be interested to see what kinds of names the members come up with, this initiative raises quite a few red flags.

Recently, we have seen an increase in financial institutions that are interested in the possibility of a name change. And all too often, we see institutions that have mistakenly simplified the re-branding process to include nothing more than changing their name and/or logo.

There are certainly appropriate times to consider changing the name of a financial institution. We see this most commonly in a few different situations:

• Institutions looking to expand into new markets with a name that is not associated with a specific town, city or geographic location
• Institutions merging together will usually opt to carry one of the institution’s names forward or will make a decision to establish a new name for the recently combined institutions
• Institutions looking to simplify their name and/or adapt to changes in their market as a means to stay relevant

Whatever the case, changing the name of an institution has huge implications across the board. From a branding perspective alone, a name change will impact the visual, verbal and experiential elements of an institution’s brand, and in today’s marketplace, these elements must be carefully managed to create favorable perceptions.

An institution looking to change its name should do so at a time when it can also revisit its brand standards to ensure that the two are in-line with one another and that they both support the institution’s overall objectives. In the case of Canora Credit Union, it seems like a misdirected effort in getting member buy-in to a name change. While acceptance of the new name is important, a new name can not simply be selected because it sounds good – as a name can make or break a brand, and the careful management of a brand is often times the difference between success and failure.

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.

Targeting Small Businesses with Lemonade

Jeff Stephens points us to the latest from Umpqua Bank – a campaign centered on perhaps the smallest and most basic of small business, the lemonade stand. “The Lemonaire” campaign, as the bank calls it, uses a variety of media to expose small business owners to the bank’s latest small business initiative - giving entrepreneurial youngsters the opportunity to start their own lemonade stand with the basic supplies and $10 business loan to get their business started.



Like Jeff, I find the campaign website interesting in that there is no overt attempt to sell and it’s minimally branded. You’ll notice that the only real message communicated in text at the bottom of the screen is not an attempt to sell product, but one of the bank’s philosophy – “We believe in encouraging entrepreneurs.” This, in combination with the fun and different presentation reflects Umpqua’s messages and overall brand, and will likely drive many small business owners to consider the bank for their needs.

Visit the lemoniare website and read what the New York Times has to say about this campaign.

New Presentation Hot Topics

Our team has delivered quite a few presentations to various financial services organizations this year; and, we pleased to share with you a new series of hot topics that we feel addresses some of the most pressing issues facing today’s financial services executives and marketers.

These topics have been greatly influenced by our observation that there is an industry-wide tendency to conduct business as usual, and are designed to challenge our audiences to step out of their comfort zones and think differently about a variety of issues. The topics include:

• Three Characteristics of High-Performance Institutions
  Understand your market; Differentiate from the Competition; and encourage a culture of Leadership
• The Magic of Internal Marketing
  The importance of involving your entire team in your marketing initiatives
• Training Your CEO
  Bridging the gap between marketing and the senior management team
• Reaching In or Branching Out
  Identifying the most viable means of growth for your institution
• The Great Demographic Divide
  A boomer’s guide to attracting younger employees and customers
• Leadership is not About Job Title
  The importance of leadership and innovation at all levels within your institution
• Change Your Mindset
  If you want different results, you have to think differently

See full session descriptions here

Please check out our calendar of events periodically, as we will be scheduling these and other presentations for the coming year. As always, if you have any questions about these topics or would like to suggest an additional topic that you think we should explore, please let us know.

Change your Mindset Idea #1: There is no Magic Bullet! - Today's Issues are Complex and Can Have Complex Solutions

It is human nature to take the path of least resistance and look for the easiest solution. Staples, the national office products retail chain, in its recent national advertising and branding campaign emphasizing the Easy Button, emphasizes this point. Making customers think it is really that easy is an excellent way to manage the mindsets of current and potential customers, however, it can be a recipe for “do nothing” to a management team with an outdated mindset.

Having worked with hundreds of financial services professionals over the past 15+ years, I am convinced that there is a severe case of “Magicbulletitis”. I use this term to define the tendency to look for one quick easy solution, which may not always exist. Folks – there is usually no one thing you can do, no one item on a "to do" list that will magically transform your business. But, Change your Mindset is a great place to start. Therefore, our final Change your Mindset blog post for June will address this topic.

Instead of thinking quick and easy, Think Long Term

Pick one or two strategic issues which you would prefer to solve quickly and easily. This could be something like being viewed as relevant in the eyes of a 25 year old and actually having them want to bank with you. A blog post is a great start, but it is not the magic bullet to instantly make you appear hip and cool with an audience you have all but ignored their entire lives. However, I suggest you draw up a plan in which you would have a set of initiatives over the next 36 months to engage with this segment and address all of the ways they will interact with you. Blog posts, an ever improving web presence, text messaging, putting a 3 person committee of employees at the bank who are under age 30 in charge of these initiatives is a great start. My main point here is for you to make a long term commitment to any group you choose to target.

There is a reason why retailers such as Starbucks, Whole Foods and Trader Joes are so successful. Yes, their “products” tend to be a bit more expensive than other providers in some cases, but they are not simply targeting a higher income customer. They are targeting the way people think: about the food they eat, about how they feel about their experience when they buy a cup of coffee, etc. Certainly demographics are involved, but the key driver to success with these retailers is that they know their customers intimately. These businesses have taken the time to understand their customers, they have continually modified and adjusted everything they do to create a unique customer experience and they made a long term commitment to getting it right.

In conclusion, I invite you to eliminate that tendency to look for the one and only thing you must do to change the situation you are in. I also invite you to read through all of the blog posts we have shared with you during the month of June. Our purpose in doing this during June was to give you suggestions and insights relative to how to shift your mindset. We hope it has indeed allowed you to see things differently.

Again, we are not suggesting that these daily blog posts are your magic bullets, but they are ideas we hope you will incorporate into your overall strategy for growth.

Thank you for your willingness to change your mindset!

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.
  
  
  
  

Change Your Mindset #3 - Focus on creating a customer experience rather than on customer service

Think of any visit you have made in the last year to any store (retail or otherwise) that stands out specifically in your mind. What did the establishment do to make this visit stand out to you? Chances are the visit stood out because it was more of an overall “experience” than merely a visit. And, the chances are that the visit stood out only because it was an experience. On the flip side of this question, think of how many visits you’ve made to establishments that you would just as soon forget, or have forgotten altogether.

Creating a customer experience does n0t mean just creating a beautiful branch facility that has a fluid floor plan, is very modern, and has plasma television screens. On the contrary a customer experience is none of those things. Creating a great customer experience is about all of the seemingly insignificant things that you do to connect with the customer from the moment they walk in the door.

An example of this would be having your concierge stand up, shake the customer's hand, ask them how their day is going, ask them what they need assistance with, and then walk them to the department where they need to be; instead of sitting behind a desk, saying hello, and pointing them in the direction of one of the departments.

Umpqua Bank is one of the most successful banks (large or small) in creating customer experience. Umpqua is currently running a program called LocalSpace that allows customers to use a networking service through Umpqua’s website to find local vendors and merchants for any variety of needs. This creates a feel of commitment to the local community with which customers can connect and creates an “experience” that is very specific to the local community on a branch by branch basis.

Another program that Umpqua has initiated is the Discover Local Music Project. Umpqua spotlights local bands and music in their markets, and allows the customer to sample the songs and even create a CD of their favorites. All of this is directed towards connecting with the customers and creating an experience at the branch that is memorable and stands out from the mundane daily task of visiting a bank branch.

Customer service is a standard and is expected. Very rarely will a customer recall that they had “good” customer service for any reason, but they will definitely remember if the did not receive good customer service. Therefore, quality service is the standard at which everyone must operate. In order to truly stand out you must create the “experience” that will connect with your customers, get them talking about your bank, and keep them coming back.

Change Your Mindset #4 - Branching is not always the most viable way to grow - Consider organic growth

According to a study released by BAI last November, the average community bank only considers about 24% of its customers “loyal.” For the average credit union that number gets a slight bump to 26%. Loosely interpreted, that means that by its own admission, the average small financial institution acknowledges that, at any moment, upwards of 70% of customers/members might walk out the door.

If we take a little more realistic approach, what that means is that financial institutions are doubtful that all of the time, effort and money that they’ve spent on recruiting new accounts will translate into sustainable, long term growth. This is a challenge to be addressed sooner rather than later.

But how?

In order to maximize the potential in a branch, an institution’s overall strategy must include elements targeted at organic growth. And, rather than an afterthought, those elements should be the primary focus of the strategy. For most institutions, this will be a major shift in mindset. Isn’t that a good thing, though? It seems hard to believe that the best customer loyalty rate this industry can achieve is an average of 26%. If we want different results in any walk of life, we need to change our approach, and the first step in doing so is changing our mindsets.

Consider this:

On average, 29 cents of every dollar is held in financial institutions. The other 71% is out there for the taking, if and only if, you can give consumers a worthwhile reason to move it to your institution.

Let’s assume that we have a financial institution with a few well executed branches. Let’s say that we’ve researched our existing markets, and discovered that the bulk of that extra 71 cents per dollar is investment money of some sort, be it stocks, IRAs, or 401K accounts. Convenience is a major player for high transaction volume accounts (i.e. retail banking). It does not seem to matter much when it comes to investments. Investments represent people’s future and livelihood in retirement, so driving a little further doesn’t seem to be quite as big of a hassle on the investment side. More branches simply aren’t going to get it done in this case.

An institution with a mind for organic growth would look at the marketplace and determine just exactly how high the demand for investments was. It would determine how many people and how many dollars that demand encompassed. It would then explore ways to meet the needs of the marketplace. It would make sure that the solutions added value from the customers’ perspective. And finally it would use this new focus to differentiate from the competition, and it would make sure that its key messages communicated what that difference means to the customer.


Unfortunately, organic growth seems to be lost in the seductive world of branching and quick returns. According to the American Bankers Association, over 75% of managers see branching as their number one avenue for growth this year. Branch network expansion is one piece of a strategy that can result in growth for a financial institution. There’s no denying the returns that can accompany a well-executed branch, but sometimes there are more profitable ways to grow. Where institutions run into trouble is when branching becomes the option, rather than one option.

We know that on average, each new account recruited costs an institution roughly $1,500. Frederick Reichheld, the author of “The Loyalty Effect” and “Loyalty Rules,” claims that the cost of acquiring a new customer can be 6-7 times as much as retaining a current one. Even at half of Reichheld’s claim - or a 3:1 new customer to existing customer expense ratio, it appears to be a sound strategy to concentrate the bulk of the effort on existing customers rather than on new customer acquisition. There are some obvious assumptions involved, but now we’re talking about a cost of $500 per customer (or less) as opposed to $1,500 per customer. What could you do with an extra $1,000 per customer?

Change Your Mindset #5: Who's Teaching Whom?

We all know the exercise. For some, we first saw it when it came time to program the VCR (remember them?) For others, it was using the cell phone. And for still others, it was loading and using the iPod they got for their birthday. To whom did we turn to help us (or better yet, do it for us?)

The younger generations have long been helping and teaching their elders when it comes to using the latest electronic and technological devices. And that practice continues to this day in very basic ways. For example, few days go by when I don’t ask my Gen X and Y colleagues about how to use some program or network we use in our daily business life. And I am sure I am not alone. So learning from our younger colleagues is hardly a new or novel phenomenon.

However, I am convinced those of us further along the demographic curve can do much, much more when it comes to hiring and developing new employees. Of course we should continue to incorporate the usual cultural assimilation activities and provide the necessary industry and product information to newly hired employees. But we should also make a concerted, formalized effort to learn as much as we can from them.

The obvious input they can have regards technology. Specifically, learn how responsive your web site is to their needs. What are their opinions for improvements? But that is not all. If you are not taking advantage of and using social networking media and/or other newer outlets to talk about your institution you are missing opportunities. Tapping your younger employees for information can support your institution in staying relevant to today’s younger market segments.

Your younger employees can be valuable resources to help you reach out and attract their peers. These are tomorrow’s customers. Find out what their outside/community interests are and how your institution can participate and align with these organizations/causes. Put them in positions of visibility where their peers may be able to relate to them. Most of all, listen to them. You’ll be surprised what you will learn.

Change Your Mindset #6: Hold Everyone Accountable

We all know that business as usual is often the path of least resistance, as it allows for routines to be developed and for employees to become comfortable. And when business as usual is accepted as the norm, managing any kind of change – especially organizational and/or cultural change can prove to be difficult.

This post is our response to our discussions with management teams that realize the importance of change within their institutions, but fall short during the implementation of such change because they fail to hold their entire team accountable. Think of it as a group of people that, instead of acting like a team, share different goals, have different agendas and ultimately act as barriers to the organization realizing the goals and/or vision outlined by the CEO and/or management.

As I mentioned above, this situation is especially prevalent when change impacts the entire organization or the culture. And, in the financial services industry, these kinds of changes are widespread due in large part to the commoditization of the industry and pressures to differentiate.

While concepts like differentiating from the competition, communicating a clear message and becoming a more brand-driven organization are new to many financial institutions, they are gaining traction; and they are exactly the kinds of initiatives that require involvement from everyone in an institution – not just the management team. Regardless of the initiative, in order to stay competitive and to grow in today’s marketplace, financial institutions must be dynamic; and in many cases this means embracing and encouraging changes rather than resisting change in favor of the status quo.

Think about this topic relative to your institution, and your institution’s vision. Is everyone working together as a cohesive team with the same goals in mind? In many cases, developing a clear vision is the first step – and communicating the vision and expectations of each employee should follow. When expectations are defined, everyone can be held accountable. And when everyone is working in the same direction, changes within your institution can be more easily managed – and goals more easily obtained.

Change your Mindset Idea #7: Take Action - not all decisions should take weeks

Then length of time it takes for many decisions to be made within the financial services industry concerns me. In a time in history where speed, responsiveness and being nimble is critical, the slow pace of decisions in this industry is nearly equal to doing nothing at all.

I postulate that fear is what keeps people from making decisions, fear of making the wrong one, fear of being judged, or fear of taking a stand on an issue. These are normal human challenges, all of which can be overcome. Here are two things you can do to help break the bottleneck of slow decision making at your institution and help propel the culture within your organization:

Push decision making authority down the chain of command: Empower some of your colleagues who may or may not be direct reports to make some of the decisions. Not only would this boost their motivation, but it would be your chance for a vote of confidence in their abilities.

Create a Culture of Asking for Forgiveness not Permission! The most successful companies not only empower their employees to make decisions, but to learn from their mistakes, not try to prevent them from making them in the first place. When an employee knows that he or she is supported and that the team “has his/her back”, they will do what is necessary to get the job done.

Take up these two ideas at your next management meeting and watch for the reaction of your younger colleagues. It is a sure way to help build buy in among this group.