Have you heard this from a community banker? “We are uniquely positioned to service the affluent customer.” And, “Our service is second to none.”
Don’t fool yourself. Your prospects don’t know about your service unless it causes problems for them. And, very few community-based financial institutions are more uniquely positioned to serve the affluent class than are their large competitors at the regional and national banks.
Real growth requires much more than the false perception that customers are privileged to bring their relationships to your organization. It takes a variety of factors, such as your brand, your product, your policies, your employees and their execution and your marketing. As banks try to build and sustain growth of their customer base, they often fall into the trap of focusing on only one of these factors or activities. But each of these activities has an impact and some are more important than others. Real growth requires a coordinated system of activities.
The airline industry provides an example of this concept. All airlines have planes, they all have pilots, flight attendants and luggage handlers and many of them fly the same routes. So, why is it that Southwest Airlines enjoys a better reputation than others when everybody uses the same planes and airports? What Southwest has is a much better activity system – it’s the combination of little things in terms of boarding rules, airplane maintenance, baggage handling and lower prices that makes the difference.
Now, let’s apply this idea to community banking. Like the airlines, financial institutions are all relatively the same. All have checking and savings accounts and all operate in much the same manner using banking systems that are recognizable from one bank to another even by the most inattentive customer. So, how can your activity system give your bank an edge over competitors?
Your people; engage them, train them, and allow them to have fun. Without changes to marketing or product, it’s very common to see dramatic changes to customer growth with a change in branch leadership. Also, branches in the same market, supported by the same marketing, and selling the same product, perform and grow at dramatically different rates. Having the right people, training them to serve your customers, and allowing them to have fun and enjoy the work while doing it, goes a long way in this part of the activity set.
Your customers; be there when they decide to switch. Unlike retail merchants, it’s hard, or almost impossible, for financial institutions to create the need for customers to buy their products. When Apple comes out with a new iPhone, it creates that need for its followers, who crave the new features. Banking can’t create that need. However, banks can determine when people are more likely to have the need for a new core relationship and determine when they’re looking for a new primary financial institution.
Bank customers are more likely to move their relationships when they go through life changing events such as moving, getting married or changing jobs. However, it is difficult to be in front of these customers when such events happen. While highly-targeted contact lists can be purchased for all of these events, in most cases, you reach potential new customers too late.
An even larger potential account holder group consists of prospects that are angry at or dissatisfied with their current financial institution. Maybe their bank changed products or hours or closed a branch. Maybe their mobile and online banking delivery channels are inferior. But how can you find the portion of these prospects who would consider your organization’s services right for them?
The answer is simple: Data. Begin by modeling your current customers to give you a starting point for designing a convenience footprint for your branches. If the prospect target group becomes too large, you can fine tune the focus by adding characteristics of your current customers to the targeting model. Most of those current customer attributes will be more reliable than any data or demographics you might purchase. Then, the availability of more and more (big) data allows you to enhance your best-prospect model.
What if you could determine the likelihood that one of your branches will be convenient for prospects by overlaying their cell phone and GPS data footprint? While you don’t know where these individuals work, eat, or play, you can have a good idea of where their cell phones are active. With the prevalence of mobile devices, this can become a very predictive indicator and a great real-world example of big data applications.
Lastly, you must not wait until an event has happened in the prospective customer’s life. You are much better off limiting the target audience by fine tuning the model while you increase the frequency of times you are in front of these high-quality prospects. This method allows you to actually be in front of them prior to a trigger event that prompts them to look for a new primary financial institution.
Product is not the answer. All of us hope to find marketing’s silver bullet. For core customer acquisition, we seek the single product that is the answer to our desired growth. If it were that easy, we all would see one clear winner and implement that product ourselves. Don’t get me wrong, your product is important; part of the product-related component of your entire activity system are characteristics like simplicity, advantages for your customers, easy to sell and profitable for your organization. If you ignore some of these components, the path to growth will become much harder or even impossible.
Ultimately, product can be part of your problem, but it will not be your only answer. Good products may have a variety of different looks if they follow the activity system components outlined above.
The bottom line is that we need to consider the little things that make growth happen. This is the glue that keeps your activity system together and makes it successful.
Mr. Griesel is president of Lincoln, Neb.-based Haberfeld Associates. He can be reached at firstname.lastname@example.org.