Bank marketing is no longer just a matter of pushing credit via traditional advertising. Many bank marketers today are shifting the focus of their activities to advising, educating and otherwise engaging with small business owners seeking financial services.
“In the old days, it seems every time we talked about small business we would use the tagline, ‘America’s No. 1 small business lender,’” says Doug Case, small business segment manager at Wells Fargo & Co. The San Francisco-based bank now markets itself more widely, using its Wells Fargo Works for Small Business website to offer advice on renting office space, hiring an accountant and setting prices. “We thought it was important to speak to the needs of the small business owner more broadly,” Case says.
Wells Fargo’s soft-sell approach parallels with efforts by Regions Bank, Capital One and Bank of the West to portray themselves as expert resources for small businesses. As they build credibility with business owners, these institutions stand a better chance of winning their deposits, cash management and other services, according to bank executives.
“Small business owners want a personal relationship with a banker who understands their business and challenges from a financial standpoint,” says Ryan Goldberg, executive vice president and head of Priority Banking and Branch Small Business for Regions. “They want that person there as part of their circle of advisors.”
In taking this stance, bankers are acting on what small business owners tell them in focus groups and in day-to-day encounters. Working with a “trusted account manager” contributes to the highest satisfaction with business owners, according to J.D. Power’s 2015 U.S. Small Business Banking Satisfaction Study, which was based on responses last summer from almost 9,000 small business owners.
Among owners who identified themselves as highly satisfied customers, three-quarters of them also have personal accounts with their primary banks. “When we look at presenting a holistic banking strategy, it makes perfect sense for us to look at the connectivity between consumers and small business, and vice versa,” Goldberg says.
The J.D. Power study also bolstered what banks already know and are incorporating in social media, online tools, training, product offerings and even the design of new branches. That is: highly satisfied customers are more likely to stay put at their bank and recommend it to others. Regions added a Refer-a-Friend reward program for business checking in 2014 that asks existing customers for referrals. If a new banking relationship results, the client who made the referral receives a $50 Visa gift card and the new client gets a $150 Visa gift card. The program is responsible for 10% to 15% of new account volume, according to Goldberg.
A preferred-customer program called Priority Banking, started in 2015, assigns Regions bankers to clients and operates a contact center to handle after-hour and weekend calls for customers. They’re also eligible for special customized offers. To qualify, small business owners must open a business checking account and have at least $50,000 in a combination of deposits, loans and investments. In the initiative’s first nine months, twice the number of clients signed up than those who were originally eligible, Goldberg says. Small business owners “are busy; 8-to-5 they are slammed,” he says. “They want flexibility; they want options. And they are looking for a full package.”
Capital One’s Spark Business platform encompasses credit cards with unlimited rewards and business checking with no monthly transaction limits, reflecting what the bank’s upper end customers considered to be outdated rules that defied business logic. “They would say, ‘Why would you want to limit the number of times we transact with your bank? If I deposit 100 checks, that’s good for you,’” says Kristi Hebner, Capital One’s senior director for small business brand strategy.
“Femme Fiscale: A Deep Dive into Women Raising Funds for Business” and “Swipe Right: Getting the Most Out of Your Business Credit Card” are recent posts on Spark Business IQ, Capital One’s site for small business owners. “Small business owners are a very busy segment,” Hebner says. “They’re savvy and know when they are being sold. So we try to feature the stories of other small business owners on the IQ site. It creates a mechanism for them to hear best practices from one another versus us using the site to sell products specifically.”
Wells Fargo evaluated financial web sites from NerdWallet to Bloomberg to the U.S. Small Business Administration in preparation for the 2014 launch of Wells Fargo Works for Small Business, according to Case. “We have products and services but we want Wells Fargo Works to stand apart from that with objective information wider than financial services.”
While its marketing focus has shifted, the bank is still lending to small businesses. In fact, as part of its effort “to put some muscle and commitment into Wells Fargo Works,” the bank has committed to loaning $100 billion to the segment over five years, Case says. In the first two years, loans totaled about $37 billion.
In 2015, after Wells Fargo commissioned Gallup for a national study of small business owners, it launched a four-point plan to help various minority segments to gain access to credit. In its first year, credit counselors have fielded 10,000 calls from individuals denied business credit, according to Case.
An estimated two-thirds of small businesses are operating without business plans, leading Wells Faro to launch an online Business Plan Center. In its first year, more than 10,000 people have started working on business plans, says Case.
Bank of the West posts white papers, including a December 2015 guide for U.S. manufacturers to achieve “smart growth,” as part of efforts to inform and attract small business owners. Bankers receive training specific to certain industries so they’re better qualified to help owners with cash flow and other strategies, according to Michelle Di Gangi, executive vice president of small- and medium-size enterprise banking and author of the manufacturers’ guide.
Bank of the West has opened four branches in Seattle and Tacoma, Wash.; Phoenix, Ariz. and La Jolla, Calif., designed specifically for small- and mid-sized business customers. Others are planned for Minneapolis and Chicago, says Di Gangi.
The bank recently added the new position of business deposit specialist to those locations to help clients with a full range of financial needs including cash management and wealth management, she said. They visit busy clients in their offices. “It’s a great holistic business for us to be in,” Di Gangi says. “We want entire relationships.”
Mr. Burritt is a contributing writer to BAI Banking Strategies based in Greensboro, N.C.