Big banks, small banks. Occasionally the differences are glossed over. Small bank leaders may overestimate their ability to replicate a large bank technology play. Large bank leaders may underestimate how impersonal the bank might look to someone accustomed to a true community bank.
But just as often, the differences are exaggerated, as in: It takes huge scale for a bank to afford sophisticated marketing. Or: Large banks’ customer-centricity programs are but a pale imitation of community banks’ natural customer intimacy.
The truth is more elusive, as will be demonstrated in a session at the upcoming BAI Retail Delivery 2013 entitled “Changing the Rules: Marketing Strategies that Grow Sales and Revenue.” In this presentation, two very different banks demonstrate that the ability of any institution to thrive depends entirely on what each does with its natural competitive advantages and how it shores up its disadvantages. Rockland Trust in Eastern Massachusetts has just under $6 billion in assets and 77 branches. At the far side of the size spectrum is Fifth Third Bank, the country’s 12th largest with $123 billion in assets and more than 1,300 banking offices in 12 states.
Both institutions were bent on achieving significant improvements in sales and revenue, and among their first commitments was that of listening carefully to their customers before making product, service and price decisions. On paper, “listen to our customers” sounds the same at both institutions. But how this maxim played out had very little in common – except in stellar results for both.
Straight Talk from Customers
A key tactic in Fifth Third’s listen-to-our-customers strategy took the form of extensive, primary customer research. “We surveyed our customers and made a point of capturing learning from day-to-day customer interactions,” says Mark Hendrix, senior vice president and head of strategic marketing. “We asked what they valued from their bank, and what they objected to, and especially how they used their bank in today’s connected, mobilized, social-mediated environment.”
Straight answers from their customers figured prominently in Fifth Third’s subsequent product introductions. According to Hendrix, “Customers told us they wanted to be rewarded for their relationship, and they wanted full transparency on costs and fees so they could make an informed decision. Customers told us they were willing to pay for value, but they wanted to fully understand the value they were receiving. We took those lessons to heart and turned them into specific products and programs.”
Fifth Third credits customer research for its ability to avoid the mistakes and experimentation that plague many market and product initiatives. Research told the bankers, with a high degree of certainty, how many customers would be interested in a particular product, what features they would value most and – a key insight – precisely what pricing range each market segment would consider appropriate. One marked success to emerge from the process was Fifth Third’s DUO card, a combination credit/debit card created in response to customers’ irritation at having to carry two cards.
Fifth Third also studied customers’ communication preferences carefully to understand the best way to market to them. The proliferation of marketing media has made such a study essential, as customers now can – and do – tend to lock in on a favorite media for a certain purpose and routinely ignore any other attempts to reach them. This phenomenon has added a layer of complexity that can doom initiatives that get it wrong but create rapid successes for those that get it right.
Hendrix says Fifth Third has converted 2.1 million customers to its new products while, in the space of just one year, increasing deposits from almost $3 billion, and the cross-sell ratio to 5.2 products per-customer from 4.6.
Next Best Thing
Rockland Trust’s listening commitment had to be carried out with different tactics. “When you can’t afford high-ticket primary research, you find the next best thing,” says Chief Marketing Officer Mark Gibson, who had previously worked for a large bank. “We quickly discovered rich troves of highly reliable research available for purchase at a fraction of what a large bank might have to spend. Dig deep enough into it, and you will find insights that you would not have been able to discover on your own – and therefore, insights that your competitors are probably not acting on.”
As an example, Gibson explains how Rockland was focused on attracting more young customers. “It was illuminating when the research told us flatly that most Gen Y customers, no matter how wired they look, still prefer to open their accounts in person, in the branch! Others know that now, but latching on to that important finding helped us reorient ourselves to attract Gen Yers, and it also left us wary of any other marketing biases we had about that group. They may say they want to be all-digital all the time, but if they have a problem, they go to a branch.
“We gained dozens of insights like that from purchased research that gave us serious competitive advantages – especially in terms of time-to-market. Eventually those insights will become conventional wisdom, but if you get there first, your advantage doesn’t just evaporate.”
Gibson also enthuses about another favorite customer listening tool: “Social media. I know some see it mainly as a way of pushing your own messages out to the market, and of course we use it that way, too. But for us, it’s a powerful tool for learning instantly what customers are saying. Not just about Rockland, but about our industry, or our category, or products that we are thinking about offering. Or the customers’ financial issues. On such matters, social media is about as unfiltered as it gets, and immediate.”
As for community banks’ “natural” listening advantage, Gibson says, “It is not unusual for our customer relationship executives to come back from a meeting where a customer has mentioned something they admire from a competing bank. We hear about it the same day and the next day we are working on it, communicating easily around the organization. That’s harder at a big bank, I know. But community banks need to make sure they really stay focused on that advantage – not taking it for granted while they try to replicate something the big banks innately do better.”
“On the other hand,” Gibson adds, “We have to make do without software that would instantly tell us valuable information, such as when a customer appears to have major financial events going on. So we need to pay that much more attention to day-to-day conversations that reveal the same thing.”
One piece of advice that Gibson and Hendrix agree upon is consistency in marketing and forging tight relationships with your sales and finance partners. As Gibson says, “Marketing budgets at community banks can be vulnerable in tight times. You have to spend consistently on marketing, so I advise acting like you need to justify your budget every day, because you never know when you will have to.”
Hendrix adds, “Work closely with your Finance staff to help them connect the dots between your initiatives and the results in whatever form – expanded relationships, brand awareness, new deposits. And engage with your Sales executives to understand what they need and also to help them understand and use what you deliver. This will improve the effectiveness of your programs. And when it comes time to talk budget, Sales and Finance will be your biggest cheerleaders.”
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