Bank Marketing Strategy + Ideas

Brace yourself: here come the fees.

Last week, we talked about how the country’s banking environment is evolving in light of recent regulatory changes and their negative revenue impact on banks. Recent federal regulations have capped overdraft fees, certain levies on credit cards, and even what banks are allowed to charge merchants when customers use their debit cards.

Now, banks are making a move to recap some of that lost revenue.

Check out these recent headlines about how banks like Wells Fargo, SunTrust and Regions Bank are beginning to charge monthly fees for debit card use for customers in some states. Will community banks follow suit?….

Atlanta Journal-Constitution – Debit card fees could signal trend:

http://www.ajc.com/business/debit-card-fees-could-1122638.html

CNNMoney – Wells Fargo to test $3 a month debit card fee:

http://money.cnn.com/2011/08/16/pf/debit_card_fee/index.htm

Wells Fargo: No more debit card rewards:

http://money.cnn.com/2011/08/22/pf/wells_fargo_debit_rewards/

###

Neal Reynolds has worked with hundreds of banks and credit unions around the country helping them to grow core deposits and market share without growing their marketing budgets.  Contact him at nreynolds@eadshop.com.

Let’s all say goodbye to banking as we know it. The writing is on the wall. Or, should we say, the writing is in the new Dodd-Frank financial reform bill.

For many years, community banks have handled the financial needs of local towns and communities. These banks took in deposits, made loans, and earned a small margin in between.

Then someone in our government decided that these banks should loan money to folks that might not be able to pay the money back. This was called the Community Reinvestment Act and it empowered regulators to punish banks that failed to “meet the credit needs” of “low-income, minority, and distressed neighborhoods.”

The two government-chartered mortgage finance firms – Fannie Mae and Freddie Mac – encouraged this “subprime” lending by authorizing ever more “flexible” criteria by which high-risk borrowers could be qualified for home loans, and then buying up the questionable mortgages that ensued. Most of the “bad” loans in this country were bought by either Fannie Mae or Freddie Mac.

We have all seen the results of this Act over the last couple of years.

Many community banks made a lot of real estate loans based on the fact that 1) they “ain’t making any more land!” and 2) real estate values had historically increased. In the fall of 2008, the regulators decided that real estate loans were bad and proceeded to force these community banks to quit making real estate loans and to write down the loans they already had.

As the required capital dwindled in these banks, regulators forced the banks to raise more with the threat of a “cease and desist” order. This basically told the directors to raise capital or they would shut down the bank. This “order” became public knowledge and was published in many hometown newspapers. Guess what happened next.

Remember the movie It’s a Wonderful Life? Well, being a bank officer and director during this time wasn’t exactly a wonderful life.

Depositors were going into the banks and withdrawing their money while the real estate borrowers quit paying their loans, telling the banks they would just buy these loans back at 10 cents on the dollar from the FDIC when they failed. And that is exactly what they were able to do. The FDIC would shut the banks down and then sell the loans for 10 to 20 cents on the dollar. Many of these banks had participated these loans out with other banks, so when one bank was shut down, it contributed to other banks failing as well.

Now the Dodd-Frank legislation has come along, which will put the nail in the coffin for many more banks. This law will add a lot more cost to banks with the increased reporting, analysis and requests for information. These expenses will be in addition to increased FDIC insurance costs the FDIC has imposed to pay back its losses.

What does all of this mean to a bank’s customers? Ultimately, banks will have to start charging more for checking accounts and other services. In fact, Bank of New York has even started charging customers for depositing large amounts of cash. An article in a recent issue of Fortune magazine stated that an estimated 4 million customers left the biggest 30 banks last year because of fees and an additional 11 million are expected to leave this year.

Where are they going?  Many are buying prepaid debit cards from companies like Wal-mart and American Express. They are also heading in record numbers to payday lenders like Cash America International and Quicken Loans for mortgages.

So what does all of this mean for banks? Well, things will need to change.

Banks must stop assuming that customers will just walk into their bank because they are convenient. Just like any other business, they’ll have to start calling on potential customers. They’ll need to start marketing themselves more. They’ll have to promote services like remote capture deposit and online bill pay. And they’ll need to customize and personalize their products and services to fit the needs of individual customers.

Many investment bankers are predicting that in the future there will no longer be banks with less than $500 million in assets. Banks will either grow up or they’ll be gone. Small community banks need to get busy!

Follow our blog over the next few weeks for a special series of posts highlighting innovative ways to effectively market your bank in this changing financial environment…

###
Neal Reynolds has worked with hundreds of banks and credit unions around the country helping them to grow core deposits and market share without growing their marketing budgets. Contact him at nreynolds@eadshop.com.

No matter how creative or innovative your marketing ideas are for your bank, you have to have the right salespeople in place to effectively carry out your strategy. But when hiring or managing your salespeople, how do you know who has what it takes?

Here are some tips from my friend, Louie Bernstein of www.sales-getters.com, who has over 22 years of experience successfully developing sales departments and salespeople:

7 Disciplines You Should Expect from Your Banking Sales Team

There are certain actions that, if your salespeople perform correctly, will bring you the business banking results you want.

#1: A good attitude. If your sales team doesn’t have a good attitude, you have problems from the very start. A good, positive, sincere attitude can be contagious. A bad attitude in the group won’t necessarily kill the group, but it’s like driving with a flat tire. You can get there, but it will take longer and it’s ugly.

#2: A desire to get better and learn. Sales reps, like other professionals, need the drive to become the best at their craft. With the web, eBooks, podcasts, email newsletters, etc., it is easy to find relevant, well-designed sales training – even as it applies to business banking. A lot of this training is free. You can do your part by providing an environment that is abundant with tools and by pointing them to the above resources. A regularly scheduled training session is also a must. You may get resistance at first, but the reps who really want to succeed will come to demand these sessions.

#3: A desire to be better than the competition. Make no mistake about it: the top-performing rep is the one who does not like to lose. This is great, as long as they don’t point those fangs internally. Everyone likes to win. You want reps that hate losing to the competition and don’t like taking second place. You must instill the concept that “there is no money for second place in sales.” Until they embrace this concept, they will never have that sense of urgency.

#4: A guaranteed number of QUALITY calls. Your reps need to be thinking about making quality calls rather than focusing on quantity. They should not want to leave the office until a certain number of quality calls are made – meaning new prospects or current prospects that are moving closer to a sale. If your reps practice, drill and rehearse – and then add quantity – the sky’s the limit.

#5: Documentation for every call. Sales reps come and go. You don’t want them to go with the knowledge of your customers in their heads, never to be seen by your company again. Whatever system you use for tracking customer interactions, make sure your reps use every bit of it. Every phone conversation, meeting, presentation, etc., needs to be documented in your CRM system. Additionally, it is a good idea is to send a follow-up email or letter after a presentation, strategy call or demo. It should document who was present, what was discussed, and what the action items are for each party.

#6: The highest degree of integrity. You cannot be one kind of person and another kind of salesperson. You cannot tolerate (or afford) to have unethical salespeople in your bank. One thing that should get a sales rep fired on the spot is lying to or misleading a customer or prospect.  How your sales reps act with your clients is a reflection on you and your entire bank. This rule should be posted and communicated to every rep (and employee) from their first day of employment.

#7: To be thinking about getting customers instead of deals. In business banking, your growth will come from repeat business or recurring revenue from your existing customer base.  You can make promises to close one deal, but that’s not how you build a business. Your sales reps should be aware of how satisfied your customer will be one month or one year after the first sale. Make sure your reps aren’t making promises your bank can’t keep. It starts with you letting your reps know your bank can’t realistically do some things just to get the deal – and they need to know you are okay with that. It may mean shorter term gains, but it translates into happier, longer-term customers and profits.

What do bananas and baking soda have to do with bank marketing? I thought you would never ask. Let’s start with the bananas…

If I were to hold up a bunch of bananas and asked an audience what they were, most would probably agree they were bananas. But if I held up a green banana and asked the same audience how many would buy this particular banana, less than half would raise their hands. And if I held up a banana that had already turned dark, even fewer would probably want to buy this banana.

As you can see, we are not really selling bananas! We are selling banana skins. People buy bananas based on what the banana skin looks like.

In light of this fact, a smart produce manager would market bananas in different ways, understanding that some people prefer ripe bananas, while others prefer green or darker bananas. Perhaps he could market the dark bananas alongside recipes for banana pudding and even place them next to the vanilla wafers. Maybe he could even add a headline like, “Ready for Grandma’s Banana Pudding?”

He might market the green bananas to folks heading out on a vacation, with a headline like, “Traveling Bananas – they’ll be ripe when you get there!”

A good marketer can take a product that many people think of as one thing and sell it in different ways.

Now let’s talk about baking soda. This is a product that has been around for over a hundred years and there are thousands of ways to use it. A good marketer might list some of these many uses on the side of the package.

You can brush your teeth with it, freshen your mouth, put it in cat litter to eliminate odors, clean pots and pans with it, eliminate odors in the refrigerator, use it as an antacid, polish silver with it, or even clean batteries. That’s how baking soda was marketed for years.

Then, one day a very smart marketer decided that he would put this same baking soda in a box with “Fridge-N-Freezer” on the front alongside a tagline that read, “30 days of freshness in every box.” He also decided to charge $.10 more per box. And guess what? People started paying $.10 more a box just to have a picture of a refrigerator on the front of the packaging!

Then this very smart marketer decided that if people would pay more to have a picture of a refrigerator on the front of the box, they might pay even more to have a picture of a cat on the front. After all, people spend millions of dollars each year on their pets. They put a picture of a cat on the front of the box advertising it as “Cat Litter Deodorizer” with “Activated Baking Soda” and starting charging over one dollar more per box! (I love the tagline “Activated Baking Soda.” I wonder who would buy non-activated baking soda? I guess people are willing to pay more for their baking soda to be activated!)

This proved to be so successful that before you knew it, baking soda was in every isle of the grocery store with many different product names and profit margins ten times that of the old-fashioned baking soda in the plain old box.

This brings us to banking. I’m sure you are wondering, what do green bananas and baking soda have to do with banking? Well, it has everything to do with banking!

For hundreds of years, banks have marketed and advertised themselves as plain old generic banks. A few got creative and started calling themselves community banks.

Throughout history, we have given our kids piggy banks for them to put their money into as a savings account and taught them how to take it out in a real emergency (when it was time to buy some candy.)

Most of us have grown up believing that you put your money in a bank and the bank keeps it for you until you need it. Historically, banks advertised CD’s and money market accounts to get us to put the money in the bank, and promoted car loans, mortgages and home equity loans to lend it out – all while making a small margin in the middle.

Banks even gave out credit cards like candy trying to get customers to charge, charge, and charge, always hoping that they would be late one month so that the bank could raise the interest rate to 19% or more.

But the last few years have changed all of this. Many people don’t have money to save and most have learned to quit running up large balances on their credit cards. And many banks are afraid to make loans in fear that those folks that ran up their credit card debt won’t be able to pay them back, especially since real estate values have plummeted.

Now is the time for a really smart marketer to apply the “green banana” concept to the banking industry. We need to realize that every individual and business has different banking needs.

For example, a large apartment community collects dozens of checks every day throughout the month. And each day, the apartment manager leaves at noon to take the checks to the bank and go to lunch. But before they go to the bank, they make copies of the checks and fax them back to headquarters to let them know which residents have paid their rent. Some apartment managers might decide to collect the checks and make a “weekly” run to the bank.

Both of these solutions are inefficient.

A smart bank marketing manager would target those apartment communities with personalized and customized marketing materials that explain how their bank can eliminate the pain of copying checks, faxing checks and going to the bank every day to deposit them.

These marketing messages would talk about the many benefits of remote deposit capture, for example, and even include the apartment community’s name or logo. A smart marketer could even create an additional piece targeting the apartment community’s corporate headquarters, making them aware of the potential liabilities of having their managers driving around town with thousands of dollars on hand at any given time.

This marketing piece would also discuss the many benefits of remote deposit capture and how, if management utilized this service, they would be able to see images of the actual checks instead of faxed copies. And even more importantly, deposits can be made in minutes without requiring anyone to leave the property.

And, of course, customers utilizing remote deposit capture are a prime candidate for online bill pay and e-statements. In fact, that same smart marketer could develop an “Apartment Banking” product line that promotes all of the bank’s services that an apartment community could use. They could even buy the web domain name ApartmentBanking.com for $9.99 and use it to promote their apartment banking product. (This name is still available, but you’d better hurry!)

The bottom line is this: there is no reason you can’t have an Apartment Banking product – just like you can have “Cat Litter Baking Soda.”

And this doesn’t just apply to apartment communities. You can target different industries with this same concept. Find out what each industry needs that is unique and position your products around them.

Find the pain and position your bank as the solution. Sure your bank can work with any industry, but you’ll get more business – and possibly better margins – by positioning and marketing yourself in different “aisles.”

###

Neal Reynolds has worked with hundreds of banks and credit unions around the country helping them to grow core deposits and market share without growing their marketing budgets.  Contact him at nreynolds@eadshop.com.