New banking regulations, reduced loan volume and intense competition are causing banks all over the country to search for ways to cut overhead.
FDIC data shows that small banks as a group are less efficient than the larger ones. In the most recent quarter, 76 cents of every $1 in revenue at banks with less than $100 million in assets was used to cover expenses. At the larger banks, expenses only consumed 58 cents – and this gap has been growing over the last several years.
But how can small community banks cut expenses in order to remain profitable without losing that “hometown personal service” that has been the mantra of community banks for many years?
Sooner than later, these community banks will have to do something they have never had to do before – they’re going to have to aggressively market, advertise and sell their products and services. They’ll have to concentrate on growing their revenue instead of just cutting expenses.
But before calling the local newspaper and running an ad promoting “local decision making” or “free checking,” banks need to think about what products and services they want to promote, who they want to target, and which customers are going to be profitable and which ones are not.
Here are some tips and ideas for community banks to think about that will help them in their marketing efforts:
Know what makes you unique.
What is it about your financial institution that makes you stand out? Do you have more branches, which could make it more convenient for potential customers, or do you offer mobile banking, which could be attractive to the younger generation? Maybe you offer Remote Deposit Capture, which many retailers, churches and apartment managers could use. Identify what makes you unique and differentiates you from the competition.
Know what products and services you are offering and why.
Which products are more profitable or easier to sell? Which ones have the greatest potential to increase business/profits in the future?
Identify who you want to target and why.
Who is your real target customer? Are you after small businesses, large businesses, high net-worth individuals, or do you want to be a one-stop shop for everyone? The “why” is just as important as the “who.” Ask yourself: do you really want to target the family of four that keeps a $43.50 balance in their checking account each month or the doctor’s office who keeps $25,000?
Understand your competition.
Do you really know who your competition is? Once you know who you are competing with, find out what these other banks and credit unions are offering. They might be advertising a 1% CD but adding an extra 50 basis points when the customer walks in. Do they offer free ATM usage? One way to find out is to use a “mystery shopper.” Local college students are great resources for this. You can find out a lot of information for a very reasonable cost.
Get a sales plan.
That’s right, a sales plan! Who is going to leave your building tomorrow to go out to retailers offering your remote capture services? If your sales team has never made sales calls, they will need training.
Create a referral program.
Put together a referral program for all bank employees and make it fun. Each Friday, you can list the winners and give away cash. (Everyone likes cash!) When a customer comes into the bank to open a new checking account, for example, reward employees for cross-selling additional products and services.
Know your targets.
Develop a list of what businesses you want to target, complete with their addresses, phone numbers and e-mail addresses.
Monitor sales activities.
Have a process in pace to monitor sales activities. Know who your sales team has called and who they have visited. Did they leave a message or speak to someone? Did they e-mail them or pick up the phone and call them?
Pull existing marketing materials and see if they need updating.
When was the last time you updated your marketing collateral? Companies like BankMarketingCenter.com offer affordable tools to help you design any marketing piece your bank will ever need. You can even personalize marketing materials with a potential customer’s name, logo or photo – all within seconds.
Update your website.
Make sure your website is up-to-date and easy for customers to use.
Turn your TVs into bulletin boards.
Stop promoting CNN or Fox on your widescreen TV’s in your branches.
Companies like WifiSignage.com offer a very affordable solution that can turn your TVs into “community event calendars.” You can produce your own messages and ads and have them playing on your TVs in seconds for less than what you’re currently paying for cable.
Make it easy for customers to do business with you.
Develop a “switch kit” or offer a “switch coach” to help customers easily move their accounts to your bank. It might seem easy for you, but many people and businesses will pay higher bank fees to your competitor rather than go to the trouble to switch to your bank – especially if they are already using online bill pay and remote deposit capture. (That’s why you want to be selling online bill pay and remote deposit capture!)
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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 [email protected].
