NorthWesternFinancialReview.com Blog

One of the biggest marketing challenges for any bank is to get someone to switch from another bank to your bank. Usually when someone does switch, it is because they had a bad experience at Bank A so they go to Bank B; rarely do they go to Bank B solely because Bank B enticed them with incredible marketing.

Most people who have been with a bank for any length of time stay there because it is simply too difficult to change banks. Once you get your paycheck on direct deposit, get auto-bill-pay set up, and get everything else set up the way you want, it is almost impossible for another bank — no matter how good — to lure such a customer away.

So I invite you to take a look at this. United Community Bank, with offices in Minot, Burlington, Drake and Leeds, North Dakota, offers an impressive online “simple switch kit.” This little program helps a potential new customer think through all their accounts and tells them what they need to do to efficiently transfer them to United Community Bank. A little help goes a long way, so I am sure many potential customers take that final leap to the new bank because of this kit.

In any business, one of the best ways to get new customers is to identify and solve problems for that new customer. In banking, changing accounts can be a hassle, so it is wise for a bank to acknowledge as much and help the customer solve this problem with as little trouble as possible.

The historically low rates available on mortgages currently create an opportunity for banks. The rate on a conventional 30-year fixed-rate mortgage is 4.25 percent. That’s amazingly low, allowing people to buy more house with less money. For most people interested in moving, however, the challenge isn’t finding a house to buy, it’s selling the one they’ve got.

Unless your house is nearly perfect — no, let’s say perfect — it’s very difficult to attract the attention of buyers, particularly in urban areas. There is a lot of inventory out there and only the best homes are attracting good offers. So many homeowners who wish to move need to do remodeling or updating on their existing home. Where there is a lot of competition for homes, a seller needs to have a home with an attractive exterior, updated kitchen, good floors and window treatments, and clean walls. Any decorating remaining from the early 1990s needs to be updated.

This can cost some money, and this is where a bank might have an opportunity. A bank might consider promoting a loan product to people who need a little money to update their home so they can sell it. It’s a pretty good loan for a bank because it would be paid off when the home is sold. So most of these loans would not need to have terms any longer than a year, or perhaps two years at the most.

Home sales remain slow, but there is activity. Some people really do want to move. If they have been in their house for a decade or more, they can likely expect to pull considerable equity out of the house when they sell, so they can put 20 percent down on a new one and get an incredible rate on their next mortgage. But they might not be anticipating the level of work they need to do on their current home to assure a sale. A good marketing campaign from the local bank could educate them on this point. This would be a real service for people considering selling, while putting the bank in great position to make some new loans.

Via The Financial Brand, which says that any social media strategy worth its salt requires at least one full-time operative. Snippet from the article:

“It’s very easy to underestimate the amount of time and energy it takes to create any kind of success in the social media space. Just to run a blog, it take[s] a bare minimum of five hours a week, and more realistically 10-20 hours. Add another five or so hours a week for Twitter. If you run promotions, or integrate video into your social media initiatives, the hours really start to balloon.”

The post refers to an online report on a well known organization that spent two years and hired two employees but still only had 135 fans on its Facebook page. That changed recently. Ask yourself, when you click through to find out how, whether your bank can find an equivalent approach–or be in position to benefit when some unknown user (perhaps inadvertently) launches the next Facebook fad.

H/T to ICBM’s Current News.

Chicago-based columnist Liz Wheeler dug out some practical examples of how Midwest banks are using Twitter and Facebook, media that have been extensively hyped but whose business uses may still mystify some bank marketers. The article is set for the July 15 print edition of NorthWestern Financial Review, but here are some tidbits:

Tweets, fans: Why some banks start

Wheeler spoke with North Shore Bank, Brookfield, Wis., which, in about a year of use, has built up more than 800 followers on Twitter.

Participating in social media was a way to go where the customers are, and, as Kate Knox, the bank’s marketing communication manager, told Wheeler: “Nothing else has jumped out that says we need to be there.” Tim Gluth, the bank’s e-business coordinator, said “it fit with our community-minded approach. It doesn’t have to be a physical community.” The bank also has a Facebook page, which is meant to attract people who wouldn’t normally go to the bank’s main web page.

Chicago-based Marquette Bank joined Twitter in April, in part to preserve promotional power at a time of tightening budgets. “It doesn’t mean we do less; we just get smarter,” said Jeff MacDonald, vice president and director of marketing and communication.

Wheeler also spoke with First American Bank, Purcell, Okla. CEO Jim McAuley said the bank was eager to use Twitter because “we felt that social banking was the wave of the future.”

Community First Bank of Boscobel, Wis., said it connects with a target market of stay-at-home-moms through its Facebook page. Wheeler notes that Community Bank of Oak Park River Forest, Ill., sees Facebook as “an environmentally friendly alternative to traditional marketing.”

Some uses for social media

Marquette Bank uses Twitter to promote rates and bank events, and to send out financial tips. MacDonald said he also does a daily search of key words such as ‘banks’ and ‘banking’, to see what users are talking about. He responds to relevant conversations and even sends links to Marquette Bank locations when users express frustration with their banks.

North Shore Bank used Twitter to warn about a scam and to calm customers when a grocery store chain announced it would close stores where the bank had branches. Gluth said the bank is careful about using Twitter for promotions. “We want to fit in; we don’t want to be an uninvited guest,” he told Wheeler.

Look for Liz Wheeler’s article Can a business case be made for Twitter? in the next NorthWestern Financial Review magazine, available July 15.

Minnesota c.u. sounds a lot like a bank

The community banking “story” has been a major feature of most interviews I’ve conducted–and every convention or meeting I’ve attended–since last September. So when I heard this ad on the radio, I thought, now there’s an effective way to support the story. Snippet:

“The one thing I like…about my banker is I’m talked to and not talked at. The folks at Spire are like a family. You walk into any one of their branches and they know exactly who you are. And, it’s nice to keep your money local. I know when I call Spire it’s someone that lives right in my community, and I really like that.”

The ad was so memorable that, when I got to the office, I did exactly what it prompted listeners to do. I typed spire-banking.com, to learn more about the bank.

Except it’s not a bank. It’s a credit union.

Have you heard those ads on the radio promoting peanuts? They say something along the lines of “You’ve heard of a couch potato, but never a couch peanut. That’s because peanuts give you energy and are good for you…” The peanut industry is running the ads in order to restore public confidence in their product after the nationwide salmonella scare connected to peanut butter.

Maybe the FDIC could take a lesson from the peanut industry. The public must not have complete confidence in FDIC insurance. Certainly, stories like this one don’t help. Remember when IndyMac Bank failed last summer and TV gave us those images of customers lined up for blocks outside the bank waiting to withdraw their money? That was a completely irrational customer response. Everyone’s money was safe. The bank had FDIC insurance and everyone with less than $100,000 in the bank were safe. But apparently they didn’t understand that.

Today, of course, the safety net of the FDIC is even bigger. Accounts are insured up to $250,000 and some accounts have no coverage limit at all. The FDIC should be out there, touting the security Americans get with an FDIC-insured bank account.

To be sure, the FDIC does a lot of promotion. I have seen Chairman Sheila Bair on many news programs touting the strength of the banking industry and the security of savings accounts protected by FDIC insurance. In addition, I really like the FDIC channel on YouTube, where the agency uses Suze Orman as a spokesperson for the value of FDIC insurance. Here is an example of one of their promotional messages.  

These messages are great as far as they go, but clearly much more needs to be done. The public doesn’t seem to be getting the message. Ads should be running in major newspapers and on television stations all over the country. Perhaps the agency could even strike up some sort of a cost-sharing arrangement with the industry trade groups. Perhaps fines extracted from people guilty of mortgage fraud could help fund the ads. Perhaps more could be done with public service announcements.

In the news, I am increasingly hearing comments made about the current economy resembling the Great Depression. That is bunk for a lot of reasons, but one of the main reasons is we didn’t have the FDIC in the early years of the Great Depression. Back then, people really did lose their money in the bank. Well, today, that simply is not happening. Today, people can be assured their money is safe. We need to make a bigger effort to drive that message home with consumers everywhere.

I had a chance to visit recently with Jerry Rossow, one of the premier bank marketers in the upper Midwest. He is president of Northern Lakes Marketing in Minnetonka, Minn. He works with many community banks. We talked about a wide range of marketing issues. Here was his response when I asked him what message a bank should try to communicate to the public, given the current difficult economy:

Bankers will want to make sure their staff can answer the question “is this bank safe?” That’s a question you are going to be getting from customers. We did some mystery shopping where we went into banks and posed that question to the greeter, receptionist or personal banker. None of them had an answer. Some of them said: “Well, I think it’s safe.  I feel my job is secure.”  They brought it down to the level of their own job, a personal level. Customers want a clear answer that their bank is safe and your employees really need to be ready to explain that.

Another thing customers want to hear is optimism. If the bank is full of gloom and doom, that won’t serve the customer very well. Customers already know about doom and gloom; they don’t want to hear that from their bank.  What people want to know is that it is banking as usual and that the bank is eager and ready and waiting. They want to know that the doors are wide open and everything is going along here just fine.  So, keep it bright and try to keep the staff well-trained in terms of having that enthusiasm. 

A lot of our reaction to a recession comes from our attitude. The customer’s sentiments matter a lot. If a customer feels depressed about the future, his behavior often translates into a self-fulfilling prophecy. So you want to show strength, because you can really affect how people feel and how they act.

Be sure to read more from the interview in the February 1 edition of NorthWestern Financial Review magazine.