Carpe Diem

Is it possible?  Is there a light at the end of the recession tunnel?  

A slew of economic reports released last week may be hinting at some possible good news.  Out of 12 reports released last week, 7 were better than expected and 2 met expectations.  And investors responded by sending the stock market to a healthy gain last week.

Heck, I watched the news last night and hardly saw anything bad about bankers!!!

The point is that as the economy begins to turn a corner, so will the public eye and focus.  As your community's hometown financial institution, have you done everything you can to capitalize on the mistrust and negative perceptions of the larger banks?

Soon J-Lo or A-Rod or some other far too wealthy person who doesn't use their whole name will do something stupid and, as Americans, we'll focus on the next shiny object that comes along.  People will forget that big banks "are bad," and then the large banks with their enormous marketing budgets will begin to gobble up market share again.

Seize the day, fellow community bankers and credit unioners!  Don't wait.  Get your piece of the market share pie while we still have a competitive advantage!

Happy Trails,

Eric

Financial Literacy and Bankers

Everywhere you look these days there is more evidence of the crisis. But I am not talking about the Wall Street crisis, I am talking about the crisis in our country's financial literacy. Consumer debt levels are astronomical, our country's savings rate has been at 0% for several years, and Suzy Orman and Dave Ramsey can't talk fast enough.
As we look around us, we as Bankers must raise our hands and admit some guilt here. As an industry and as individual banks or credit unions, we have done a lousy job of counseling our customers on basic financial topics.
For example, when a young single who is just starting out on their own comes in to open their new accounts, do we help them in all the right ways? Do we talk to them about saving 10% of their take-home pay? Or advise them on the importance of their credit report and give them some tips on how to protect it? Something as simple as saying, "You know, if you set up your minimum payment for your credit card as an automatic payment online, you will never be late. This not only saves you late fees and interest rates as high as 36%, but protects something even more important.... your credit score." Usually, we just take the credit card application and don't mention anything about using it wisely.
How many times when people say they don't have a savings account do we offer some friendly advice, as their banker and friend, that they really should put away some money every payday... and that we can help them get it set up to come directly out of their paycheck and go into their savings account...? Not to mention how boring most of our savings options are-that's a topic for another day!
These examples are just for the young people who need to get a firm financial foundation started so they can experience financial success throughout their lives. But we don't train our employees to do this. We don't require them to help all of our customers at the level that they really need.
This wouldn't be such a problem if people got financial education elsewhere... but where are they to get it?
Obviously, the parents don't necessarily know it or pass it down. Some high schools teach it; some states require it.... but most states do not. In those states, the kids who take consumer education are few, as resources and teachers are not always available. Even most college graduates have never had a course in financial education.
Isn't it time that as bankers, we start to take some responsibility for teaching our customers some basic financial principles? Do we really just care about "making the sale" or "cross-selling"? At Market Match, we include financial counseling in our cross-sell training series, the Winning Team. But I am curious if any of you out there are using other programs or materials to ensure that your employees are prepared to have deeper conversations with your customers? Please email me at slovejoy@marketmatch.com and let me know if you are a leader in this area of financial literacy.
I believe, as a Banker, that we can do better.

What's It Like To Be Our Customer?

What our customers are thinking, and what we think is on their minds are often times two different things. For your small business customers, before you have a meeting or pick up the phone, you should always review the following questions that may either uncover an opportunity or bring to light a festering issue before it becomes a major problem for the customer.

Think of your customers and ask yourself the following questions:

• Is it easy to do business with us? - Perhaps the process of opening new accounts, etc. was created in a vacuum and is onerous for customers providing an unnecessary pain point.

• How do they perceive our customer service? - Your sales and marketing departments may be doing a great job but other areas of the bank may be creating customer service issues. Most customers won't say anything until they're ready to hit the road.

• Are we taking care of their business and personal needs? - Do you have too many single-service customers? If you never ask a business customer about their personal needs they will only think two things--you aren't interested or you just don't care.

• Are we suggesting better or more innovative ways to meet their present and future needs? - Is your bank truly a trusted advisor to your business customers? That's only possible if you demonstrate a willingness to help the customer to achieve their long-term goals through advisory services. It's sometimes about sacrificing short-term sales goals. The more the customer grows their business the more opportunity the bank will have to develop deeper, more profitable relationships.

• Are we asking the right questions to uncover their concerns? - Effectively profiling business customers to gauge their long-term strategies enables the bank, and the banker, to provide valuable strategic financial advice to become a true partner in the success of the business owner.

• If concern areas are outside your scope responsibility, am I alerting the appropriate people so the problem can be addressed and corrected? - Too many times bankers fail to act on customer cues because "it is someone else's responsibility." This is one of the leading causes of customer attrition. It's the banker's responsibility to uncover concern areas, notify responsible parties, act as the conduit for problem resolution and then close the loop back to the customer.

• Are we employing all of the bank's resources for the benefit of the customer? - Has the business customer been introduced to the cash management expert or wealth management professional at the bank to advise on various business and personal issues?

It's human nature that we tend to think that customers will automatically offer their thoughts to us just because we are sitting across the desk from each other. The lesson here is that if you don't ask the right questions you'll never get the answers necessary to advance a relationship or to stop a valuable customer from leaving.

From now on, before you visit or call a customer, ask yourself these questions and see if you can effectively answer them without the input of your customers. You may find that your conversations with your customers will take on a whole different perspective.

Nothing Kills a Bad Product Faster Than Good Advertising

"Nothing kills a bad product faster than good advertising."

~ David Ogilvy

Even if you are the entire Marketing Department ... you're not an "Army of one."  

As a Marketing VP, I used to tell my sales staff, "I don't complete your annual evaluations, but you're in MY department."

As marketers, we need to step outside of the organizational chart and take responsibility for staff training ... after all, your sales staff must deliver on the promises that YOU make!

Provide The Right Tools

After completing hundreds of branch shops for clients all around the country, I've learned that the vast majority of financial institution "sales" is literally reading a brochure to the prospect.  Take a good look at the tools that you give your staff to use.

• Are they easy to understand?
• Are they focused on customer benefits?
• Do they speak to customer needs?
• Do they differentiate your institution and your product offerings?
• Do they package the products in ways that will help your staff cross-sell?

Set Service Standards

Customer service is objective.  What one person sees as great customer service, another person may see as average.

Unless we create a set of clear, measurable Service Standards we cannot expect our staff to automatically know how to act.  

The goal is to have the service be the same from branch to branch and from market to market.

• Put the standards in writing and come up with fun and creative ways to display them
• Keep the list short - no more than 10 standards.  Only include the most important aspects of your institution's service
• Do not focus on operational issues.  These are short service standards ... NOT an employee handbook or training manual. 

Make It Fun

Periodic internal sales promotions can work wonders.  Make a game of it.  Creating competition between your branches can help to build a team feeling within each branch.

• Create a traveling trophy that the winning branch can display until the next internal promotion
• Make sure that you focus on bundling products for extra points
• Offer meaningful prizes to standout branches and individuals

We'd love to hear tips on how you train your sales staff, provide the right tools and make it fun! Please reply to this blog and brag about your efforts.

Take care,

Eric

Don't Throw $$$ Down the 18th Hole!

Golf hole sponsorship -- $250

Spring Soccer League Sponsorship -- $400

Getting quantifiable ROI from any of these sponsorships – Doubtful


Stop right there! I urge you not to process that pile of sponsorship requests until you stop and answer some direct questions about why you are doing them and what you expect to get in return.

Yes, every company must support its local communities through charitable donations. However, sponsorships, as opposed to donations, mean you should get something back in return -- and a 5 inch one-color logo on a t-shirt just isn’t enough.

Take the time to look at all of your sponsorships with an objective eye and see if there aren’t better ways for you to build in a return on investment (ROI).

I used to do PR for McDonald’s and I can’t tell you how many sponsorship proposals came across my desk promising to give me logo exposure on banners and t-shirts. Well, there is a McDonald’s restaurant with huge golden arches every 4 miles or so in this country. We really weren’t looking for more logo exposure.

So, I rewrote the proposals and built in exposure that brought strategic value to McDonald’s. I used sponsorship of a community walk to promote a new line of salads and healthy kids meal options. I used sponsorship of a museum exhibit to showcase McDonald’s grants and activities in local elementary schools. Basically, I got strategic and creative and it paid off.

I urge you to look beyond logo exposure and build business drivers into your sponsorships.

• Can you showcase cash management products like desktop deposit scanners to all of the small business owners at the golf outing?
• When you sponsor the Spring Soccer League can you provide a bounce-back coupon for a free soccer photo frame to everyone who opens a child’s savings account?
  

Here are some questions that might help you be more strategic about your next sponsorship request:

1. What audience do I have access to with this sponsorship? Why is this audience important?

2. What do we MOST want this audience to know about us and what makes us different?

3. What business driver can I build into this sponsorship that will allow us to have another opportunity to touch this audience?

• “We have innovative business products that save time for small business owners” – have a business banker on hand to showcase your business products
  
• “We have online technology that saves Mom’s time paying the bills” – giveaway item that drives traffic to your online bill pay demo
  

4. How can I measure response to this sponsorship?

5. What plan can I put into place for my salespeople to follow up on these leads?

The bottom line – if you are creative you can do something good for the community and something good for your business at the same time. Make sure you take the time to make your sponsorships a win-win situation.

Post a comment and share great sponsorship ideas you’ve seen or implemented.

Deanna

Sitcoms

About an hour ago I could hear my husband laughing hysterically...he was flipping channels as he waited for his latest coding change to upload (he's a software developer!) and came across a classic Cheers episode. You know the one...it's the episode where the writers ran out ideas but wanted to have a "new" show so they put together the highlight reel. SNL is making a killing doing the same thing right now! So here' my attempt to refresh your memory on some MarketMatch classics:

So, Soap is smarter than a bank? The blog was posted June 18, 2008. That day, the Dow closed at 12,029.06 and Barack Obama was still "just" a senator. So is this blog post still relevant today? ABSOLUTELY!! Now, if never before, is your opportunity to differentiate yourselves from everyone else in your market. What do you stand for? Are your institution's value statements posted on a wall in the breakroom? Do you even have value statements? You need to be reinforcing them with your staff, your customers and your community at large! Carpe diem!

On Monday, October 20, 2008 one of my fellow MarketMatch bloggers, Nick Vaglio posted ALCO is Not Dog Food. With the media abuzz in the banking industry, I think this post deserves an encore! As you communicate your safety and soundness, respond to media questions and use publicity to promote your institution, please reference back to this. I have read more press releases and advertisements referencing LTV, various ratios and other banking-specific acronyms to choke a horse. This is more important than ever right now!

And on a final note for this fine Wednesday afternoon, Eric Gagliano posted Who is Your Uncle Dave on December 22, 2008. Eric, thank you. Thank you for reminding us that people do business with people. We all know customers are more likely to do business with those we respect, appreciate and care for. Does your community care about you?

And as Bruce would say, Cheers!

Jenna

Plastic-The Next Crisis?

In the 1967 film, The Graduate, Mr. McGuire is counseling Ben Braddock (played by Dustin Hoffman) on what field to go into now that he has graduated college.  The dialogue went like this:

Mr. McGuire: I want to say one word to you. Just one word.

Benjamin: Yes, sir.

Mr. McGuire: Are you listening?

Benjamin: Yes, I am.

Mr. McGuire: Plastics.

Benjamin: Exactly how do you mean?

Mr. McGuire: There's a great future in plastics. Think about it. Will you think about it?

Not exactly the same plastic that banks ventured into.  But their type of plastic (credit cards) had an equal promise of a great future.  But is this the next financial tsunami?  Are we destined to be swamped by a sea of molten plastic resulting from the next financial meltdown that is now being talked about in hushed tones in the corridors of America's banks, while the media begins to turn up the volume.

A recent story on CNN said, "major banks have been hit hard by bad mortgages. Now, fears are growing that troubled financial institutions are going to have another consumer headache to deal with: credit card defaults."

"There have been no shortage of warnings about the business as the economy continues to sputter."

"Just last month, Bank of America CEO Ken Lewis warned lawmakers at a high-profile Congressional hearing on the government's $700 billion rescue plan that he had no doubts 2009 would be an "awful year" for the credit card industry."

Fearing a wave of credit card-related losses, banks have been aggressively setting aside funds to help cushion the blow. One problem, note analysts, is that banks aren't quite sure just how severe the losses will be.

Industry charge-offs, or loans a bank considers to be uncollectable, climbed to a historic high of 7.73% in December. Most analysts expect that figure to head higher as more and more people find themselves out of work.

Unemployment rates, widely viewed as the most reliable indicator of future credit card losses, climbed to 8.1% in February - its highest level in 25 years.

A widely used rule of thumb is that charge-offs typically climb to 1 percentage point above the unemployment rate. And many expect the unemployment rate to keep rising throughout the year.

Of course, this is not the first time that credit card issuers have had to contend with relatively high unemployment. During the recession in the early 1980s, the jobless level peaked at 10.8% in late 1982. But some experts point out that this is a much different time for the industry.

Not only did a much smaller slice of the American public own a credit or charge card, the amount of credit issued by the industry was just a fraction of what it is today. As of January 2009, the amount of outstanding credit in the industry totaled just under $1 trillion, compared to just $70.5 billion in 1982.

But some analysts point out that the magnitude of any future credit card problems will be mitigated by the fact that most banks' credit card businesses are a fraction of the size of their ailing mortgage portfolios.

"You are not going to have a complete redo of the subprime mortgage mess because it is simply not the same scale," said David Robertson, publisher of the industry trade publication Nilson Report.

What is also encouraging, notes Robertson, is that banks' credit card operations have become much more adept at adjusting to tough economic times after years of practice, including the downturn that followed the dot-com bubble earlier this decade.

Well I hope David Robertson is right.  We had a pretty good day today--the Dow was up 5.8% and Citigroup said they made a profit in the first two months of this year (although we'll wait and see how much of that is left after the charge-offs).

I guess the whole point is that we can't become paralyzed by fear of the next disaster.  We have to continue to take care of our customers as best we can so we can begin to recover and prosper together.

Cheers,

Nick Vaglio, CFMP

In or Out -- Communication is the Key

So I was talking to a girlfriend about how we each work through little everyday issues with our spouses – you know, do you gripe when he leaves the toilet seat up, or when you disagree about whose turn it is to unload the dishwasher, etc. My friend was telling me that she and her husband communicate with each other proactively and don’t let things fester.

I had to admit that my spouse and I tend to be more head in the sand folks when it comes to problem resolution. We tend to pretend everything is roses and sunshine until the inevitable blow out where we clear the air and end up not speaking for a few days. But, that’s a topic to save for marital counseling somewhere down the road.

But speaking of communication . . . I think banks need to look at their communication styles with their customers right now. Are you burying your head in the sand, proceeding with business as usual and waiting for the storm to blow over? Not the best way to build a long term relationship with your customers, even I have to admit.

I troll community bank sites regularly and have seen some examples of banks that are doing a great job of communicating with their customers about the current economic climate and their position. I particularly applaud those banks being proactive in communicating their position on the TARP Capital Purchase Program.

Whether taking the money or not, the important part is that you share where you stand and explain your position. Here are two examples of banks that have done a good job letting customers know where they are and why:

• Arvest Bank – promotes its decision not to seek TARP funds because they are unnecessary
• Citizens Community Bank – explains how it has used TARP funds to provide loans in the community
  

These are just two examples I have found. I know there are tons more out there. Comment and let us know what your bank has done on this issue.

My main point -- Don’t take a reactive stance on this issue. You need to do more than arm a few managers and key frontline staff with talking points for customer inquiries. Only a handful of concerned customers will actually come to you and ask questions.

The majority will assume the worst and move their accounts without ever giving you a chance to explain. And, unlike spouses, you can’t give them a shoulder massage and expect to get back into their good graces tomorrow.

Deanna

Focus on the Customer's Life Stage

I recently saw an email list-serve question concerning "Profiling Scripts" that bank staff can use to look for "hidden clues to better help customers."

Since it costs an average of about $500 to acquire a new customer/member and about $50 to retain and grow the relationships, this is a great idea, however, I really don't believe in scripts.  I feel that our staff come across as more sincere when they use their own language (maybe go with "Talking point", but scripts scare me).  Better than a script, is to make sure your staff uses YOUR institution's products as much as possible.

"I use our online banking and it saves me so much time," is significantly more believable than, "We have online banking and I hear that it's really easy to use."

More direct to the profiling question ... we recommend that our clients focus on the customer's Life Stage.  I believe that we can make educated product assumptions and recommendations based on what life stage a customer is in.  For instance, a customer with a new baby on the way is experiencing all of their life priorities changing.  Now, they likely have needs that they never considered before, like: college investments, an auto loan for a larger vehicle, life insurance, and a consolidation loan to lower monthly payments.  Think about it: marriage, birth, new home, new job, lost job, divorce, death in the family -- all require specific financial needs.

We actually create sell-sheets for our client geared towards those customers experiencing specific life stages and tie the life stage to key bank products.  The staff can then speak to the sell-sheet (like they do with your current product sheets/brochures).

More and more, we're going to be forced to focus on the customer and look at banking through their eyes.  I'm sure our blog readers would love to hear what YOU'RE doing to "profile" customers and better meet their needs (I know that I would).  Please respond to this posting and share.

Happy trails,

Eric

Is it Spring Yet??

Greetings...

By the calendar, it is March and spring should be right around the corner. However, if you ask those on the east coast (the recipients of 8-12 inches of snow yesterday) they would swear it is mid-winter! Baseball is beginning and the temperatures just are not cooperating!

The point? Ahh, yes. The point is that "shifts" are happening everywhere. Shifts in the weather, shifts in the competition, and shifts in the economy. Some are slow to occur, some are swift and breathtaking, others occur and we only realize it after the fact! We need to have our customer contact points ready to act and react to the shifts and secure confidence from our customers!

Last week, we conducted 7 focus groups and 26 competitive shops for a client. The one word to describe the banking situation. WOW....and not in a good way! 50% of the 26 competitors did not even respond to our phone request for information, another 20% simply referred us to their website. I thought the in person shops would be better....not the case. In 70% of the shops, we were simply handed a brochure with no questions other than "what type of account are you interested in", 90% of the checking account discussions started and ended with Free checking!

With spring around the corner (hopefully) and the economy struggling, customers needing help, and money in motion everywhere...I think it is time for a Spring Inspection! Take a day and:

• visit ALL of your branches
• call your call center
• scour your website
• review all materials that are mailed from the institution

Do each of these with your "customer eyes" on...does your call center convey competence? Is your website truly easy to navigate, are your branches user friendly and promoting confidence in the bank/cu?

I think you may be surprised what you find! However, if YOU find it...and correct it...then it won't impact the customer negatively. Do a Spring Inspection THIS WEEK.

You will be surprised what you find...and you may also be pleasantly surprised! The key is that everyone KNOWS that they will be inspected to check on your expectations. That is an old Marty Cohen (from Cohen/Brown) saying that still resonates and has power.

Inspect...share expectations...and make sure you are ready for the current and future shifts by having your customer contact points ready to shine!

Cheers!

Bruce Clapp