With so many different community banks offering so many different products, banks often ask us how they can better compete on product offerings. If a bank is offering two checking accounts with no monthly fee, three with rewards, and one with insurance, what should a competitive bank offer in response?
In this mindset, it’s easy for a bank to end up with 30+ products, including 15+ different checking accounts. When a bank gets to this point, confusion sets in. Their own people may have trouble remembering all the nuances between the different offerings, making it impossible for potential customers to understand them.
It’s Not About The Products
When it comes down to it, there’s not much room for differentiation in products – and trying too hard to compete on products just leads to chaos. That’s why we advise community banks to focus on what can differentiate them and what their strength is – relationships. We believe a bank could narrow its product offerings down to only 3 and at the same time increase revenue – if these 3 were the right products for their community, and if the bank then took practical steps to nurture existing and new relationships. Customers will remain loyal to a bank that understands them and serves them well based on relationship, not products.
Practical Ways to Focus on Relationships
A move to focus on relationships includes steps such as conducting new customer acquisition analyses and creating strategies to improve customer retention. By looking closely at longtime customers and new customers, you get to know who your customers are and learn how to better serve them.
A Personalized Approach
It also includes a more personalized marketing approach. We have one client who interacts with customers on Facebook through Trivia Tuesday. Through this small act, they’re making a big statement about community and relationships, and strengthening their connections.
To go a step further, digitally-progressive banks can harness data to deliver personalized emails, texts, and app alerts. As Amazon sends purchase recommendations based on purchase histories and Google sends push notifications to Android users when they’re out to let them know how long it will take them to get home, well-timed, personalized messages are what customers expect. As banking is becoming more digital, the opportunity for relationship is changing but growing, and it’s more important than ever for banks to be customer-centric.
True Community Engagement
Getting involved with community organizations and charities is another practical way to build relationships and learn about what the market’s specific needs are. But just making donations or helping with fundraisers isn’t enough. To truly engage the community, you need to think bigger. For example, instead of just helping with the fundraiser, actually use your location as a place where fundraising items can be sold. Being involved helps you to really know your community, and to be able to learn how to best serve them.
So when a community bank asks how they can compete on product offerings, our answer is that they can’t and shouldn’t, but should instead be competing on relationship. An old idea with new meaning: focus on the customer.