For community banks that are competing with online-only banks, large financial institutions and competition right down the road, factors affecting overall loan portfolio growth such as localized rate competition and balancing portfolio risk across loan concentrations are significant. However, as the Federal Reserve has raised interest rates, consumer pressure to receive higher rates on deposit accounts – such as CDs and checking – has also increased.
This has caught the eye of larger banks, who have shifted focus on deposits in an effort to increase market share while the getting is good. Community banks that simply cannot afford to match rates of competition with deeper pockets must turn to alternative strategies to attract customers, and even the community banks that can afford to give large banks a run for their money on rates may lack the branding to attract customers’ attention.
What are community banks left to do? Target the customer base that is contemplating a switch to a new bank. According to “Making the switch,” a study by Oliver Wyman, 28 percent of consumers consider switching checking accounts and 40 percent of them actually switch annually, representing around 11 percent of the total checking deposit market. Community banks and credit unions should turn to their marketing efforts to better understand the customer, map the buyer journey and identify the most popular methods to attract customers who want to switch.
Identify your customer’s journey
While a customer relationship management tool made for banks is an excellent tool to see the full extent of clients’ current relationships with your bank, financial professionals must backpedal to the beginning of the buyer journey to effectively market products. Banks should consider the following questions to identify characteristics of the ideal customer:
- How did our clients learn about our products?
- How long is our sales cycle?
- At that point in the customer journey do we see the largest drop?
- What holes in the customer journey do we have and how can we fill them?
- What life events correlate to our customers’ buyer journey?
If your bank has not mapped out the customer buyer journey for your institution, it’s time to dedicate time to doing so – especially as it pertains to understanding how clients learn about your product line. According to the same Oliver Wyman study, most consumers start the switch with one or a few banks in mind, spending less than one month searching for a replacement. This means that if your community bank isn’t top of mind for the prospect, it will never be considered. Without a sound strategy to entice prospects to begin the buyer’s journey, community banks can’t level the competition. So how do you become top of mind? Bolster your online branding efforts through social media.
Grow your business with social media
While 76 percent of financial professionals strongly agree that social media is important to their banks, only 17 percent of financial professionals state that their bank or credit union has developed a clear statement of the goals it wants to accomplish through social media. It’s important to have a presence on different social media and online channels – including Facebook, Twitter, LinkedIn and Google – and a marketing strategy around each platform for a number of reasons.
Social media represents an opportunity for community banks to shed their negative stereotypes and highlight their impact beyond the numbers, noted Jeff McCarthy, vice president of marketing at First Bank Financial Centre, in a recent American Bankers Association (ABA) research report, “The State of Social Media in Banking.”
“Banks are often viewed as cold and impersonal,” McCarthy said in the study. “We see social media as an opportunity to portray the warmth and culture that we have here.” McCarthy went on to further explain how his Milwaukee bank utilizes social media for positive branding. “When we first got into social media a year and a half ago, not a lot of people knew about us. So we used social media as a way to showcase some of the great things the bank and its employees are doing in the community.”
Social media also represents an opportunity for banks to frame themselves around their impact within the community – from the immediate impact of their products on local businesses to philanthropic efforts on behalf of the bank and individual employees. Paid social media opportunities also represent an underutilized strategy by community banks that have little online experience but desire to put their bank’s message in front of the right eyes.
Organic social media refers to updates and posts that are free to post online. This might include a Facebook or LinkedIn post sharing a personal finance article that your customers might find useful or a retweet of banking news on Twitter.
Paid social media, also known as pay-per-click (PPC) advertising, refers to putting a specific message in front of a specific customer, and it allows for targeting methods that cannot be used in traditional social media. Users can target customers by numerous parameters to showcase the right product to the right person. Customers can be targeted by:
- Age group
- Geographic area
- General interests
- Salary range
- Marital status
Using the power of social media advertising, banks and credit unions can create ads that reach customers at the perfect time within the buyer journey or around life events. For example, your bank can run Facebook ads aimed at newlyweds that explain the benefits of applying for a mortgage loan at your financial institution or it can target recent college graduates with ads on LinkedIn about investment accounts or checking accounts.
Access the power of search PPC
Another online strategy that can be used for branding is search PPC. Search PPC refers to your bank’s ability to pay to be among the top placements on relevant results pages of search engines like Google or Bing. Similarly to social media advertising, search PPC advertisers can target prospects based on qualifying demographic criteria.
Actually, however, one of the most sought-after features of search engine PPC platforms is something called a remarketing list. Remarketing lists, which are also available on limited social media platforms, allow users to create lists based on how prospects or existing customers interact with your site and then target those on the lists with relevant ads. For example, perhaps you have high website traffic to your checking account page, but your savings account page engagement is lower than average and you want to increase sales of that product. With a remarketing list, you could target the individuals who have visited the checking account page with highly-specific ads that state the relationship pricing benefits of having both a checking account and savings account with your institution.
Strategic social media and PPC advertising gives banks the ability to target customers with highly-relevant offers that lead them to your bank over the big bank competition.
In the eBook, “Agile Bankers: How Community Banks are Addressing Disruption, Risk and Growth,” Duane Abadie, president of First Bank & Trust, made a valuable remark.
When speaking about large bank competition, he said, “They can outspend us on marketing. They can outprice us. They have the balance sheets to be able to acquire business and do things that a community bank would not have the balance sheet and income statement flexibility to do. So as I look at competition and our community bank’s opportunity and strategy to be successful, to me it’s all around flexibility and speed-to-market.”
Online branding strategies represent one opportunity to be flexible. Social media usage and PPC advertising are not a one-size-fits-all approach to branding, but each strategy offers competitive advantages and gives community institutions a leg up against big-bank and online-only competition.