At any given time, one-fifth of banking customers are researching where to buy their next product or service, and 42 percent of those who left one institution did so because they received an offer or took notice of an advertisement from a different financial institution. On top of that, one in three Millennials are open to changing banks within the next three months. Therefore, it is imperative to distinguish your community bank from other banks.
If your community bank customer has their finances situated in multiple locations, try incentivizing them to consolidate their finances with your bank. This can be a major boost to growing wallet share and customer satisfaction. How do you get them to do that?
In a customer-centric world, what keeps people invested is personalization, and in that sense, community banks have a distinct advantage as they’ve already positioned themselves as members of the community. They not only know the faces of their neighbors, they actively participate in community and philanthropic events.
This positions the community bank to understand the specific needs of their customers — and not just financial ones. Sending dinner over when a customer is sick or in the hospital; doing an errand; helping with yard work or shoveling the driveway if they’re incapacitated — those are the kinds of things customers are likely to remember. And yes, there are community bankers who do this.
Consumers can be fiercely loyal to a business when they believe they receive something special from the relationship — like trust. So it would seem to follow that, when it comes to making the biggest purchases of their lives, such as a house or a car, that customer is more likely to trust someone they have an established relationship with — someone who knows their financial situation, right? Surprise.
A recent survey showed that, when it came to financing a major purchase (like a home or car), more than 50 percent of those surveyed went with a different institution than their primary bank because an enticing offer was presented elsewhere.
Where did you go wrong? Maybe you weren’t proactive enough.
If you know your customer well, you know what they’re really looking for. Perhaps you have it and they don’t know it yet. Perhaps you can get the chance — before they sign on the dotted line — to make a counter-offer, one that’s as good as or better than the one that grabbed them away from you. If you make that counter offer, if that customer sees you’re going the extra mile to get them the best possible deal because you care about them, they may well change their mind. It’s up to you to cut through the clutter and make sure customers know how hard you’re working for them and how much you want them to stay with you.
Much has been spouted about Amazon and other companies being eager to jump into banking. While it may be years before there is any significant impact, the threat is real. That said, community banks are well-positioned to fight back.
A recent survey showed that, when it comes to deposits, transfers and other less complicated transactions, 62 percent feel it’s important for a financial institution to have local branches. Why? Because when it comes to mortgages, auto loans and other major financial transactions almost half still favor face-to-face interactions. That’s a big advantage community banks have over Amazon or PayPal, even with their “special introductory offers.”
The bottom line is, whether it’s an individual customer, business owner or first-time account holder, customers want more “bank for their buck.” Community banks have a unique ability to offer this because they have a unique relationship with their customers, built on face-to-face familiarity, trust and a history of understanding needs, hopes and aspirations. As a growing share of the population migrates management of their finances to their smart phones, it will be those community banks that interact in meaningful ways — personally and digitally, who will have long-term growth and survivability.
Paula Tompkins is CEO, founder and a member of the board of ChannelNet, a technology-based sales, marketing and service company serving the financial industry. She currently holds two U.S. patents on personalization and modular software design. She can be reached at [email protected]