Ted Triplett, Chief Marketing Officer, Insight Ecosystems provided the following column. The article has been published in the June, 2012 issue of Michigan Banker, and I am providing it in my blog, too. Community Banks understand the importance of relationship banking, and Mr. Triplett’s guest column provides the latest insights into this important topic.
By TED TRIPLETT
Chief Marketing Officer
It’s a universally accepted concept: The bank that delivers what customers want ultimately wins the competitive advantage. At a minimum, a bank must understand what customers value and how to create, communicate and deliver it to them. Otherwise, customers will simply go somewhere else.
In the end, market share is won by those banks that can give customers a good reason to deal with them or to buy their products and services instead of the competition’s. Where customers see no such reason, they will continue to shop around in search of the bank that will.
For most any bank, “value” means offering competitive products and services. But it’s important to note that creating value isn’t about simply lowering the price on your core products and services. Competing only on price is a losing proposition, because customers who are lured by lower prices will simply continue to chase after them. Customers who equate value with cost are classic price-switchers. Nine times out of 10, these customers don’t find value in anything else the bank has to offer. As a result, they perceive banks and their products to be all the same.
And, while raising rates or lowering fees may represent a value to some customers, it doesn’t create the loyalty and retention banks should strive for. Therefore, one key to gaining a competitive advantage without lowering your prices is by proving to your customers that your products and services provide tremendous value in ways that can’t be found elsewhere.
Here are five ways you can add value to increase loyalty, differentiate your bank and gain a competitive advantage:
1. Providing Information. Customers want more than just products—they want to feel they’ve made the right decision. And they can only do this when they have enough information about your bank and the relationship it offers. The more they know about your bank, the more they believe in its offerings and its people. The better you educate and inform your customers, the more products and services they will purchase and the longer they’ll stay.
2. Two-Way Communication. Another way to create value is to develop and build a dialogue with your customers. When a customer complains, “I never hear from you,” he or she is really saying that there’s not a consistent flow of communication between you and the customer. A dialogue doesn’t happen when your customers feel the only time they hear from you is when you’re trying to sell them something and the only time you hear from them is when they have a complaint.
3. Continuity of Message. To create a dialogue your communication needs to be consistent and there needs to be continuity between successive messages—so each message builds upon the last message. This means no more random offers, at random times, through random channels. Otherwise, all it takes is a rude personal banker to undermine all the hard work and investment that’s been put into building and managing the customer relationship.
4. Frequency of Interaction. Customers feel closer to a bank that makes regular, meaningful contact. The more involved the customer is with you the less likely they’ll be to switch banks. Therefore, frequent value-focused touch points are a key to adding value. Repeat the message, and often (every 6 to 8 weeks), and you’ll reap plenty of what you sow.
5. Personalized Communication. Frequent personalized communication helps solidify customer relationships. Every communication piece should be personalized, instead of “Dear Valued Customer” communications. Creating value may be as simple as recognizing your customer and calling him or her by name. However, this form of value goes beyond name recognition. It’s created when you treat your customers like individuals. By tailoring the service or offering to the individual customer, you send all sorts of messages that your customer is noticed, that he or she is known and valued, and that his or her business means something to your bank—that the customer is more than a number.
Every customer is vulnerable to the competitive pull when more value is offered elsewhere. Unless you add value for your customers, you won’t succeed in creating enough compelling reasons for them to stay and purchase additional products and services. In addition, your customers won’t see a differential advantage for your bank over the bank across the street, which will result in higher attrition rates. However, when customers feel they have received value, they will reward your bank with loyalty. This loyalty translates into increased cross-sales, customer referrals and lifetime value of each customer.
Ted Triplett is the Chief Marketing Officer for Insight Ecosystems, a customer relationship management and business intelligence company. He is a recognized financial service industry leader with expertise in helping financial institutions build and deepen customer relationships.
Triplett conducts telephone briefings (presentations) for the ABA, has been an advisory board member for ABA Marketing Conference; writes financial industry white papers and is a regular contributor and columnist for ABA Bank Marketing magazine. He is a proud graduate of the University of Nebraska where he graduated summa cum laude.