Should Community Banks take the Planet Fitness Approach?

ID-100334953Recently, an acquaintance told me that he and his significant other had joined Planet Fitness.  There is a Planet Fitness near my home, and I had seen their television commercials, but had never visited their location.  Curiously, I asked him questions about it.  Here are a few highlights.

Judgement Free Zone ®

Planet Fitness claims it not a “gym” and their Judgement Free Zone ® tagline firmly stands behind it.  That means, no outside trainers and heavy lifting (i.e. deadlifts and cleans) is highly fround upon; in fact, “grunting” is prohibited.

The Daily Show had a hilarious report on this very subject a few years ago:

 

The concept of Planet Fitness it to create a welcoming environment to either:

  • People new to working out
  • People who just want a causal, laid back gym environment

In other works, gymrats and crossfitters aren’t the target market for Planet Fitness.

Laid Back. With my mind on my money and my money on my mind!

Planet Fitness is using a “laid back” approach that other businesses and non-profits have been applying for years. Take Non-denomiational Christian churches for example; there is one church in my city that separates itself by telling people to “Come as you are.”  In fact, they have even hosted nontraditional meetings in a bar and call it “Beer Church.”

How does this apply to banks?

There are two lessons banks can learn from this approach.  Intimidation and target marketing.

Intimidation

What’s more intimidating than going to a gym?  How about asking a complete stranger for money.  Isn’t that essentially what a loan is?  A person walks into a “Financial Institution” and literally pleads their case to borrow money.

What if a bank were to make banking, particularly lending, less intimidating?  There are several ways of doing this:

  • In Branch Financial Literacy Classes
  • Participating in Get Smart About Credit
  • CRA Initiatives

The list can go on and on; but first, there must be a mentality, a company culture that welcomes these approaches, otherwise it is just blowing smoke.

Target Marketing

A hot, dynamic term in marketing, especially with community banks.  But how targeted is the marketing approach? Let’s consider home equity lines of credit (HELOC).

  • Do you expect someone with a $150,000 home to be the same type of person who owes a $500,000?
  • Do you think a 50 year old married couple with three children in their late teens to mid 20s have the same needs/wants as a married couple in their early 30s?

If not, why do banks consistently market to those customers the same way?

Banks throw a huge advertising net that includes phrases like, “remodeling, vacation, tuition cost” and the list goes on and on.  Instead of trying to jam as much information out there, wouldn’t it be better served to create a message directly targeting a specific market?

Start with your current customer base and/or with the communities you serve.  Is there a specific demographic you are trying to reach?  Once you answer that question, find out what connects each person in that demographic.

Again, go back to HELOCs.  If you already have a customer base, then use a prospecting tool to gather information.  In this case, let’s say a prospecting tool is used to find out where this customer base lives in your area.  From there, use tools to communicate your message to this audience.

  • Direct Mail Postcards
  • Google Adwords targeted to the Zip Code and street address
  • Display Advertising that can be targeted via location AND by common interest

If you are interested in learning more about prospecting tools, then check out CRS Data’s Banker Suite program.  The Banker Suite contains a prospecting tool that allows banks to search for certain criteria within different counties.

So, take the Planet Fitness approach and pump up your marketing results and beat the flabby ads approach.

 

 

 

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Commercial Bank Branding and Football Logos

Titans HelmetsHow is it football fans can cheer for teams even though they continue to disappoint fans season after season? Better yet, how can banks learn from this during a period of employee turnover?

Let’s use the Tennessee Titans as an example.  I’m a huge Titans fan and became a fan when Coach Jeff Fisher was the head coach, Eddie George was the starting running back and Steve McNair was leading the team as quarterback.  All three people are no longer with the Titans.

  • Jeff Fisher: Now coaching the St. Louis Rams.
  • Eddie George: Hosting a college pre-game show for Fox.
  • Steve McNair: Traded to the Baltimore Ravens in 2005, retired in 2008 and passed away in 2009.

This season, The Tennessee Titans have a record of 2-10, and consist of:

  • Coach Ken Whisenhunt: A head coach who runs a traditional offensive scheme that contradicts Coach Fisher’s “Run-n-Gun” approach during the McNair era.
  • Running Back Committee: Instead of a starting running back, the Titans use a three-man approach.
  • Quarterback Problems: The Titans have started three different quarterbacks this season.

So why…why do I stay a fan of the Tennessee Titans.

Steve McNair was traded to Baltimore, so why am I not a Ravens fan?

Coach Fisher is in St. Louis, so why am I not a Rams fan, instead of staying with the Titans? 

I originally became a Titans fan due to proximity.  I live in Tennessee, and the Titans are in Tennessee.  But it soon become an emotional connection as the Titans seem to be an underdog.  Shoot, even when Steve McNair was chosen as MVP in 2003, he had to share the title with Payton Manning.

What can Banks take away from this?

Recently I wrote a post that touched on hiring commercial lenders based on their loan portfolio.  The flip side of this is what happens when a bank loses a commercial lender that has a successful portfolio.

Loosing a Strong Loan Producer

It happens to just about any community bank.  The have a top producing commercial lender who gets an offer they can’t refuse from a competitor.  They leave and immediately the bank accepts the fact that they are going to lose current customers due to “their banker” leaving.  Many times, banks start building a reactive checklist, but what if they started a proactive campaign.

Reactive Approach

Making a ListAs the bank starts searching for a replacement, the bank will also review the leaving commercial banker’s portfolio so it can be divided up between their current commercial lenders.

A good bank will also look at the profitability of each customer in the portfolio to see who is unprofitable and see this as an opportunity to “lose” this customer.  Plus, they will make sure to focus their attention on profitable and potentially profitable customers on the list.

This is a good strategy that every community bank should follow, but consider adding a proactive strategy that may already tie into your marketing and sales efforts.

Proactive Approach

Instead of waiting for a commercial lender to leave, consider these tactics to entrench your customers into your bank’s brand.

  • Email Communication: Let’s assume your bank’s sales culture has a calling program in place where your commercial lenders are required to meet with their entire portfolio at least three times a year.  If that is the case, what other forms of communication does your bank use to communicate to these customers?  A bank can create an email program where the bank is sending meaningful information.  It can be about a new service, business advice or anything else that the customer would deem useful.  This approach not only keeps customers in the communication loop, but also ties them to your bank’s brand beyond the commercial lender.
  • Customer Recognition: Find ways that your bank can recognize this customer and their business.  For example, if the commercial customer has a retail business, highlight their business to your customer base, and make sure the customer knows about it.  You may even want to let a bank executive notify the customer.  That way the customer now has a connection another banker in your organization.
  • Connect on Social Media: If you have a company presence on social media, make sure you are connected to your customer base.  Better yet, if your CEO or other executives are on a social media platform (i.e. Twitter, LinkedIn or Pinterest), make sure they are connected with the customer and engaged with them.
  • Team Approach: Most likely a commercial lender works with a team of people when dealing with their customers.  It may be a loan processor, or maybe a cash management specialist.  Either way, it is important that your commercial customers know the entire team.  Make sure your commercial lender introduces the support staff to their customers, or at the very least, their top customers.  Also consider creating a mentoring program, where the commercial lender takes an up-and-comer out with them on customer calls.

Brand Focus

You are connecting your customer to other people and outlets of your bank.  This will continue to establish the brand of your organization by reenforcing the strengths your bank has, and will make any customer think twice before they leave you to join their “former banker.”

Now if the Titans can just get their act together, I won’t be looking for another NFL franchise.

Finding Mr. Right

Having trouble selling a product or service that you think is perfect?

Inspector Jacques ClouseauCommunity banks are finding themselves in this situation.  More and more people are looking to outside competitors for banking assistance.

  • Credit unions are supplying people with low-interest rate car loans.
  • Reloadable pre-pay cards are offering an alternative to traditional checking accounts
  • Mobile apps are creating new ways to pay for bills and exchange money between people

These three options are great, but here’s the catch: community banks offer some (if not all) of these services. The problem is that people either do not want do business with a bank or they are unaware that banks offer these services.

How can community banks overcome this issue?

Image Crisis

Inspector and Chief InspectorIt is no surprise that banks have received bad publicity over the past 6 years.  Bank closures, bailouts and fraud have caused public opinion of banks to collapse.  Unfortunately for community banks, people tend to lump big banks and local community banks together in this mess.

To help overcome this, banks need to work on their public relations efforts by reaching out to potential customers and to the communities they serve.  The issue is that many community banks are stretched thin, so it is important that a consistent message is communicated so you can maximize your exposure.

Keep a consistent message

Call it a tagline, slogan or sayin’, but whatever you call it, make sure you keep it consistent.  By keeping a consistent message, people will start recognizing it.  But remember, even if you and your staff are getting tired of the message, keep it up.  The last thing you want to do is keep changing your message.  Constant change means you are hitting the restart button with your audience.

No Exposure

Inspector and WomanIs your bank advertising, communicating and marketing in the right places? For example, if you are wanting to grow your customer base among 20 -34 year olds, then advertising on an AM radio station between the hours of 10am – 1pm may not be the most effective place.

Make sure you are where your market is, and focus your attention to it.

  1. Research where your target market is.
  2. Craft a message that will get their attention and give a call to action.
  3. Follow through to see if your efforts are working or if it needs tweaking.

As previously mentioned, most community banks are stretched thin, so make sure your communication is done in a creative way that will get people’s attention.

Creative Communication

If a bank wants to increase the number of CDs it has, then running an average newspaper advertisement may do the job, but that doesn’t mean you can communicate the same way when trying to reach a digital based customer.

If you are trying to reach a young, digital audience, then find out where these customers are. Do you have a presence on Twitter or Instagram?  If not, think about how you can translate your message on these sites. Even if you do have a social presence, what are you doing locally to get their attention?  If you can effectively communicate on a digital and local level, you will amplify your message and yield stronger results.

Pay Attention

Inspector BombBefore jumping into new waters, be sure to research.  Make sure your perfect product/service is what your intended target market wants.  Once it is launched and you have communicated your message, listen to your audience.  If your audience likes it, use that as a stepping stone.  If your audience has issues with it, use that as a stepping stone too.

The last thing a community bank wants is their efforts to backfire and blow up like a bomb.

 

 

 

Rich Rod and Commercial Lenders

Coach Rich Rod AngryWhat does Coach Rich Rodriguez and commercial lending have to do with one another?  Better yet, how can banks learn from his career history when it comes to hiring a new commercial lender?

Let’s start with the latter and work our way back to Rich Rod.

Commercial Lending Hires

Since working in banking, I have seen two schools of thought in the hiring process of commercial lenders.

Hiring From Within

When a commercial lending position opens up with the Bank, the position is filled with a banker who wants to be a commercial lender.

Pros

  • Promotion: The bank can raise overall morale by promoting someone that already works for the bank.
  • Culture: The new commercial lender already knows the culture of the bank, will have a rapport with bank staff,  and will understand the expectations of the position.

Cons

  • Training and Development: The new commercial lender will need time to learn the position and develop into a commercial lender.
  • No Portfolio: The new commercial lender comes with no established customer portfolio, which can slow down production in the loan pipeline.

Due to the cons of hiring from within, a bank may fast track the learning and customer portfolio curve by hiring a seasoned, experienced commercial lender

Hiring Outside the Company

A bank may want to see an immediate spike in their loan pipeline and hire a commercial lender from a competitor.

Pros

  • Immediate Pipeline: An established loan portfolio can lead to new loan revenue from the lender’s current customers that are not bank customers.

Cons

  • Culture Shock: The commercial lender needs to learn the culture of the bank, learn the processes and build a reputation with the staff.
  • Lack of Loan Revenue: Just because the new lender has a customer base at their previous bank, doesn’t mean they can easily bring their customers with them.

Regardless of the decision, a bank is rolling the dice when hiring a new lender, but let’s compare the previous two examples with the coaching career of Rich Rod.

Early Success at WVU: Hiring from Within

Rich Rod WVU ThumbRich Rod was hired as WVU’s head football coach in 2000, but that wasn’t his first experience as a Mountaineer.  Here are the highlights of Rich Rod’s life before accepting the head coaching position at WVU:

  • A native West Virginian
  • Attended WVU and played defensive back for the Mountaineers
  • A student assistant coach
  • Served as a volunteer assistant

Rich Rod was a logical choice for WVU and during his time there, the Mountaineers exceeded expectations by dominating other teams in the Big East and becoming a nationally ranked top football program.  He was able to hit the ground running due to his long relationship with the Mountaineers.

A Michigan Rocky Ro(a)d: Hiring Outside the Company

Rich Rod MichThe University of Michigan saw the winning record Rich Rod had at WVU.  The Wolverines wanted a winning coach and had heard Rodriguez was getting frustrated with the new President at WVU.  They made the coach an offer he couldn’t refuse, and Rich Rod officially replaced his West Virginia blue and gold for Michigan’s gold and blue.

Rich Rod only spent three years as the University of Michigan’s head football coach.  What happened?

Short Sighted Vision

Michigan wanted a winning coach and they knew Rich Rod already looked good in blue and gold.  Seemed like a winner, right?  What Michigan didn’t realize was that Rodriguez’s offensive strategy, the spread offense, didn’t fully match the football players at Michigan.  This would require a change in players and in staffing.  In fact, players ended up leaving Michigan, citing “offensive behavior” but one has to wonder if it really had to do with “offense changes.”

A move from traditional offense to a spread offense doesn’t happen overnight, it takes seasons to accomplish.  Unfortunately for Rich Rod, the Wolverines didn’t have the patience to see it pan out.

Culture Clash

It is well documented that Coach Rodriguez didn’t get along with the Michigan environment.  He wasn’t a “Michigan Man.”  He didn’t plan on conforming to what boosters and the Michigan administration and boosters wanted from their coach and it came back to haunt him.

Learning a Lesson: What Works for You

This is just one example of several when it comes to hiring.  Just because it didn’t work for Rich Rod and Michigan, doesn’t necessary mean it will not work for your organization.  Shoot, look at what Rodriguez is doing at Arizona.  To date, they have had two winning seasons, and this season they have the opportunity to win the Pac-12 Conference Title.

If your bank does decide to hire outside the company to fill a commercial lending position (or any other position), consider the following points

  • Thorough background check: Go beyond the credit and criminal check, get to know the person.  Find out if they are going to be a good fit for the position and your organization.  Do they have the same values as your company?  Will they fit in with your bank’s strategic plan?  To answer these and other questions, you will have to have several interviews and include different people to sit in on the interview.
  • Loan Portfolio Review: There is no true way to review someone’s loan portfolio before you hire them.  That said, it is important to have some level of due diligence to ensure the new commercial lender’s customer base matches your bank’s target market.  If your bank is focused on growing commercial and industrial (C&I) loans by creating relationships with manufacturing companies, it may not be in your bank’s best interest to hire a lender who only focuses in commercial real estate (CRE) lending.

Hopefully this Rich Rod metaphor helps you and your organization the next time you need to find your next commercial lender.

Running Scared

Killer-Bunny--monty-python-and-the-holy-grail-590929_1008_566Are you running off your customers?  You may not be doing it on purpose, but it’s happening in just about every industry.  The demand we put on customers to use new technology compounded by the lack of face-to-face/human-to-human service is causing people to look for other ways to conduct their business.

Unfortunately community banks are no different.  In addition to the two previously mentioned issues, banks are also trying to find ways to cover cost by reviewing fee structures.  But community banks should learn a lesson from the mistake Bank of America (BoA) made back in 2011.  BoA dropped the ball a couple of years ago when they tried to apply a debit card fee to customers.  By trying to quietly pass the fee through, it sparked a national outrage that caused BoA to stop the new fee.  To this day, people still remember that mistake and are quick to take any bank to task if they try to sneak in a new fee.

So how can a community bank keep the peace will trying to stay in business?  It boils down to adding value and communication.  Whether you are creating a new product or instituting a new fee structure, you need to make sure it adds value and that everyone is on the same page.

Adding Value

What do you and your team take into account when launching a new product or service?  Do you just look at how it will make your company profitable or do you go outside your company walls to see how it will benefit your customer?  Worse yet, you are giving the bank away by downplaying a product or service and giving it out for free?

Example: Remote Deposit Capture

A few years ago, I had the privilege of diving into the Cash Management side of banking and helped create a Remote Deposit Capture service for a bank.  We put a team together, researched pricing, interviewed vendors, created a marketing strategy and came up with a solid plan.  When the dust settled, I started selling the service to current customers alongside the bank’s commercial lenders.  The hardest people to sale the service to wasn’t the customers, it was a couple of lenders who believed we should give the service away for free.  They were shocked that the service started out at $50 a month and could reach $100 if the customer leased the scanner through the bank.  It wasn’t until the lenders saw how much value customers saw in the service (convenience, saving time, reduced spending), that they were finally comfortable with the pricing.

Communication

Effective communication must be done both internally to staff and externally to customers.

Keep your staff up to date

Before launching a new service or restructuring any process that will affect your customers, start communicating with your staff.  After all, your staff will be the ones who receive the most feedback from your customers, and you want to make sure they are well educated to handle any incoming questions or complaints.

  1. Communicate early: Let your staff know what changes are coming in enough time so they will be prepared.  This also allows for time to make sure your systems are ready for any change and that the change is compliant.
  2. Explain why changes are being made: If you do not tell your staff why changes are being made, then you are leaving it up to them to find out why.  This will result in everyone having a different answer, which leads to confusion and unnecessary stress to both staff and customers.
  3. Distribute tools to help communicate to customers: Provide a list of talking points or provide a list of possible Frequently Asked Questions (FAQs) along with a list of answers.

Three simple steps, that when executed efficiently, pay off in dividends.

Keep customers in the communication loop

Sounds easy, right?  Sadly not all banks think about updating communication outlets, nor do they proactively communicate and listen.

  1. Update your website: How often do you update your site?  At the very least, update it whenever a new service has been launched.
  2. Communicate in different ways: Direct mail, email, statements, traditional advertising and online outlets are just options out there to use.
  3. Keep listening: When customers come in to talk about changes, be sure you and your team listens.  You may not like everything you hear, but you will learn ore about your customers and how the changes impacted their experience with your bank.

Change isn’t easy, but it’s needed for survival.  For a business to survive, you need to change without scaring your customers so bad they leave you and run right to your competitor.  In other words don’t let your customers feel like this…

What’s Your Story?

DoinkLast week, a professional wrestler by the name of Matt Osborne passed away.  Better known as “Doink the Clown” Matt was able to stand out in a profession where people come and go and talent is a dime a dozen.  How did he do it and can Community Banks learn a lesson from him?

Stand Out: Doink the Clown

By viewing the photo above, you’ll notice that Matt Osborne didn’t have a bodybuilder physique, so how was he able to be a successful wrestler?

His Doink gimmick was different from what everyone else was doing.  A bad guy clown that was inspired by Stephen King’s “It” character, Doink would pull mischievous pranks on fan favorite wrestlers and have deranged segments that would make your stomach turn.  He was able to compensate for the lack of huge muscles by pulling audiences in with a not so average storyline.

Take away point: Like Doink, community banks aren’t as big as our mega bank competitors, but we can stand out by doing things differently.

  • Community Action: Unlike Bank of America or Regions, our Board Members and key decision makers are accessible and can participate in a grassroots level to show how committed they are to the community.
  • Quick: Local decision-making allows for faster decision-making.
  • Accommodating: Be creative when putting products together and work with customers to make a deal instead of finding ways to say no.

Reinvent and Grow: Borne Again

BorneMatt’s Doink character was created when he worked for the WWE (then WWF) and the company had rights to the character, not Matt.  So, when he parted ways with the company he had a dilemma: how could he continue as a wrestler while keep the name recognition of Doink.  The answer: Borne Again.

Matt went to a smaller competitor named ECW and quickly established himself as a former disgruntled employee of the WWF.  He named his new character “Borne Again” and kept the clown outfit but only wore messy, small amounts of face paint (i.e. Heath Ledger as Joker in The Dark Knight).  His attitude was even darker than the previous Doink character; which fit right in with the over the top antics ECW stood for.  By creating the Borne Again persona, Matt was able to keep the Doink brand, but made it his own and continued the story of a deranged man.

Take away point: Take ownership of you brand.

  • Tell your story: Your bank has a brand, a story, so explain it and communicate to your staff, customers and prospects.
  • Build your brand: Once you lay the foundation of your brand, build on it.  Internally create a vision statement and a set of values.  Externally tie your brand into your advertising, marketing and sales.

Downfall: Your own Worse Enemy

Matt’s departure from both the WWE and ECW stemmed from personal problems. It’s a shame, because this man seemed to be a talented entertainer whose career, and life, ended too soon.  If he would have won his battle against his demons, who knows what type of success he would have had.

Take away point: Don’t self destruct.

Often community banks lack success because they either have bad apples ruining the bank or they allow operations and compliance totally run their business.

  • Bad apples: A poor performing, negative thinking employee can ruin the moral of a team.  Find out what’s wrong and either coach up or coach out.
  • Operations and Compliance: Don’t get me wrong, there is a place for both operations and compliance.  They should have a say in how the bank is ran and deserve a seat at the leadership table.  That said, these departments do not need to control the bank.  Think about it; have you ever heard of company base it’s success on internal operations?

Hopefully Matt Osborne is in a better place.  As a teenager, I found his silly and disturbing antics in the wrestling ring entertaining.  He was a true performer who left his mark in his profession.

How do you plan on leaving your mark in your profession?

Convenience: Old Verses New

When I first became a community banker, people would ask how many locations the bank had in town. When I told people over twenty locations, with five in Chattanooga, they would say something like this:

Only five? That’s not convenient. Amsouth has about twenty locations around Chattanooga, and they are convenient.

True, Amsouth did have more locations, but let’s fast forward to the present: people ask different questions to quantify convenience and Amsouth ain’t around anymore.

Now, I work for a community bank in Knoxville that has a total of four locations, but that doesn’t seem to bother most people. Especially when they hear:

  • Free Worldwide ATM Access
  • Free Online Bill Pay
  • Mobile Banking
  • Mobile Check Deposits

Most people understand the first three examples, but a few have not hear of Mobile Check Deposits. This mobile app allows people to deposit checks into their bank account by simply taking a photo of the check. Talk about convenience!

This new mobile app (only available at four different banks in Knoxville), is a global trend that is defining the new convenience of banking. This new convenience is due mainly to the increase of mobile technology, and even companies outside of the traditional banking structure are benefiting. Paypal, Google and Apple all have virtual wallets that are slowly starting to break down the old convenient view of banking…to the point of replacing the need for a bank all together; unless there is a need for a loan.

Who knows, if Paypal merges with a lending company like Quicken Loans or Discover, then there could be an updated version of the new convenience.

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