Wednesday, February 10, 2010

A little game of one-on-one?

I recently met with Frank Teas, CEO of The Nashua Bank in New Hampshire to discuss strategy (See photo. Frank is actually the person on the left). During the course of the discussion, he said that his marketing plan was one-on-one marketing. I have also heard of it referred to shoe-leather or face-to-face marketing.

As many community banks realize the challenge of evolving into a price leader because of their Goliath competitors, they are returning to the way banking was done when it was personal, dating back over 100 years. This, it seems to be perceived, is their rock in David's slingshot.

It got me thinking during my long drive home from New Hampshire. If customers are brought in primarily through relationships with bank personnel, then a critical objective must be to maximize the number of front-line personnel to serve in this capacity.

For example, a commercial lender may typically manage 100 relationships and about a $50 million loan portfolio. If you want $300 million in commercial loans, you will need six lenders. If you want your lenders to manage a larger portfolio, they will typically swim upstream to do larger balances per loan, or try to have more relationships.

This has an impact. If a lender must manage more relationships, there is less time for each individual customer. If he/she manages less relationships, it may reduce profitability. If he/she swims upstream, the bank is likely to be one of several "bidders" for the customers' business, attracting price shoppers.

The answer to these interdependent questions is in your strategy... what bank do you want to be?

Once decided, the bank must find the right personnel to be the face of the institution. Personnel that will build your brand, solidify relationships, and bring customers that value relationships more than price.

What bank do you want to be? Are you ready for a game of one-on-one?

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