Thursday, September 26, 2013

You Can't Buy a Customer's Love?

I recently attended the ABA Marketing Conference in San Antonio where a speaker from USAA said something similar to this post's title. Really? How do I explain the branding study by a client that identified Ally Bank as the most recognizable brand in their market?

As most readers know, Ally is the former bank-finance arm of General Motors (GMAC). They required a substantial capital infusion from Uncle Sam to keep them solvent during the financial crisis. I don't think they have many, if any branches. So how do they earn "most recognizable"? My money is on their ad budget. In other words, they bought their fame. Love? No. Head above the crowd? Looks like it.

This flies in the face of conventional wisdom spoken so eloquently by the USAA speaker. How could blast, one directional messaging still yield results in today's engagement world? And if money can buy customer love, what can community banks with limited ad budgets do to survive?

USAA is highly regarded in banking circles for their omni channel marketing approach. But I find it interesting that their representative took the position that budget heavy blast messaging was not effective at gaining customer loyalty.

Why? I'm a veteran and USAA insurance customer. I cannot recall speaking to a live person from the insurance or bank side. But I see plenty of TV ads during prime airtime, receive a couple of e-mails per month, and occasionally receive direct mail from them. Is this how to win my love? Perhaps. I'm not sure. But, according to their actions, they must think so.

But I do know most community banks cannot afford this path. We don't have the resources. So what are we to do?

Customers switch banks when something happens that compels them to do so. For each customer, it may be a slightly different "something"; a declined credit, difficulty sending a wire, accidentally bounced check, a bad experience with their banker. The key to be the bank they go to once "something" happens is to be on top of their mind when they decide to switch. Ally and, yes, USAA, do that through their ad budgets. You, on the other hand, must work harder and smarter to be that top of mind bank.

Traditional advertising can play a role. But actually knowing potential customers can go a long way. Do your employees, front line and support staff, participate in community organizations? Are they on LinkedIn and do they follow your bank's LinkedIn profile?

Does your bank blog, and interact with community members on the blog? Have you positioned your employees as subject matter experts on the blog, and host community based education sessions such as "How to Finance a Small Business"? Does your brand have personality, such as supporting the local sports team(s) by using Facebook post factoids on team athletes, and wearing team colors in your branches before a big game?

Whatever path you choose to combat big bank big ad budgets, ensure it is consistent, constant, integrated, interesting, relevant, and genuine.  USAA is thought to be best in class in omni channel engagement. You can be genuinely best in class. But you have to build the strategy and execute it.

What are you waiting for?

~ Jeff


  1. I have never seen an ad for Ally. And if I have I had no idea which company it was for. But I do know they have the most incredible interest rates on checking and savings accounts- I have a higher interest rate on my Ally checking account (which I just opened) than I did on my savings at my last bank. And they have no branches that I know of- all online. I've also heard their customer service is awesome. Just some other thoughts to throw in the mix.

  2. Kap,

    You have just zero'd in on a business model that earns loyalty through rate. It costs the traditional bank branch 1.23% in operating expenses as a percent of average deposits. Branchless banks have a distinct pricing advantage because they don't incur that 1.23%.

    If the comfort of having a branch is not important to customers; if they don't care about having a relationship with a banker because of their current or future situation; and if the US Treasury's majority ownership of Ally does not make customers queasy, then Ally Bank is a formidable competitor to community financial institutions.

    Thanks for the comment!

    ~ Jeff

  3. All the advertising dollars in the world won’t make a difference if your word-of-mouth campaign is nil. For instance, my credit union posts to Facebook several times a day. These posts consist of anything from pictures introducing new staff members to reports of how their most recent fund raising efforts faired, both of which are things that are directly related to my bank and my community. Interspersed with these updates are advertisements and offers. I like their page and I like their “personality”. Once a strong social media personality is established, community banks can smoothly integrate that presence into an exceptional customer service platform. If community banks truly focus on just that….the community, they can definitely compete with impersonal mass advertising.

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  6. Leigh, I think the compliance monster might inhibit community FIs from showing personality on social media. Many that do it, do so blandly. Could that feed negative word of mouth? I agree that community FIs must leverage all tools available to them to build a brand to be as effective as those FIs with large budgets.

    ~ Jeff

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