The Reciprocating Marketplace

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Reward your community bank by rewarding its customers

By Damien Hayes

The banking industry’s current loan products do very little to actually support our industry’s long-term strategic goals. Our industry’s loan products do not foster new loan growth by broadening customer relationships, and they fail to encourage and reward profitable behaviors. Worse still, there is little that is truly exciting to capture people’s attention and attract new customers.

The result: growing apathy among bank customers.

In November 2014, our company, Saylent, completed an industry survey of 1,200 consumers and 400 small businesses. As a result, we have scores of jaw-dropping statistics that would send your community bank’s marketing team straight to the padded room. For today, I will only focus on two of these statistics.

First, 75 percent of younger millennial consumers currently bank with the same institution as their parents. Is this the result of generational loyalty? Perhaps. Or maybe it’s the simple fact that banks haven’t given this generation any reason to switch. What would be the point of going through the trouble to uproot their financial life just to move to another bank with essentially the same offering? I seriously doubt that same statistic would be found in any other major industry, from automobiles to electronics to brands of shoes.

Second, 97 percent of small-business owners are satisfied with their current banking relationship. In other words, if your growth projections include acquiring more small-business accounts and loans, you have to ask yourself some serious questions. Should your community bank exhaust its sales and marketing resources by chasing that elusive 3 percent of unsatisfied business owners or should it get more creative? What if your bank can disrupt that 97 percent by offering a unique and innovative program that rewards business owners and adds value to their relationship as they become more profitable for your bank?

Reward your customers for their profitable behavior and their loyalty will certainly reward you.

To overcome this substantial marketplace apathy and gain (more than) your community bank’s fair share, I urge you to take a look at your bank’s product and reward structures. Why? To get that answer, all you have to do is peek over the fence that circles our industry and you’ll immediately see how our society’s culture has changed, and with it consumer expectations. The entire marketplace outside financial services is rewarding its customers for their valued behaviors and loyalty.

Sure, we have seen credit card rewards, hotel loyalty points like Hilton Honors and airline points such as Delta’s SkyMiles, but that just scratches the surface. Retailers have worked aggressively to implement rewards programs—such as Best Buy’s Reward Zone and CVS Pharmacy’s ExtraCare—that build up a cash value to be applied to future purchases. If that’s not enough to convince you, take a look at Papa Rewards by Papa John’s, My Starbucks Rewards or even Kellogg’s Family Rewards. It is so prevalent in our society that we are literally getting rewards for purchasing pizza, coffee and breakfast cereal.

With all of these reward programs being used, why is the financial services industry so slow to apply this trend to our own product suites and, more importantly, the whole relationship with a customer?

At Saylent, we saw this gap between the banking industry and the rest of the consumer culture as an opportunity to change the game. We knew that banks needed a tool that was “core processor agnostic” and could leverage data from the multiple sources within their institutions. In addition, banks needed easy programs to implement—programs that were completely automated and had minimal impact on a bank’s resources. Only then would banks be free to think outside the proverbial box and, for the first time in decades, feel empowered to create new and innovative products and loyalty programs.

Imagine if, instead of feeling confined to your community bank’s existing “me too” offerings, it could say the following:

“We differentiate ourselves by tying our loan and deposit products directly to a loyalty program that rewards our customers for their profitable behaviors and overall relationship with our bank. In fact, our programs are tailored to your age bracket and stage in life. So, the more you do many of the things you’re already doing (open new loans, pay with a debit card, use bill pay, etc.), the more value you get as our customer.”

It’s possible and it’s imperative. If you feel your community bank’s market is saturated and stagnant, you want to aggressively grow your bank’s loan portfolio, or you simply want to inspire your employees to become cross-selling machines, then you give your customers a reason to believe your community bank can offer a financial partnership that is collaborative and reciprocating. Of all the industries consumers come in contact with, community banks are among the most personal. Reward your customers for their profitable behavior and their loyalty will certainly reward you.


Damien Hayes (dhayes@saylent.com) is the senior revenue consultant at Saylent, a data analytics software and service provider in Franklin, Mass.

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