Small-Business Smarts: Turning entrepreneurs into longtime customers

Community banks are focusing on reputation, in-person marketing and industry expertise to turn entrepreneurs into longtime customers.

For most community banks, small business is an appealing customer base. Not only are their financial needs generally larger and more frequent than those of consumers, but small-business owners also tend to be more loyal to their banks than other customers.

“Small businesses are critically important to us, as we are highly focused on growing our core deposit base with local merchants and business owners,” says Steven Schnall, chairman and CEO of Quontic Bank in Astoria, N.Y., with assets of $310 million. “Business-operating accounts generally result in low- or no-cost DDA deposits, which can also be fee-generating, and they also present opportunities to make profitable small-business loans to companies that larger banks overlook.”

What is the best way for community banks to make their presence known to small businesses to attract their business in the first place? There is no single answer. It depends on each bank’s strengths and goals.

Quontic Bank takes a varied approach. “We participate actively in several charitable organizations, do community outreach, advertise locally and market directly to local businesses via email, mail and in person,” says Schnall. “In person is always the most effective.”

For the $6.7 billion-asset ServisFirst in Birmingham, Ala., reputation is an important selling point. “Our original shareholders owned businesses that bank with us, and they spread the news about ServisFirst throughout the business community, creating a strong word-of-mouth reputation,” says Paul Schabacker, executive vice president.

In addition, ServisFirst invests marketing dollars into charitable and community outreach programs. However, its primary outreach is through direct personal calling. To strengthen this, the bank offers attractive incentive programs to its proactive calling officers.

Once face-to-face, bank representatives “sell” three keywords: fast, fair and reliable. “We make quick decisions, we treat our clients fairly in good times and bad, and we can be relied upon to make consistent decisions over time,” says Schabacker.

The idea, then, is that the small businesses ServisFirst invests time in become long-term customers—an investment worth making.

William Atkinson
, a longtime Independent Banker contributor, is an Illinois-based journalist specializing in banking and small-business issues.