This week in the American Banker is an Op-Ed provided by the Thought Leaders over at Simon-Kucher & Partners.
For readers not familiar with the firm, the partners at SK are in the business of giving advice to the industry; particularly to pricing product and services.
Simply put, the advice they are sharing with the retail bank industry were it adopted by bankers would, in today's climate, be a game changer. It includes the understanding that banks are entitled to a profit and that customers should expect good value. The marketing that goes with the philosphy writes itself.
They feel that there is a responsible way to approach pricing, which they are calling “Fair Value Exchange”. In essence it's where the "customer needs and bank needs are in equilibrium. The result is a fair return on savings and investments, a fair interest rate on a mortgage or other loan, and fair fees for checking. Fair Value Exchange needs to be the guiding principle in product development and pricing if the industry finally wants to get out of its ongoing image crisis. It is about designing products and services the way customers want them, identifying the optimal price points to meet corporate profitability targets and customer expectations, and communicating very transparently how much is charged and why."
Wow. Ethics and fairness in business. Every firm could apply these principles as a formula to success... it's not only the banking industry that would benefit from such an approach to business.
We're in an era when other consulting firms spend energy determining the tolerance levels of bank customers. In other words, how much nonsense and abuse a bank customer will accept before they leave for the competition. These firms advise banks on how to stay just a degree away from that point of the client exiting, the logic being that it "supposedly" maximizes returns. "Have the client hate only just enough to maximize the fees charged but not so much that they actually close their accounts." The current state of “bank-client relationships” are proving that this short-term gain is a long-term loss... for everyone.
A ‘thumbs up’ to the team at Simon-Kucher.
More good news is that some banks are getting it and employing the approach of treating as you would like to be treated. Jean Halliday reports over at the Forbes website about how, via cause marketing, the Bank of Ann Arbor, with only six locations, has nearly 20,000 fans, or “likes” on Facebook. That's the kind of social media success most institutions could only dream of.
Jean notes that, in comparison, " JPMorgan Chase, the nation’s biggest bank, has 20,071 fans, although the bank’s Chase Community Giving Facebook page has 3.3 million likes. So there is something to cause marketing.
In 2006, the Bank of Ann Arbor started advertising itself as the one that “helps.” President and CEO Tim Marshall said even during the darkest years of the recent economic downturn, the bank kept boosting its commitments to area non-profits.
As the bank approached its fifteenth anniversary, Marshall, also acting CMO, challenged his ad agency to find a way to increase its presence on Facebook. “I told them we had 279 Facebook fans, which was unacceptable.”
So the ad agency, Ann Arbor’s Perich + Partners, developed the Sweet 15 Local Charity Drive. Consumers who clicked the “like” button on the bank’s Facebook page could then nominate and vote for area non-profits. The 15 groups with the most votes split $75,000 from the bank.
“Rather than tout how much we’ve grown in 15 years, let’s celebrate by giving back,” said Ernie Perich, president of the ad agency and a bank director. He called the campaign an evolution of the “Helps” blitz.
The Bank of Ann Arbor got more than 16,000 fans on Facebook 60 days after the charity drive started. The drive attracted more than 100,000 votes.
He was so pleased with the results of the Sweet 15 event on Facebook, he ordered up another marketing program from Perich last fall. Perich decided to keep the bank’s same year-old ad format poking fun at bigger, out-of-town banks because consumers were already voluntarily sending their ideas for new ads to the bank.
Each radio, print and billboard ad used the line “Non-local banks think…,” like this one that won Perich several local Addy awards in 2011:
The ad refers to legendary college football coaches’ the U of M’s Bo Schembechler and his rival Woody Hayes from Ohio State.
People were asked to “Build A Billboard” on Facebook for the bank. Perich created an app that let fans see how their ads for the “Non-local banks think…” would look on billboards.
The Bank of Ann Arbor gathered 700-plus headlines from over 400 unique users during the contest. The Grand Prize winner, Janine Hutchinson, collected $1,000 and her name on the billboard for her “Non-local banks think Mani Osteria plays for the Tigers.” (It’s a local restaurant.)
Marshall said the Facebook promotions and ads are working, boosting awareness and positive feedback.
Indeed, Cause Marketing Forum of Rye, N.Y., says 47% of consumers have bought a brand at least monthly that supports a cause, representing a 47% jump in 2012 from 2010. And 39 % more people “would recommend” cause-related brands this year compared to 2010."
The article "Rebuild Consumer Trust by Offering a Fair Deal" b
