Banks and Credit Unions: How to Grow Market Share In A Mature Market

By Tom Dougherty

An Example of Bad Bank And Credit Union Marketing

Credit union marketing is usually poor
Banks and Credit Unions need to wake up

The competition to increase market share has gotten more intense regardless of business category. The goal is somewhat easier to attain if you’re in an immature market in which the messaging is fairly basic and the players can succeed just by selling category. In those cases, you can just sell the category benefits to convince new customers to buy. (Think of the pharmaceutical companies, for example.)

However, most companies aren’t so lucky. What if you are in an industry, such as banking, in which there are no new customers to entice? You can’t build the category. All of us already have a bank or credit union. Even worse, from the perspective of the customer, banks and credit unions provide similar services and solutions.

In fact, most customers describe their banks as the place they keep their checking account. That’s about it. However, if we take a closer look at the banking market, we can answer the question: How do you grow market share at a bank or credit union when there are no new banking customers?

What Banks and Credit Unions Have Done

Credit Union failures in marketing are legendary. It is about blaming your failure on the customer. “They don’t understand the credit union difference” is the mantra. Maybe the problem is the credit unions ability to identify that difference in a way that is meaningful to prospects?  Maybe the difference is not all that meaningful to anyone but the converted?

Banks are having a hard time creating a brand message that holds meaning to the banking customer and is different from the competition. Most of their image campaigns (not brand campaigns) look and sound the same — “Trust us. We’re your neighbor”, etc. Nearly all bank campaigns have also created daily print advertising around bank interest rates. Yet the rates are very nearly the same at every bank and credit union.

Banks have tried to increase the meaning and relevance of their brand messages by including other investment services in their offerings, but they still fail to provide the customer a reason to choose between one bank and the rest of the financial market (or between other banks). Banks have certainly become more sophisticated at database mining and direct marketing. It is all just bad bank marketing and an inside-out view of the target audience.

They have trotted out every possible customer convenience, including electronic banking, but they still haven’t been able to give the customer a meaningful reason to choose them. They have yet to create bank brand. The simple but hard truth is that banks and credit unions are less meaningful to our lives than they were 10-20 years ago. Back then your relationship with your banker was personal and important. You knew your banker. You made many of your transactions because you trusted your banker, and he trusted you. Today, banks and credit unions have made it nearly impossible to have that kind of relationship. (Read our bank market study here)

Bank brands are strictly playing a numbers game with no real personality or meaning involved in the process. Decisions on loans, interest rates, credit ratings, and collateral dollars are not made based on an assessment of the customer’s character, but on an assessment of the customer’s numbers. Few homeowners anymore have a mortgage with their bank. S

ome banks and credit unions actually penalize you—charge you a fee—if you come into a bank branch to make a transaction. Stopping at the ATM is something you look forward to with the same relish you do when dropping your clothes off at the dry cleaners. Therefore, is it any wonder banks and credit unions are less meaningful to the banking customer, or that the customer is less loyal than they were 10-20 years ago? Banks haven’t connected with customers or provided them with a reason to be loyal.

What Banks Should Do

Banks need to stop with the promotions if they desire to increase their market share. Customers currently change banks at the point of failure. They switch when the banks have disappointed the customer in some fashion. Customers don’t change banks because of a one-sixteenth of a percentage point difference in an interest rate. The customer who opens a checking account to get the free picnic cooler is the person who will stay only until another bank offers them a free calculator. By participating in such promotions, banks are training their customers to believe there is no difference between their brand and the brand of their competition. They’ve effectively told their banking customers that their brands have no meaning, which translates into a lack of value for the customer in general.

Why not give your customer something really valuable and desirable? Give them a brand that has meaning to their lives and you will increase your bank’s market share. Your long-term success can only exist if customers covet your bank brand, not your picnic cooler prizes. At Stealing Share™, we know that purchase decisions are emotional, not cognitive. We know that bank consumers crave to use bank brands that are an integral part of their own self-description. Developing a brand strategy that has an emotional attachment is how you steal share from competition in a mature market, where there are no new customers.

The bad news for the banking industry is that the market is stagnating and spinning out of control down the long dark corridor of commodity marketing. However, this is good news for those banks and credit unions that define their brand as being about the customer and not the bank itself. Opportunity to grow market share in this industry is enormous. The bank or credit union that does that will win and significantly grow in brand equity while increasing the bank’s market share.

 Marketing in the banking industry