Increasing The Market Share of Banks and Credit Unions

Differentiating the Banking Category by Banks and Credit Unions

 

Change is everywhere

Banking category
Banks face a choice

The banking industry is going through another of its transition periods as banks come to understand that they are more closely aligned with the service sector than they are with the financial sector.

The stakes for success are high and the losers will eventually fail. The trend towards consolidation is continuing and, increasingly, large banks are looming on the competitive horizon.

These larger banks have immense marketing budgets to wield and their national advertising provides them with greater local awareness than even the most established community banks.

Banks and credit unions placed in the Banking categoryTherefore, one would think that the largest multi-state banks would hold an insurmountable advantage in gaining new customers and growing market share. The evidence, however, would point to a different conclusion.

Had any bank broken through the awareness barrier with important meaning to the prospective (not the current) customer base, then it would not be necessary to build a branch on what seems like every street corner.

The Current Banking Category

Why You Must Do Things Differently

The reason to invest in a brand is to protect banks against the tremendous capital expense of having to put a new branch on every corner. You need to attract new customers when the bank is not necessarily the most convenient. The reason few banks have been able to win the battle for the wallet (which is in fact a battle for importance on an emotional and intellectual level) is telling.

The Banking category in a chartAdvertising does little to differentiate one bank brand from another and they seem to dwell on category-wide benefits. While it may actually matter (according to your market research) to a potential banking customer that your bank is: convenient, has many ATM machines, competitive rates, “free checking” (we have even seen promises of “SUPER FREE CHECKING”), friendly service, and that you are “small enough to care – large enough to meet your needs,” all of these attributes are banking category table stakes.

Current advertising does little to differentiate beyond corporate identity.

You Can’t Win With Table Stakes

You cannot be a BANK (or Credit Union) today if you are inconvenient, have few ATMs, unfriendly service, expensive checking, and are “too large to care and too small to meet your needs.” We cannot find any bank or credit union that advertises these deficits and your potential customers have a right to believe that banks are in fact, all, pretty much the same. So, left without REAL choices, consumers choose by convenience and locations -occasionally word of mouth reputation, and, most importantly, when they are fed up with their current bank.

Be More Important

Bank category table stakesFor the customer, switching banks or credit unions is a first rate hassle. They avoid it unless they have relocated, moved, changed jobs, or been poorly treated by their current bank. All things considered they are likely to just stay put. If you want to win in this market space and increase your market share, you need to target those that are already looking to switch banks because of one of the above reasons. You must also stand out in their minds, above their considered set of banking choices, to win.

This means that banks and credit unions need to know their potential banking customers better than banks currently know them. Market research that tells you that they value convenience and location but all of these things are not doing enough to help banks increase market share. You do not need research to know this.

It is a consumer trend that transcends your banking category and it does not tell you how to be different and better (as a bank brand) which is the hallmark of a brand that steals, grows, and increases market share.

Your Bank Marketing Success Is Dependent on Your Strategic Brand Work

We are not talking about your bank marketing and advertising failings, we are talking about the DNA of your brand that pre-determines how effective your advertising will be because it provides the fundamental permission to be vitally important and believable. It is this essence that will make everything you market more effective.

Without such a fundamental changes, the only answer to your quest to increase market share is to build more branches, spend more on advertising, and buy up more competitors.

The Detailed Banking Category Decision Tree

Bank and Credit Union Decision Tree – Choosing a Financial Institution in 21 Steps

  1. What do I need to do with my money?
    The first question is what NEEDS to be done. The customer needs to become aware of the situation at hand and automatically addresses what needs to be done in order to live.
  2. What should I do with my money?
    Then the customer begins to think about what they SHOULD do with their money. This could include considering what will bring in more profit or how much should be saved as opposed to invested…etc. The customer begins to debate after the recognition of what must be done in order to function properly.
  3. Banking category choicesWhat do I want to do with my money?
    Following the debate of what needs to and should be done with finances, the customer begins to take into account what they would like to do or WANTS to do with their money for themselves. They think about what will make them the most profit and what will be easy and beneficial for them.
  4. What do I know?
    Naturally the customer then begins to think about how much experience and knowledge they have in this field and wonders how much control they could have over their money based upon this experience and knowledge.
  5. What will be best for me?
    The customer asks himself if they know best and if they knows of the best options for themselves. They consider themselves as an individual before considering others involved in the decisions.
  6. What will be best for my spouse/family?
    Immediately after the personalization of the decision has been established, they become aware of the needs of the family/spouse. Determining what would be best for them may not in fact be the same as determining what is best for them as an individual.
  7. Am I a member of a particular group that has a specific financial set-up?
    Next the prospect thinks about their current situation regarding employment, benefits, and other factors. They ask themselves if they are a member of a certain institution by association or if there could be added benefits to belonging to an institution aligned with their employment benefits. For example, a certain credit union or bank may only accept members or share holders who work for a particular company or for the government…etc.
  8. What is the easiest solution?
    This is where they begins to get frustrated and starts looking for the easiest, most painless option. After discovering the many factors involved with choosing a new home for his finances and those of his family/spouse, he begins to look for a quick fix or an easy answer to appear.
  9. Does location matter (work/home)?
    Convenience becomes the next question. The financial institution close to home or to work presents an easy option that is accessible and timely. Thy wonder if they will make any sacrifices in order to have that convenience factor of proximity.
  10. What resources do I need to make this happen?
    Next, they wonder what kind of money they need to start up and how much money they will need to budget for each account. Do they need anything in particular before he starts up his accounts?
  11. What are my options?
    They observe the entire set of institutions in the area and realizes there are more options than they thought. They realize that they may not know which one will be right for them or their family/spouse.
  12. University marketing studyWhat do my family and friends use for their finances?
    Immediately they turn to people he trusts for advice and recommendations. They figure if they use XYZ Bank and they have no problems, then I should go check out XYZ bank because it would probably work for them too. Which is sometimes, but definitely not always the case.
  13. Who will help me?
    They look for more assistance. They start becoming aware of the different institutions advertising, the way the buildings look…etc. They seek information and may either go inside for help from an employee or they may look on the Internet for information and ratings.
  14. What will make a difference? They determine the deciding factor, whether it is location, price, options, customer service…etc. There will be one factor that will directly influence their final decision.
  15. How will I keep my records?
    They want to know how they will keep track of his money and see what is being done to maximize their profits. They want to be sure they can see what is happening and that they feel security in the decision time and time again.
  16. What kind of access will I have?
    Security also lies within the realm of easy access. Will the money be safe from everyone else but entirely accessible to them? They want to know that if any transactions or emergency funds are needed, that they can rely on his provider to be there for them regardless of day or hour.
  17. What will I have to do?
    How do they get started? They want to know of any catches or start-up fees. They need to know how difficult it will be for them to get organized and fall into a pattern at the new institution.
  18. What will be done for me?
    They want to know what kind of service they will be getting in return for their investment of their finances. What kind of rewards are given to the customer and what can be done to make life easier? They want peace of mind and to know that they are being accommodated.
  19. Over what will I have control?
    In other words, what do I have to do to keep things going in the right direction? They want some sort of control over their money, but not enough that they feel as though they are completely responsible for what happens to it while it is in the bank or in mutual funds…etc. They want to have control via access and knowledge.
  20. What kind of fees and charges are involved?
    Everyone naturally wants to know what kind of late fees or start-up fees pop up. As consumers, we are always taught to look for the small print and the hidden catches when something seems too good to be true.
  21. What will I have the ability to do on my computer?
    They want to know what can be accomplished at home on the computer. When they cannot make it to the institution after work or during lunch, they want to know if they can come home and have online capabilities. They also want to know if there is anything online that sets this particular place over another. They are still looking for assurance that they are going to make the right decision.

Understanding “the switcher” is key and you need to understand the thought process that propels customers to switch.

At Stealing Share we build decision trees to help us visualize this and help us anticipate all of the internal questions that the prospect makes when they consider switching banks. We then address those issues in the brand’s definition being careful to note the important questions that is the self-identify of the customer.

It is these questions that illuminate the bank’s promise because your brand is NEVER about you. It is all about the customer. If the prospect can find themselves in the brand, sharing their core beliefs and values they will prefer you and you will increase your market share.

 

 Banking Opportunity in the Banking categoryOpportunity is always found in the belief systems of your target audience.

 

The ways in which banks and credit unions speak today does little to create preference. Bank of America, Wells Fargo, BB&T, First Trust, RBC Centura, PNC, and Sun Trust all appear as the same to potential customers.

Real opportunity to increase market share will be found when they finally define themselves in terms of the customer and not in terms of their own offerings and services.

As long as banks and credit unions continue to see themselves solely as banks and not as extensions of their prospective customers then their only option is to put a new bank branch on every street corner in America, wasting valuable capital and resources that may ultimately place the bank itself at a competitive disadvantage.

 

What is going on in the banking category?

Banking Market Study Update