By Tom Hershberger
At many community banks, marketing planning is the outcome of a periodic meeting to discuss the bank’s marketing efforts and product specials being promoted by direct competitors. While the process does provide short-term structure for decisions, it is reactive and lacks a strategic foundation.
Planning at its core is strategic. A proactive investigation of opportunities, not a reactive posture based on current market conditions. The simplest way to identify opportunities is to conduct relevant research.
Research is, in most organizations, an overlooked resource when plans are being developed. The reason might be cost, but more likely, it is the fact that research benefits are misunderstood by management. For many bank managers, research is the unwelcome telephone survey they receive during an evening meal. That is not the beginning or the end of effective research.
Structure your discovery
Well-designed research begins with the analysis of available data and migrates to intentional inquiries with targeted audiences. Think of it as a discovery process. What do you need to know about your customers or market? The answer might lie in an examination of current customer purchase behaviors and product possession. Examining your existing relationship data might be exactly what you need to effectively identify the best market segments for a new product. There is no need to conduct market surveys if data management provides the information you need.
Begin with objectives
Research is only required when additional information will improve the quality of a decision. Some research is conducted to determine what to do, while other projects are directed at how to do it.
The results should be focused on objectives set before the research begins. If a decision has been made to introduce a new product, then utilize your research to gauge customer reactions to the service.
The research results can improve the focus of your product introduction. If a new market area is on your list, utilize your research to examine the competitive environment and financial solutions not being delivered effectively by other institutions.
Provide a foundation for management
Let’s use Cross Bank as our example. The Cross Bank management team is investigating the placement of a new branch in an adjacent community. If they have already purchased the property and started developing the branch floor plan, then the research opportunities are driven by questions about relationship acquisition in the immediate market area. However, if the bank’s management team is genuinely interested in whether to even enter the market with a new branch, research can provide an excellent foundation for their decision.
Cross Bank could employ several different research resources to evaluate the community and potential branch locations.
Relationship Information Management. An internal examination of Cross Bank’s customers can identify if the bank already possesses relationships in the proposed trade area. If customers are present, their product utilization is an excellent predictor of relationships that could be acquired. A bank’s future customer is typically a clone of existing customers in the same market area.
Image and Positioning Research. Using telephone surveys for data collection, image and positioning research can help examine the top-of-mind awareness for Cross Bank and competitors in the market area. The investigation can be expanded to evaluate reputation factors and investigate consumer propensities to change financial institutions.
Focus Groups. Conducting focus groups with consumers or businesses in the new community could provide important insights about competitors with established market share. Competitor strengths and weaknesses or consumer preferences are all easy to investigate in a focus group environment. By profiling your focus group participants, you can capture the insights applicable to your desired market segments.
Improve your decisions
All research methodologies have a “best practice” application. Mail surveys perform well with existing customers and fail to produce responses with noncustomers. Online surveys are inexpensive to execute, but include a passive design for data collection. They produce excellent results with employees and customers. Clarifying your research objectives is the only way to ensure that you are selecting the most effective research methodology.
If you want to know what your customers are thinking, who better to ask than your customers? Research, properly designed, can provide actionable information superior to the general observations typically shared during planning meetings. The kind of information that removes the guesswork you get when creating a marketing plan based on last year’s results plus 10 percent. Adopt a strategy that places research in your bank’s budget every year.
Create accountability
Not every performance measurement needs to come from the balance sheet or income statement. Research provides an additional layer of information to examine success and create accountabilities.
Consider utilizing a customer satisfaction survey to determine if corporate communications and staff training are having a favorable impact on customer experiences. Utilize mystery shopping evaluations to collect customer assessments of the service they receive. You can even create accountabilities for your managers by using an employee survey to create an index to track employee engagement. The options are numerous and more affordable than your might think.
“I know” is superior to “I think.” Use your research to determine what you know before you make your final marketing plan decisions.
Tom Hershberger is president and CEO of Cross Financial Group, a consulting firm, based in Lincoln, Neb., that specializes in sales and marketing support services for community banks. Tom is a faculty member at the ABA Bank Marketing School. Telephone: (402) 441-3131; Email: tom@crossfinancial.com.
