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Archive for the ‘credit union marketing’ Category

Most banks and credit unions strive to have competitive–if not superior–rates on products and services. The belief is that offering 2.50% APR on an auto loan leads to far more success than offering 3.00% APR. Makes sense…mostly.

Any consumer can (and does) look at 2.50% as better than 3.00% on an auto loan–the numbers are easy to compare, and the smaller one is always better. The credit union or bank offering this superior rate is probably getting more business because of it.

BUT: if tweaked a bit, their superior loan rate could create even more of an impact on consumers–and result in more word of mouth.

Example
On a $15,000, 48-month auto loan, the rate difference between 2.50% and 3.00% only equates to $3.30/month in savings in the payment for the customer/member. That’s nothing. They aren’t even going to notice that $3.30 difference each month at all. So, they’re getting a better rate but without any of the buzzworthy gratification of feeling like they are saving.

But what WOULD feel gratifying to them? Receiving one single lump sum $40 check at the end of each year of the auto loan. A substantial rebate–a pleasant, buzzworthy surprise in the mail. Enough to treat yourself to a dinner out, a new shirt, or a deposit into your vacation fund.

Same Investment, More WOM
To the bank or credit union, the investment is the same ($40/year in rate concessions), but it’s packaged in a different and more interesting way; a way that might cause the customer/member to tell a friend, “woah, I got a $40 rebate in the mail today!” Plus, this approach would result in better member/customer retention because people would need to stick around in order to get their rebate check.

[As you know, we here at the PSST!/CBC family are huge advocates of applying business concepts from other non-financial industries. In fact, the idea we’ve shared is very similar to, though not inspired by, how REI runs their business as a co-op]

The Bottom Line
There are many ways to make the seemingly mundane aspects of financial services more buzzworthy and interesting. You just have to open your eyes to a new, word-of-mouth-oriented way of thinking, and peel away all the assumptions and limitations we’ve self-imposed as an industry (for example, we assume the savings from a lower interest rate must be amortized evenly across a loan’s life).

Or, if you can’t do it yourself, you can always call PSST! and CBC!

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As we mentioned in yesterday’s long-overdue issue of the OMFG! e-mail newsletter about word of mouth marketing for banks and credit unions, we’d like to offer you a sweet little deal: a free copy of Andy Sernovitz’s leading (and aptly-titled) book on buzz, “Word of Mouth Marketing.” This book will give you a great overview of the concept of word of mouth marketing at your bank or credit union, and is loaded with examples from every corner of the business world.

Here’s all you have to do:

  1. Set an objective for your bank or credit union’s word of mouth marketing efforts this year.
  2. Contact us using the Request an Estimate form, and tell us about your goal. It takes about 12.3 seconds.
  3. We will schedule a time to discuss your word of mouth marketing goals and efforts at your bank or credit union, and then send you a copy of the book.

And in case you are not yet subscribed to the OMFG! email newsletter, subscribe now and you’ll get monthly doses of advice and tips on word of mouth marketing for your bank or credit union. For instance, yesterday’s issue featured the article, 3 Ways to Brainstorm Word of Mouth Marketing, which answers the big question: “we want to build WOM–but where do we start?!”

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Many banks and credit unions offer a fairly standard referral program–either on an ongoing basis, or as a special campaign. The offer is simple and predictable: if you refer a friend and he/she joins/becomes a customer, then you both receive a spiff ($25 each, etc.).

There’s a good chance this program is taking money out of your pocket unnecessarily.

Let me give you an example. I recently joined a new gym, which offered a referral reward. They asked, “who referred you to us?” The truth? Nobody. But I do have a buddy who already works out there. So I answered, “my friend Josh,” knowing that Josh would then get a month free at the gym, and I would score brownie points with him.

This is a problem…and the reason is simple: you’re paying people to do what they were going to do anyway. In my case, I was going to join that gym regardless. At your bank or credit union, if they truly found your offering compelling enough to refer a friend, they would do it anyway. If they don’t find it compelling enough, $25 isn’t going to change that.

It’s importance to understand the difference rewarding a behavior, and behavior modification. Simply put, with your referral program, you’re wanting the latter…but paying for the former.

Rewarding a behavior is retroactive–you give them a pat on the head for something they already did. Behavior modification is giving someone an incentive to do what they otherwise wouldn’t.

The problem is this: the “incentive” most banks and credit unions try to use is tangible or financial (cash or swag). Based on the principles of word of mouth marketing, though, the real incentive a person has for telling others is the feeling of importance, VIP-status or helpfulness that they get from making a referral (more on this in the free download, Bottling the Buzz: Harnessing Word of Mouth Marketing to Beat the Competition

)

The Takeaway: If you want positive ROI on your referral program, you need your company to be extremely buzzworthy, which is what makes people WANT to tell others about you.

 

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There are three words that almost always generate buzz in the business world, yet are almost never spoken because companies are so afraid to utter them.

DON’T BUY NOW.

Consumers rely on companies (like, say, banks and credit unions) for expert advice. I rely on my HVAC guy to tell me how best to manage my home’s heating equipment. I rely on my bank or credit union to give me advice on how best to structure my debt or savings to reach my goals. Etc.

Consumers also expect, from experience, that while they generally trust the company they do business with, that the company is going to make recommendations that are also in the best interest of the company itself. Of course, this often means recommending the consumer buy something from the company. That way, both the company and consumer win…right? Not necessarily.

It can be highly buzzworthy when a bank or credit union recommends something to a consumer that is NOT in the best interest of that bank or credit union. It’s unexpected, and it demonstrates to the consumer that the financial institution is truly being objective, and on acting in the consumer’s best interest.  For banks and credit unions, this may be:

  • Advising a consumer with bad credit to apply for a mortgage at a different institution where their chances of approval are higher
  • Telling a consumer about a higher rate on a deposit product at the credit union down the street
  • Advising a potential investor making a trade in their portfolio–a trade that would earn the company a commission

There are SO MANY banks and credit unions who talk about building a brand of being “a trusted advisor” (a good platform but a tad common). If you are truly a trusted advisor, it would be IMPOSSIBLE to act in the consumer’s best interest without at least occasionally recommending something that your company either doesn’t provide, or doesn’t have the best option for.

And here’s the real kicker: ultimately, it IS in your best interest to say DON’T BUY NOW. Why? Because you’ve now proven you are truly a trusted advisor, which greatly increases loyalty because the consumer knows you’re very objective, and in their corner. You’ve also likely generated referrals and created a good deal of buzz, because the consumer is so surprised you would recommend something not in your best interest.

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Our friends at WOMMA have defined word of mouth marketing as:

“Giving people a reason to talk about your products and services, and making it easier for that conversation to take place.”

For any company, this is easier said than done–admittedly. For banks and credit unions, it’s proven to be extremely challenging, for two reasons: a) banking isn’t really all that worth talking about, and b) marketers in banking are largely only experienced in fairly traditional marketing means.

I’m here to tell you that the hardest part about word of mouth marketing for banks and credit unions has nothing to do with marketing. Instead, it has everything to do with the first part of WOMMA’s definition: “creating something worth talking about.”

You see, creating a bank or credit union worth talking about is not about marketing. It’s simply about creating a remarkable company. It’s about creating a Purple Cow (in Seth Godin language). It’s about making the guts, the insides and the real essence of the company–not just the facade–special and interesting.  If you think of WOM as marketing, it’s easy to slip into a mindset where WOM is about creating interesting packaging; a buzzworthy cosmetic exterior people will talk about.

What further solidifies this problem for the financial industry is that creating an interesting marketing facade is easy (just pay an agency to do it for you), while creating a truly buzzworthy company is very hard (requiring lots of sweat equity and commitment to change). And in the banking industry, we tend to take the easier route…only to find it that it creates only fleeting buzz, if any at all.

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We love seeing word of mouth marketing catching on with banks and credit unions. Any form of buzz that a financial institution can generate is a step in the right direction not only for that bank or credit union, but for the financial services industry as a whole.

One of the manifestations of WOM in banking so far has centered around the idea of “random acts of kindness.” Financial marketing stars Umpqua Bank have been known for using random acts of kindness successfully (such as with their ice cream truck, which we can vouch from personal experience does successfully bring smiles to faces!), and the idea has caught on with other banks and credit unions as well.

But I have one fear: I’m afraid banks and credit unions are starting to oversimplify things, thinking that WOM = random acts of kindness. The truth is, random acts of kindness are just one of the many forms of word of mouth marketing.

Remember, word of mouth marketing is a huge, broad topic, with dozens of subcategories of types of WOM. (You can learn about some of the other forms in our word of mouth marketing glossary.) According to the Word of Mouth Marketing Association, word of mouth is about giving people something worth talking about, and making it easier for them to have conversations. Random acts of kindness are a great way to accomplish this, but only one of many ways.

Much like we’ve said about bank and credit union social media, random acts of kindness does not a WOM program make…but it’s a good start.

Credit unions and banks: If you are doing random acts of kindness today, kudos to you! Keep up the good work! But also keep learning about the other types of word of mouth, and build out a thorough, multi-faceted word of mouth marketing strategy!

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A recent article in US Banker put some numbers behind a message that we’ve been pushing for a long time: social media should not be used as a platform for blatant advertising or product pushing – especially not in financial services.

Only four percent of social media users have ever visited a financial institution’s profile on a social networking site, which might suggest that consumers aren’t really interested in having “social” contact with their bank or credit union. Or, maybe it indicates that financial institutions are just using social media the wrong way. I think it’s a combination of both, but probably more of the latter. Honestly, most bank and credit union Facebook pages are not value adding – they tend to list opening hours and general info, have some pictures from events at branches, etc. None of that gives a person any reason to visit.

Research indicates, “the top three types of messages that consumers indicated were appropriate from a financial institution were: customer service (34 percent), community involvement (29 percent) and educational (28 percent).” Seeing as customer service is at the top of the list, maybe banks and credit unions should take a page out of Zappos’ or JetBlue’s book and start using Twitter/Facebook as one of their primary communication tools. I can think of more than one instance where it would have been helpful if I could have asked my bank a question over Facebook (they are in a different time zone). Unfortunately, the closest thing I could do was message them through online banking, to which it took them three business days (that’s right, THREE) to respond. Unacceptable? Absolutely.

In this day and age, consumers expect quick response from companies – especially the ones they trust with their savings. Social media would help banks and credit unions reach the level of responsiveness that consumers are accustomed to. It may take some effort and learning, but sites like Facebook and Twitter are free, so what’s the downside?

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