Speak to a community bank marketing exec today, and you’ll most likely hear about how their customer base is “graying out” — aging, dying — and how the substantial deposits of those customers is leaving the bank. And they’ll also tell you how they are struggling to attract Millennial and Gen Z consumers against the ever-growing wave of megabank marketing and fintech and neobank competition.
Compounding the problem, younger consumers tend to have smaller balances than the older consumers, so replacing a single older customer might require winning multiple younger ones. At the same time, the top six megabanks are winning the vast majority of these younger consumers. In fact, Bank of America alone is winning a third of them.
Community financial institutions — even those with assets well into the billions — don’t have marketing budgets that get anywhere close to those of the megabanks. They also can’t compete on a national scale, with the custom-built technology of fintechs, or with the sheer pervasiveness of the megabanks’ branch networks. So how can community banks and credit unionsstand out as these trends accelerate?
Three words: Define your niche
The trick is shaping and defining a niche in which you can stand out. Much has been written about the niche approach. It doesn’t require rethinking your entire brand, just your messaging — but landing on the right message and niche is difficult. Fintechs and megabanks use data-driven approaches to understand what the market needs and how to stand out. Even without a data analytics team, community banks and credit unions can take a similar approach. It all starts by leveraging an asset that only your institution already has: your first-party data.
Start Small and Work Your Way Up:
Millennial and Gen Z consumers may be only a small percentage of your customer base, but you have some of them. Use the data you have to understand why they chose you and what keeps them with you. Then use the answers to add more like-minded younger customers.
Let Data Drive You, Not the Other Way Around
The goal is to find out why the Millennial and Gen Z consumers you have chose you. This starts by finding similarities among them. You have rich demographic and transactional data already in your core system. From that, you can recreate the journey those customers took to find and grow with you with a few key steps:
- Data analysis and segmentation. Start with broad brush strokes — collect data on your customers under the age of 45, for example. Pull the data — from your core, mortgage, card systems, and more – into an analysis tool like Tableau or PowerBI.
- Piece together their journey. What were their starting balances with you? What product(s) did they start with, how long have they been with your institution, and how have their deposits or products grown in that time? Where do they live, how did they learn about you?
- Focus group/surveys. Reach out to a representative set of these customers — say 5% to 10% of them with varying balances and products and time with your institution — and interview them to understand their sentiments about you. Offer a gift card to a local business in exchange for their time. Find out, in their own words, what led them to you and why they stay with you. Find out what more they want from your institution, whether that be technologies, features, services, etc.
- Demo and third-party data analysis in your area. Now look at your wider area, not just your customers, and understand the trends. What are the major industries in which younger consumers work, where do they live and commute to, etc.? (You may have some intuition of this — but back up that intuition with real data.) Look from the digital data perspective as well: What are Google search trends in your area, popular Facebook groups, etc. Look into digital data analysis tools, like tracking pixels on your website that can tell you what your current audience indexes highly for versus the general population. For example, are visitors to your website more likely to want a certain car, have a certain credit score, etc.? This can inform your messaging and targeting.
- Competitor research. What are your closest competitors doing, both in the physical and digital worlds? Keep an eye on everything from physical signage (bank marquees, billboards) to digital trends (what other institutions show up when you Google “checking accounts near me”).
- Psychographics — interests, desires, ambitions, fears. With an understanding of the data points of your current customers, you can begin to piece together their personas in more detail. You understand their reality, now put yourself in their shoes to understand what motivates and drives them. For example, are they most concerned about the long-term future, or buying that home in three years?
With all this data in hand, document it via persona mapping diagrams and customer journey diagrams. These will provide you easy reference points to the material in the future, rather than sifting through dashboards, reports, and spreadsheets of data.
Find More Like-Minded Customers
Collecting and analyzing the data isn’t easy, but the rewards are big — you’ll out-message and out-target your closest competitors. But once you’ve collected the data, built new data-driven personas and journey maps, you can shift your focus to actually finding consumers with similar profiles and reaching them with precise, specific messaging.
Data should inform your tactics (the best places to reach the prospects you want), your message (what you actually say in your ads to stand out), and the experience you build (what happens when they engage with your ad). But now you can rely on your intuition and marketing skills to start building those messages and experiences.
Focus on Things You Can Do:
Don’t try to keep up with a big bank’s marketing budget, just be sure your institution’s website and app work smoothly and match your own ad promises.
In today’s digital world, if a consumer is engaging with your ads and landing pages, keep in mind that simultaneously, they are engaging with your competitors’ ads (including Bank of America’s!) and landing pages as well. Your interactions and experiences at this point must match up.
This isn’t about having a “cooler” landing page than a megabank, but it is about making sure an ad promise doesn’t dissipate on your website. You could have the most effective ad in the world, but if the landing page it leads to doesn’t work on mobile phones, you’ll immediately lose 70% of your traffic or more. So follow through. Remove frictions to any interactions with you.
Leverage Marketing Technology, Strategically
You don’t need custom-built marketing technologies like the megabanks have. There are thousands of marketing technology companies with which you can piece together a tech stack to accomplish anything the megabanks can do. A few key areas for community banks and credit unions to look into are:
- Analytics tools for audience insights. Above, we mentioned tools that can be used to pull all your marketing data into one place, and run analysis on it. These are great for more manual analyses — that lead to persona development, journey mapping, and strategic planning. With the manual approach, you can get insights that will impact your next 6-12 months. With an analysis tool stood up, you can also repeat the analysis on a regular basis, say quarterly, to see how your marketing efforts are actually impacting your institution’s customer base.
- Example technologies: Tableau, PowerBI.
- Marketing databases. There are many technologies out there today that can replace the aging MCIF. A marketing database can ingest data from your core system, provide real-time insights and help you onboard that data digitally for retargeting and lookalike prospecting.
- Example technologies: Amazon Web Services, Azure, Google Cloud, Merkury.
- Real-time personalization. Analytics tools inform you about your audience, but you won’t be able to do things like real-time personalization of your website or ads. You have a better understanding of your customer base, but not of the individual customers. Building a real 1:1 marketing database can help you build a personalized experience on your website, in the teller line, at the call center and online chat. This is a much bigger undertaking than just dumping your data into an analysis tool, but one that pays off in the long run in terms of providing better customer service.
- Example technologies: Pega, Salesforce, Tealium.
- Marketing automation. This is the first marketing tech area many banks and credit unions invest in — allowing you to build and orchestrate campaigns (typically cross-sell) across email, direct mail, digital advertising and more. Your investment in a marketing automation tool will be greatly enhanced if you also have a marketing database and analytics tool as well, because you can create automated campaigns with more relevant and timely insights.
- Example technologies: HubSpot, Unica.
- Analytics tools for marketing measurement. There are also separate tools that can help you with attribution and ROI measurement of your digital and offline campaigns — informing you what’s working and what’s not. You need to move beyond the click. It’s often the case that exposure to many different types of ads is what gets a person to finally open an account. Your direct mail piece, by itself, may not have led to any account opens, because many people today might receive the mailing and then Google you, taking action online and throwing the postcard away. But receiving the postcard was actually a key step in their journey. A measurement tool will help you understand these trends.
- Example technologies: Google Analytics, Adobe Analytics.
You can’t directly outcompete BofA in your area, but you can outcompete BofA with a subset of customers in your area. Trying to reach your entire area means your budget is spread thin and your message is more generic. It will not be seen as frequently, and when it is, you’ll sound like all the other banks and credit unions doing the same thing.
Using your first-party data to focus in on one or a few subsets of the Millennial and Gen Z market will allow you to have a more specific message that stands out. You’ll win a much bigger market share of these subsets, even against megabank and fintech marketing — meaning a better bottom line for your institution in the long run.
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