Most financial marketers view checking as a series of individual accounts rather than a holistic entity with the capability of advancing broad corporate objectives. As a critical element in an institution’s marketing arsenal, it’s a good idea to periodically examine the structure of your checking accounts to see where you need to edit, retool or fine-tune your offering to maximize performance. What can be realigned to better achieve your marketing goals and strengthen relationships with accountholders while responding better to consumers’ needs?
Here is a simple, seven-question quiz to kick-off a checking account review and help you decide whether your current program is helping — or hindering — your overall marketing efforts.
1. What’s the profitability of each account type?
The first step in a checking review is to determine the profitability of each account. Set up a large spreadsheet with products across the top and income/expense items down the left margin. Load in average balances, cost of services and features, and income sources to determine the net revenue of each account type. Not surprisingly, you’ll find that profitability is highly correlated to account balances. Mobile services and bill pay can be a big drain on profitability if the customer is given the services but doesn’t activate them. As we overhauled our accounts at Liberty Bank, our goal was clear: minimize losses on smaller accounts and boost incentives to build larger balances.
2. Is your checking program built on a solid foundation?
If your checking accounts have grown organically over the years — particularly if you have frequently accommodated new ideas and integrated employee suggestions — it may lack a cohesive marketing strategy. Accounts that have been added or modified to address issues, customer complaints or requests may no longer be relevant. Preferences change, customers turn over. And while each account may have been created for a good reason, they may not all fit well together. That’s what Liberty Bank found when we examined our checking program. Some account types had just 200 customers, while others seemed indistinguishable from one another. Ideally, every checking account should have a target audience and a purpose which collectively advances the bank’s long term agenda.
3. Does your checking program reflect a specific, deliberate strategy?
Is yours an attract-and-burn strategy or a slow-growth profit strategy? Business-first or consumer-friendly? (FYI – “Attract and burn” means positioning for volume, then phasing out unprofitable accounts — an approach favored by the big nationals.) Slow-grow profit eschews discount pricing and emphasizes service. One strategy that’s now fallen out of favor solicited volumes of low-balance accounts which produced income through back-end fees — not a good strategy for building goodwill and trust.
4. Do you incorporate incentives that build balances and strengthen relationships?
New customers should be presented with series of offers which progressively offer more services and better benefits. Ideally, your lineup of products, services and features should sell themselves. The offering should entice consumers to bring in more money and deepen their relationship. Talk to frontline personnel and conduct focus groups to determine the most popular benefits and the most annoying problems people obsess about most. Use these findings to guide the design your account strategy. At Liberty Bank, because free money orders and foreign ATM reimbursements are attractive benefits, we used them to add extra appeal to our higher-balance accounts.
5. Are you appealing to your customers’ financial lifestyles?
Each checking account should target specific lifestyle needs. Identify the four or five primary lifestyles that constitute your customer base, then make sure you have a checking account for each. The financial needs of affluent singles, recent college graduates and empty-nesters are all different, and should be considered as you design your accounts. Create one account that is an easy entry into the institution — a mass-market product you can promote widely — but put an onboarding process in place that cross-sells additional services.
Consider adding lending discounts for credit users, or CD bonuses for more affluent customers. A high concentration of seniors may warrant checking benefits, such as prescription discounts and free checks. Banks with a high percentage of students could spotlight all-digital accounts.
6. Is your checking account program short and simple?
Customers need a clear and simple path to buying. If your system of accounts has grown over the years, there’s a good chance they lack structure and cohesion. There could be inconsistent minimum balance requirements, or overlapping product features that confuse consumers. Consolidate down to no more than four accounts, if possible. Create a matrix with each account, breaking down its features, fees and requirements. You should see a logical progression.
7. Are your checking accounts designed for customers or competitors?
Don’t make the mistake of building your checking program around competitors instead of your customers. While you certainly need to be aware of the competitive environment, your accountholders are unique and deserve products specifically built for them. A commercial bank will reflect a different customer profile than a local lender or credit union. Customer demographics and lifestyles will dictate opening balance and compensating balance requirements. National institutions which typically require higher minimum balances and higher service charges have a different operating model and a different marketing playbook.
Customers dislike service fees — especially surprise fees. Make your fee structure transparent. Overdraft policies can be particularly contentious. Nearly one-quarter of the bank account complaints collected by the Consumer Financial Protection Bureau (CFPB) relate to overdraft policies and fees. Keep your policies simple, short and fair. They too, can define your brand.