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The 5 Biggest Marketing Traps Almost Every Bank Falls Into—and How to Avoid Being One of Them

by | Marketing Plan

Bank Marketing Ideas

If your marketing department is like a lot that I’ve seen, it’s filled with “creative” types. They make things that are pretty, produce lots of “stuff,” and throw great parties.

But when it comes to quantifying ROI, well…who wants to talk about that uncreative stuff, right?

Where did they get that attitude? They learned it in marketing school. But quick, name a few marketing professors who’ve made a fortune with their marketing strategies.

(Cricket, cricket.)

It’s not that they aren’t teaching anything. It’s just that they are usually setting their students up to succeed brilliantly in 1992. They teach branding, creativity, how to build slogans, how to order paraphernalia with logos on  “stuff,” how to do campaigns and product launches. All fine things that haven’t seen an ROI for well over a decade. Unfortunately, nobody’s updated the teaching, so most banks get a negative ROI on a serious investment of resources.

So should you fire the people in marketing? Not at all. They just need some re-schooling about what is working now. It’s not their fault. But, let’s get this rolling in the right direction right now — no reason to wait.

So, what are the biggest wastes of marketing dollars today?

1. Branding—The “snake oil” of marketing

There is an inherent problem here. Everybody is spending ridiculous amounts of money on branding…but nobody knows what branding is.

Branding is not about having pretty logos, lobbies, and brochures.

Think about it. When was the last time a $5 million great credit walked in the door and said, “I’d sure like to pay you 100 to 200 basis points more because I love your logo”?

They don’t come to you for pretty things. They come because of your reputation for having an impeccable culture of people who are going to knock themselves out to make and save them money in creative ways that make sense.  THAT is your brand.

Want the clearest possible illustration of this? Go to elance.com or CrowdSpring.com and put in bids for your logos, brochures, and other pieces for $500 or less, and you’ll get what you’ve been paying $200,000 for. Then you can spend the rest on the real work of branding.

2. Product pushes

Hey toots, lookin’ good today! You been workin’ out? Now let me show you the Special of the Day.

Is that the kind of whiz-bang snake oil a customer wants to hear from their bank—the people they come to as a source of wisdom to help them retire with financial independence?

Not a chance. But that’s exactly how a product push comes off. So get over it. Marketing needs to understand that their role is to drive profit-rich “non-salesy” selling in their organization in such a way that they get entire relationships at premium pricing.

Anything less than that will lower your perception to that of a salesy pusher of financial “products.” Tell me how that’s going to work to help you create talkable experiences where customers leave with a smile and come back with a friend in tow willing to pay premium pricing?

3. Silo marketing—No integration between marketing and sales

You’ve heard me say this before—marketing is not a department; it is a way of being.

Well, that hasn’t changed.

What does that mean specifically? It means that the purpose of a marketing department is to upgrade the quality of customers constantly. That means targeting all work to find A+ prospects and taking customers and making them A customers by getting all their business, advising them well, so they become a lower risk, and getting premium pricing.

That also means that if your marketing department doesn’t have an entire plan based on the 3 to 5 segmented, tightly-niched key markets, haven’t identified the key prospects in each of those segments, and doesn’t have a targeted one-to-one personalize outreach process to build reputational equity with each one and then an iron-clad system to track the hand raises from that list and properly direct them through the salespeople proven to have the highest closing ratio with the highest premium pricing…well, let’s just say whatever they ARE doing is a waste.

Your bank doesn’t need more unprofitable customers. It’s not a numbers game. It’s a profit game.

4. Abdicating culture as the primary responsibility

Since research shows that the best return on your marketing dollars comes from investment in your people first, followed by investment in customers and then investment to get new prospects, doesn’t it make sense that the marketing department needs to be in charge of the culture?

If you’re running a “not for profit” bank, then perhaps not. Otherwise, yup, this should be obvious.

5. Not understanding and managing strategies around net interest margin

When I spoke to a group of bank marketers recently, I asked them how many of them understood the net interest margin. Not one hand went up.

This is a little like asking for cheddar in a cheese shop and hearing that they’ve never heard of it.

Net interest margin is the “it.” It’s what gets you back out of trouble quickly if you have some problem loans. It’s what builds your capital for growth or acquisition. It’s your Steady Eddie—the backbone of a healthy bank.

Fees do not automatically renew. RISKY. And politicians can make fees go away. RISKIER.

Net interest margin is the gift that keeps giving.

If you and your marketing team don’t have solid strategies to get and keep your net interest margin over 5, what rabbit will you pull out of your hat the next time the economy turns worse, and you have loan write-offs? How will you be ready for the impact of Basel III, or what comes next? What will you do to create predictable success that is more important than improving loan quality and net interest margin?

If your marketing team doesn’t understand the net interest margin, that’s not their fault. That is the fault of the executive team not properly directing the marketing team.

The great news is that all hope is not lost. You and your marketing team can find out that marketing is not a department but a way of being that everyone in your bank must have.

So drop the “Nasty 5,” and let’s get about having a year filled with a culture of on fire, clear strategies to get and keep A+ quality clients, and a net interest margin where all the other banks ask, “How’d they DO that?!”

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