Case Study: Financial Services – Competitor’s Customers
Financial Services – Competitor’s Customers
Case 2: Growing By Getting Competitor’s Customers to Switch Accounts to the Bank
Before Hiring Ethridge
A community bank with several branches through a metropolitan area had made an assumption that, because there had been several acquisitions and mergers by larger banks of smaller community banks in the area that a significant number of customers of those smaller banks would switch banks to continue using a community bank. Therefore they began running a television campaign with customers looking into the camera talking about how they were independent thinkers who had switched banks and urging the audience to be independent thinkers and switch banks too.
The client bank and its advertising agency contacted Ethridge & Associates, L.L.C. and asked us to design and conduct a strategic marketing research study that would answer the following questions:
- What will it take for people to switch banks? What do people really care about?
- Which of several messages to be tested will be most persuasive in motivating people to switch accounts to the client bank?
- What is the profile of those people who are most likely to switch accounts?
- What is the relative order of influence that various bank attributes (selection factors) have on people’s decision to choose one bank over another?
- How is the client bank perceived by the market? What is the bank’s image compared to competing banks? How is it positioned relative to competing financial institutions in terms of its strengths, weaknesses, opportunities and threats?
After Hiring Ethridge
Ethridge & Associates, L.L.C. conducted its proprietary Marketing Opportunity Analysis and included some custom-designed questions to address the bank’s specific assumptions and goals about getting people to switch to their bank, as well as to test some message concepts. This study revealed the following discoveries.
- The assumption that there will be a significant shift in bank accounts due to recent bank mergers and acquisitions locally was clearly wrong.
- The people who were most likely to switch banks in the next 12 months were not customers of the large, surviving banks that acquired smaller banks recently, as had been assumed, or of the other major regional banks.
- The people who were most likely to switch banks were more likely to be customers of smaller community banks, like the client’s bank and its closest community bank competitors.
- The client bank was not positioned to take business from the larger banks due to its major competitive disadvantage on branch ubiquity. The client had competitive disadvantages on four convenience attributes that ranked in the top 10 most influential attributes out of 30 attributes measured.
- The fundamental issues that were most likely to cause people to switch banks were that people get angry at banks over the lack of customer/personal service and fees/service charges/interest charged that they perceive to be too high. Positively, the client bank already had image strengths on these attributes among those who knew the bank best.
- The client bank was vulnerable to loosing over half of its customers. Less than half of the client bank’s current customers most preferred this bank as their first choice and the majority of the bank’s own customers were secondary customers of the bank (i.e., who had more accounts with other banks).
- Particular customers segments of the client bank that had particular types of accounts with the bank were most likely to switch specific accounts from other banks to the client bank.
Based on these key findings, Ethridge recommended that the bank take the following strategic actions.
- The bank’s highest priority should be to reduce the bank’s own vulnerability to losing customers. To do this, the bank should develop a direct mail campaign to target its own customers who had the particular types of accounts that were most likely to switch certain types of accounts from other banks to the client bank, to cross sell those other accounts to current customers.
- Additionally, the bank should aim to take business away from the other, smaller community banks, the banks from which people are most likely to switch, and the banks from which the client bank was best positioned to take business.
- The direct mail sales campaign should be reinforced by creating a new television campaign that used a problem-solutionpersuasion strategy and a “slice of life” vignettes, as follows.
- As the problem to be resolved, these ads should use “slice of life” vignettes of people inside of other banks or on the phone with those banks experiencing poor customer service and/or high fees/charges.
- The solution to the problem should then depict people inside of or on the phone with the client bank receiving a very positive, customer service experience and/or being elated about low or no fees for particular worthwhile services. The use of these examples was made possible (believable) because our image study showed that the client bank already had image strengths in these attributes among those who knew the bank best.
- Summarize the solution with the copy point that the client bank “makes banking simple and easy” (an attribute that ranked very high in influencing people to choose one bank over another).
- Finally, the bank should use as the overall strategic campaign theme, the slogan that (because this bank makes banking simple and easy) it offers “A Better Way of Banking” (the ultimate claim/branding/umbrella theme).
Results of Implementing Ethridge’s Recommendations
The bank implemented the recommendations exactly as prescribed and profitably increased its size by 25% over the course of the new campaign.