BID Daily Newsletter
December 02, 2013

BID Daily Newsletter

December 02, 2013

Evolution of Customer Understanding

According to Encyclopedia Britannica, giraffes were known to the ancient Egyptians and Greeks, and many were exhibited in the old Roman games. Giraffes were thought to be a mixture of camel and leopard and were called camelopards back then.
We've come a long way since then in our understanding of certain animal species and our understanding of small business customers has also evolved over the years. This is in part because there are many more ways to capture and analyze information about what business owners want. Using this data, we can better tailor products and services to meet the demands of this important customer base.
Take check writing, for example. One recent MineralTree study found most small businesses are stuck in the Dark Ages when it comes to payments but they don't want to be. The survey of 300 small and medium-sized businesses in Sep found 75% of respondents still make the majority of payments by paper check. What's more, 68% said they would be interested in an online payment system that eliminates the need to write checks. Among small and mid-size businesses that use accounting software like QuickBooks and NetSuite, the percentage of those interested jumped to 89%.
According to MineralTree, small businesses need two critical features that current bill pay tools offered by banks don't have. The first is integration with accounting systems and the second is security and fraud protection. This is something to consider when you're discussing what types of products and services to provide small business customers.
A recent J.D. Power U.S. Small Business Banking Satisfaction Study provides another window of insight into the needs of small business customers. Overall satisfaction among these customers declined this year, but this time around, fees weren't the drag. Instead, it would appear that the crux of the problem is that banks are not doing all they can to make it easier for small business customers to manage their finances.
This presents another opportunity for community banks to step in and offer needed solutions. Small businesses often need an advisor who can be an advocate for their business and who can help them organize and make their lives easier. Start by reaching out to your current clients and asking what you can do to make their business run more smoothly. The answers may surprise you and open up new revenue opportunities.
Small businesses, of course, are not a homogeneous group so they have myriad needs and desires. But based on a plethora of publically available data, we have more information than ever on what they as a larger group generally want and don't want. The trick, of course, is to use this information when coming up with new products and services to appeal to them. Cost is an issue but know your customers will pay for services they find particularly meaningful. It's why new car buyers are willing to pay more for leather seats and why they'll often spring for an extra coat of special paint.
While there are certain constants for small business owners like a desire for good service, other demands change over time. Knowing this can help your bank as you strive to understand these changes and adapt accordingly. It isn't necessary to take our word for it however, as you can just ask the next camelopards you see.