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PCBB Banc Investment Daily May 30, 2014
Banc Investment Daily
May 30, 2014

Understanding Products Needs And Interests

Over the years there have been many commercial products that have bombed when brought to market, even though at first blush they may have seemed like a winning idea. Remember New Coke and how it offended the taste buds of staunch cola drinkers? How about Frito-Lay Wow! Chips--the line of fat-free chips with Olestra that caused digestive complications for scores of snackers. Going back a little more, there was Clairol's Touch of Yogurt Shampoo, which flopped in large part because the idea of washing one's hair with yogurt didn't appeal to the masses--and those who mistakenly ate it got sick.
There are a host of reasons products fail, and it can be hard to know at the get-go whether something is destined to be a winner or loser with customers. But understanding your target market and having a never-say-die approach to innovation are absolutely essential for long-term success.
We've written a lot about the growing importance of mobile banking, but before you go hog-wild, it behooves you to understand how many of your customers are clamoring for it. It might interest you to know, for instance, that demand tends to vary by geography. A recent study by FindABetterBank revealed that 39% of shoppers from Baltimore said they must have mobile banking and another 39% in the Dallas/Fort Worth area concurred. By contrast, only 31% in Los Angeles, 30% in New York City, 28% in Miami and 22% in Detroit said they must have mobile banking.
If you're in a market where mobile isn't currently all the rage, it might make sense to focus first on other, more pertinent business lines. For instance, if you're catering primarily to an older population, perhaps mobile banking should take somewhat of a back seat to a renewed focus on retirement planning. When asked about their biggest financial worry, 23% of older adults ages 50 to 64 cited retirement healthcare expenses, 22% said saving enough for retirement and 17% said keeping up with monthly expenses, according to the 2013 Mercer Workplace Survey. There's a host of other data suggesting customers need significant help when it comes to socking away money for retirement and budgeting, so bankers should tap into this. If this demographic is a sweet spot for your bank, it could make sense to roll out products and services based on expected interest.
If, on the other hand, your bank wants to target a younger crowd, consider ways to build broader relationships with these customers. For example, TD Bank and the National Foundation for Credit Counseling are teaming up to offer 110 free financial education seminars in select areas of the country for around 2,000 young adults. The learning sessions will concentrate on budgeting and basic financial management skills, understanding credit reports/scores and preparing for home ownership. These are all issues that appeal to younger customers and may help cement current and future banking relationships.
There are so many ways to slice and dice customers it can become overwhelming at times, but it can also surface interesting information you can leverage. After all, knowing who you're trying to reach and what these customers need in terms of banking products is critical. It will also help ensure the products and services you offer won't end up ranking alongside the Edsel or celery-flavored Jell-O.