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PCBB Banc Investment Daily September 22, 2016
Banc Investment Daily
September 22, 2016

But Wait, There's More

Ron Popeil has often been the brunt of ridicule for his overly enthusiastic infomercials promoting his unusual line of consumer products such as the Pocket Fisherman, the Veg-O-Matic; and the Beef Jerky Machine. Popeil had a knack for convincing people to buy whatever he had to sell, and then to convince them to come back and buy again. Regarded as one of the great direct marketing geniuses of the modern age, Popeil is probably best known for his signature phrase, "But wait, there's more!" With Popeil, there was always more to come.
The exploits of Ron Popeil come to mind as we consider how well community banks perform when it comes to selling additional products to customers. The answer is: not very well when compared to big banks. That's odd, because customers are much more engaged with community banks than with big banks.
Two surveys by Gallup provide a snapshot of the situation. One survey from last year found that large bank customers have an average of 71% of all of their financial products with their primary bank. That total drops to 66% for regional banks and to 65% for community banks. The decline is even more severe when examining credit products. Large banks get 53% of the credit products of their customers, while regional and community banks get 32% each. That's a lot of mortgages, loans and credit cards that community banks are ceding to big banks.
One might imagine that one reason big bank customers buy other products from those large institutions is because customers are so thoroughly engaged. In fact, the opposite is true. In a Gallup poll, only 17% of big bank customers said they were fully engaged with their bank. That's less than 50% of the rate for community banks, where 37% of customers said they were fully engaged. As Gallup pointed out in its survey, engaged customers represent an excellent opportunity for organic growth. These engaged customers tend to be loyal and recommend the bank to family and friends. They should be the front line in the effort to grow revenue by selling more products.
But wait, there's more. Another Gallup poll found that small banks rated much better than large or regional banks on a range of questions, including "Is always on my side," "always communicates in a clear and up-front manner," and "is a bank you will use for the rest of your life." Community banks even won on the point "is always willing to meet my credit and lending needs."
So how do big banks win out when selling additional products? The answer, according to Gallup, has a lot of do with internal training. Big bank personnel are schooled in how to have a sales conversation with customers. They often try to get customers to think about the big picture and their financial future, rather than just focusing on immediate needs.
Community banks can do more than simply improve the sales ability of front-line personnel. Make sure that financial products are competitive in terms of price and quality with what can be found elsewhere. Train your teams constantly, measure results and of course - be sure not to structure things the way Wells Fargo did because that can obviously bring trouble.
Judging by the Gallup poll results, community bank customers are prime candidates for you to increase revenues and boost the bottom line. What these customers need, perhaps, is a little Popeilish push to understand what makes your bank so great for them and how you can deliver services they need.