Want Growth in 2009?
The Answer is Marketing

With the economic downturn, many financial institutions are reporting that they’ve “hit a wall” when it comes to deposit and loan growth. In fact, many are happy to remain “flat” in growth – it’s better than the alternative, right? Who can blame them when faced with these cold, hard, economic facts?

• Unemployment is at an all-time high.
• Despite the Economic Recovery Act, we’re nowhere close to seeing an upswing.
• Net budget deficit due to spending on Iraq war; when Medicare and Social Security are taken out of the mix, the deficit increased by nearly $500 billion during the 2007 fiscal year, according to most leading economists.
• Consumer debt has increased to $2.5 trillion (not including real estate debt), or $8,200 for every man, woman and child in the nation.
• Negative consumer savings rates over the past two years.
• The Consumer Confidence Index dropped to 38.0 in Oct. 2008, down from 61.4 in Sep. 2008. The free-fall in consumer confidence coincides with the steep drop in loan demand starting this past summer.

When planning for 2009, the knee-jerk reaction for most financial institutions is to cut marketing. However, that’s the LAST thing you want to do! Consider these suggestions:

1. Reevaluate Marketing Communication Channels. Many financial institutions use a variety of media to increase awareness of their products and services. However, if you can’t get a measured response from your media decisions, it may be time to reallocate the media budget into other projects and/or media. This includes communication opportunities that effectively reach younger members, as well as making sure your Web site is up-to-date. I once had a data processing manager tell me a year in cyberspace is actually three months. So if a Web site hasn’t been updated in a year, it’s more like four years.
2. Grow Younger. Generation Y, currently 14-31 years of age, is one of the largest generations in history. These consumers will determine which businesses survive for at least the next 20 years. Gen Y generally values the opinions of parents and peers. All banks and credit unions need younger members to fuel their future growth. Members with no credit history (age 18+) can be good credit risks, so you need reach these potential consumers. Use testimonials from younger people in marketing efforts. Long term, you simply need to target Generation Y by packaging products and services and marketing to them on a regular basis. A first-time home buyer’s program is one such product. Promote first auto loans and credit cards with parents as co-signers. Market first checking/debit/ATM card, etc., to consumers in high school and ready to enter college. Recent focus groups show many members of Gen Y are having trouble saving money. They see value in putting their savings in a place where they have limited access to it. This is where special club savings accounts can pay off.
3. Loans, Loans, Loans. Continue to promote loans at every opportunity. There should be at least one loan promotion every quarter. I also recommend several auto loan promotions, especially in the area of used cars since they are such a great value in today’s market. Continue promoting vehicle and real estate loans, but also credit card and unsecured "personal loans."
4. Promote New Partnerships. A great way to save on resources is to partner with companies and organizations that can provide a service your institution does not. For example, mine the dealerships in your area to provide financing right at the dealership. Further examples of mutually beneficial partnerships would be investment firms, mortgage companies and financial planners.
5. Increase Account Relationships. Multiple account relationships are key to profitability. Identify accountholders who are good targets for loans, etc., by using the current systems in place. An increase in checking accounts should generate an increase in multiple account relationships among these members. Even with electronic transactions and online account access, research shows the greatest percentage of core deposits – especially checking accounts – come from within a three-mile radius of a financial institution’s branch. Identify accountholders living within this radius who don’t have checking accounts with your financial institution and make them an offer to switch. Make the process of switching easy by developing a “switch kit.” Staff members need to be reminded regularly that cross-selling other services is an important part of their jobs.
6. New Account Promotions. Recruitment efforts – plan on one event each month. The event should be tied into a product offering and to that particular month. Hammer away at convenience services. Give an incentive to current accountholders for referring others to the branch. Special rates, giveaways, etc., are great ways to draw awareness to the products and services you offer. These promotions could be used to promote loans, deposits or convenience services. Feature people in the newsletter and on the Web site. This can greatly increase word-of-mouth marketing. Include a photo and testimonial. Your services brochure, newsletter, even thank-you phone calls should be made to new members. Speaking of your newsletter…research has found that readership and response levels grow exponentially when the newsletters are mailed rather than inserted in statements. Surveys show people prefer receiving information about their bank or credit union via mail…and this includes members age 18-25! That’s why it’s recommend using the newsletter as a direct mailer. You may recoup some of the mailing costs by having fewer multiple-ounce statements mailed each quarter (at first-class postage rates). Additional newsletters should mail to residents in a 10-mile radius of your branches. There is potential to grow membership in the areas surrounding each branch. Plus, you’ll save a significant amount of money on graphic production and printing.

So while many marketing directors are trying to wrestle the hatchet from budget planners, stay ahead of the game by beefing up your strategic communications.