Do You Have Bank Customer Baldness?

Bank Customer Management

About 70% of all men have worried about genetically programmed hair loss since the days of Julius Caesar (who incidentally had a serious comb over).  As a man ages, somewhere around his early twenties, hair loss takes place and no amount of Rogain, head massages, Cayenne pepper rub or goose dropping treatment can replace it.  Similar to Male Pattern Baldness, some banks are genetically programmed to lose younger customers. They start to lose them around the edges, in the middle and then the most profitable on top.  If the average community bank is like CenterState Bank, chances are your average customer age is the oldest it has ever been and likely now above 50 years of age.

 

The good news is that the current community bank demographic sweet spot is the best it has ever been. The younger side of the Baby Boom generation has proven to be the most engaged, loyal and profitable demographic cohort in the history of banking (at least as far back as profitability records go (1985)). The downside is that, once the wealth transfer takes place over the next 10+ years, community banks are going to be at a major strategic disadvantage as their customer baldness will be apparent. Older customers will age out of the bank while younger replacement customers will be harder to come by.

 

To prevent your bank from looking like a chrome dome, there are some specific things that you can do to stem the loss and even regrow customers.

 

Segmented Marketing: Take a look at your marketing materials. Do you have specific marketing materials for the 20-somethings? At least, do your marketing materials appeal to someone under 40? If your materials look like a page out of Reader’s Digest you shouldn’t be surprised that your approach is attracting those with AARP cards. Try the approach similar to ads found in Sports Illustrated or Cosmopolitan for greater impact.

 

How about your marketing channels? Have you bought keywords from Google? Have you used online ads? Have you experimented with mobile ads or ads on social media? How about your giveaways? Are you offering potted plants or a set of Beats headphones? Finally, loyalty programs, referral functionality and partnership programs should also be considered as banks have had solid success with each in attracting a younger demographic.

 

Communication Channels: Emails are good, but for certain time-sensitive alerts, text is better. If airlines can figure out the right cadence to text, surely a bank can. Try this - for your next loan closing, ask the borrower if they would like updates via text. Training lending officers to utilize text for progress updates (or better - create systems to handle) makes a world of difference in customer experience.

 

Products: Almost every survey we have seen in the past year has the importance of mobile and online capabilities as either the number one or number two consideration for choosing a bank for those under 35 years of age. Our point here goes beyond just mobile banking as banks can develop or partner to provide a variety of functionality on their mobile banking or standalone apps. Useful tools such as personal financial management applications, prepaid cards, person-to-person payment transfers and business-focused calculators all resonate with the younger set.

 

Business Model: Annual subscription based services that can be cancelled at any time have proven to be one of the better ways to attract those under 35. Consider what Elite level package of services that you can bestow and then bill annual with a satisfaction guarantee. This approach will keep Millennials from feeling constantly fee charged. 

 

Culture/Brand: You don’t need to be a hip, 20-something, Twitter-using Vine addict to attract the 25 to 35 demographic. Having a customer-centric approach that is transparent, ego-less and convenient is the key to winning all customers over - particularly those under 35. Creating a banking culture that has those attributes is the surest and most important way to attract the younger crowd.

 

Those under 35 want to achieve acceptance and financial security in a convenient manner just like all banking customers do. The only real difference is that they can read smaller print and are used to greater use of technology and productivity. Most likely your bank wants the same thing, so by building a younger target into your strategic plan this year, both purposes can be served. Hopefully, the end result is a more profitable bank for the future and a fuller head of customer hair.