How To Test Your Bank’s Customer Value Proposition For the New Year

Bank Customer Value Proposition

Every January, we advocate taking another look at your value proposition to see if there are any changes that need to be made.

 

Part of the problem with the current state of banking is that it is hard to tell one community bank from another. Because of this fact, loans, deposits and other bank services have largely turned into commoditized products. In some cases, bank margins are lower than they are for bottled water. If retailers can charge up to $6.00 for water, surely a bank can differentiate itself.

 

The cornerstone to building a brand in banking is to start with a solid customer value proposition. This is the secret sauce that makes your bank unique. No doubt, like most banks, you are about service, but what is it about service that makes you stand out. Sure, your customers can get to the CEO, but why does that matter? Does your CEO ensure faster loan approval times, friendlier service, better pricing or more accurate underwriting? Service means so many different things to different people, that it pays to define the true value proposition in your service.

 

Maybe your value proposition is that you are a more accurate loan underwriting, thus your loan pricing is lower for quality businesses? Maybe your bank truly has a service level that is unique in that you will come to a borrower’s home to bring them the loan documents to sign. Or, maybe no one ever waits in line for a transaction. Whatever the case, a value proposition is aligned with your vision and mission and is a clear differentiator.

 

You want your value proposition to compel your dream client to take action?  Here are six questions you need to ask and answer to test the potency and effectiveness of your value proposition:

 

Does it set you apart?

 

Your value proposition at your bank should do the heavy lifting in terms of being the main reason why customers want to do business with you and not the large bank or credit union down the street. At a minimum, your value proposition should be different than a majority of banks. If everyone has extended hours in their branch, longer hours isn’t really a value proposition is it?

 

Does it move your customers to action?

 

Sure, you might have the most modern ATMs in the county, but so what? That may not be compelling enough to switch banks. A good value proposition moves away from describing attributes of the bank and solves an important problem for a customer. It is the “why” of your mission and it should be compelling enough to not only separate you from your competitors, but to motivate potential customers to come over.

 

Is it simple?

 

A well thought out value proposition should be clear and easy to understand. You need to boil the proposition down to its essence and not take a paragraph to spell it out. This isn’t to say you can’t have a marketing campaign, website, white paper and advertising campaign getting into the details, only that the value proposition should be one-sentence clear.

 

Does your value proposition speak to your target customer?

 

If your value proposition doesn’t help define your ideal customer, then it is probably not working hard enough for you. A value proposition such as “Personalized service to ensure this community’s affluent reaches their retirement dreams” not only separates you, but clearly defines your market niche.

 

Can you prove it?

 

Some of the best banks we know have developed key performance indicators around their value proposition. If you are all about service, maybe an annual satisfaction survey, average wait time dashboard or some other metric will validate your proposition. Not only will creating a set of quantifiable metrics help prove your value to the community, but it will get everyone in the bank working together to ensure you achieve your proposition.

 

Can you sustain it?

 

One very common mistake we see is for a community bank to articulate a value proposition that cannot be sustained. At CenterState for example, we know we may not always be one of the largest banks in Florida, nor are we as nimble as we once were, so we try to stay away from size being any type of value proposition. Value propositions around things that may change such as geography, size or specific people are always dangerous. A good value proposition should be able to be sustained in the next twelve months as well as the next twelve years.

 

If your proposition is about relationship banking, your bank should be able to define what that means, measure, tell how that relationship benefits your clients and have a plan for how to sustain it. A good value proposition drives brand, marketing, sales and culture and is worth every ounce of effort you can afford to put into it.

 

See if these questions can help you refine your proposition and start your new year off to a clear path to success. 

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