Focus on small business: How one community bank grew a key customer segment

Northwestern Financial Review, Sep 15-Sep 30, 2002 by Winter, Bill

Did you know that the more than 22 million small businesses in the United States employ more than half the nation's workforce and produces more than half of our Gross Domestic Product? Not only that, small business is the source of most new jobs and new ideas in this country.

You don't have to hold a masters degree from Harvard to realize that small businesses are a tremendous opportunity for community banks that fully understand the advantages of the word "community."

In my research, I found that most owners of small businesses are deeply involved in their companies, are cost-conscious, have limited resources, depend on their banks for counsel, want to simplify their finances, have a hands-on management style, require a strong personal commitment from their banker and expect appreciation for their business.

These attributes challenge community banks to provide valuable products and services that anticipate as well as meet their needs. It challenges banks to deliver these products and services professionally and quickly, and it challenges them to supply a high degree of personal service that may, at times, stretch the limits. A cookie-cutter plan rarely works well for small businesses.

So how do you reach owners of small businesses, a diverse group if there ever was one?

At the State Bank of Long Lake, Minn., its small business emphasis started with a marketing pan that included these elements:

* Greater name awareness;

* Greater market penetration;

* Retention of existing customers;

* Frequent communication and recognition;

* High quality service; and

* A team, rather than individual, approach.

To accomplish these goals, the bank developed a multifaceted campaign that included:

* An ongoing advertising program that emphasized the bank's benefits and its team concept;

* A kit with a variety of sell-sheets that highlight the bank's skills and professionalism, including testimonials from satisfied customers.

* A series of quarterly seminars on topics appealing specifically to small business owners - profit management, marketing, taxes, legal issues, insurance and human resources. It's important to note that all speakers were from outside the bank and experts in their fields, capturing the important credibility factor.

* A series of radio ads featuring customer testimonials.

* Periodic gifts sent to long-- standing customers to express appreciation for their loyalty.

* Personal phone calls and letters to customers thanking them for their business and inviting them to seminars.

During the first 15 months of the campaign, the number of new small business customers increased by 23 percent, and the number of new accounts opened by current customers increased by 30 percent. In addition, no accounts were closed due to service problems. Seminars drew standing-room-only attendance, and more than 350 general kits were sent to prospects as a result of inquiries.

I'll be the first to admit that a promotional campaign is no better than the staff that works with customers and prospects day in and day out. In my mind, the key is employing and retaining commercial bankers who can get into the minds of small business owners and provide outstanding personal services. As marketers, it's our job to build awareness, highlight the benefits, and influence a call to action.

Bill Winter is a marketing consultant for several Minnesota community banks, including State Bank of Long Lake.