Strengthen bond with lucrative customers

Northwestern Financial Review, May 15-May 31, 2004 by Aker, George

Seniors Marketing

The segment of our population that is older than 65 will be growing rapidly during the next 20 years. Community bankers are ideally situated to provide banking services to this group as we are locally owned and known in our communities. Rather than seeking to restrict lobby traffic, we encourage our customers to visit with us. Seniors today are living healthy lifestyles with keen interests in the affairs of the world. They are active physically to older ages and have financial resources to undertake the activities that interest them.

The much-heralded $10 trillion in assets held by existing seniors will be transferred to the next generation when they are "good and ready." Interestingly, those deposits are not all held on the East and West coasts and in Chicago, but are present in all of our communities as well. During the next decades, there is not a more desirable market segment in our population for our banking services.

The seniors club concept was designed because of this important market in our communities. We started as bankers seeking to attract deposits and sell our banking services to create a loyal customer base. We designed social activities for our customers that allowed them to feel a part of their own local club. They expressed a desire to travel to places of interest outside our county, which was met by engaging local bus companies to take our groups on day trips. Their appetite grew and soon we were taking three- to five-day trips by bus. The transportation companies responded with more luxurious buses, known as "coaches." The response exceeded our original expectations as customers told friends and relatives who wanted to join.

What are the realities that make a seniors club attractive? Deposits may no longer "go with the geography." In days gone by, we built new branches and felt that a good proportion of the people in the community could be attracted to our facilities. Now deposits know no limits with banking by mail, telephone and the Internet. Banking services are being provided by regional and national organizations, insurance companies and brokerage houses. Product differentiation is often difficult. Conclusion: it is our personal relationship with our best customers that will create lasting loyalty to draw deposits and cross-sell services.

Social programs are important to our customer club members who love gatherings and events that prove the bank is interested in them. Parties to celebrate ethnic holidays from St. Patrick's Day to Syttende Mai for the Norwegians and Octoberfest for the Germans are sure to please. Card parties and bingo are welcome respites during seasons with less desirable weather. Bank anniversaries and important dates are always cause for celebration. Senior bank management can spend time with groups of club members very efficiently, while each member goes away feeling they have had time with "their" chairman of the board or president. Seniors club members are always willing to venture their options for improvements. Familiarity breeds trust in the bank and the leadership. Conclusion: The club will expand trust and goodwill.

Travel is the "jewel" that induces prospects to become customers and sales reps for your bank. Group travel is safe, comfortable, interesting and life expanding. Travel is of the highest interest for seniors with time and money. They love to see other parts of the United States and the world. Initial travel whets the appetite for longer trips to more exotic destinations. Members love to recount their trips to friends and family on return. Each of those friends and family members become prospective customers for your bank either out of gratitude for "what you did for mom and dad," or to partake in upcoming trips themselves. It is impossible to run out of places that you would like to go if you had the time and available resources. Conclusion: Travel will turn club members into salespeople for your bank.

What will a seniors club do for your bank's profitability? Bank clubs regularly report significant increases in number of customers, average deposit size, and number of services used by club members and households. It is common for bank clubs to report deposit totals of 30 percent to 40 percent of bank deposits owned by members. Obviously, all of the funds do not come from new external sources in a given period of time; however, the club gives you an excellent path for efficient and effective management of significant core deposits. Even a portion of your interest rate margin attributable to deposit generation makes your seniors club highly profitable. Add the direct income from service use and profitability increases. Seniors club activities priced properly and operated at reasonable capacity will add incremental income. Value the goodwill and reputation expansion through unpaid club member solicitors and the case is made.

George Aker is president of Heritage Clubs International LLC, Reno, Nev.