In the banking industry, finding a way to stand out in the crowd is an ongoing and often daunting challenge.
There aren’t many ways to dress up a checking account, so financial institutions often use innovative marketing techniques to distinguish themselves from the competition.
“It is a fundamental premise of economics that the less differentiated the goods are, the more competitive the field is,” University of Colorado marketing professor Donald Lichtenstein said.
And much like the airline industry, he continued, banking products aren’t very diverse.
“If one bank offers free checking, and one doesn’t, that’s a huge difference,” Lichtenstein said.
Brenda Marlin, associate director of the American Banking Association’s marketing network, agreed that offering a multitude of services is a vital part of retaining and attracting customers.
“The more types of services banks have, the longer customers will stay,” she said.
Marlin said when people do decide to switch banks, it’s usually because another bank is offering better convenience.
The ABA doesn’t have exact numbers about how often people switch banks, but Marlin said “banks are getting better about keeping their customers.”
Marketing tools like free checking and Internet banking — while effective and used by countless banks — don’t seem to be enough to help some banks separate themselves from the competition anymore.
Today, many financial institutions use unique marketing techniques and gimmicks to snare customers.
“The banks of the past where you open the doors and wait for the customers to come in are no longer there,” said Robert Burke, branch manager at U.S. Bank in Longmont.
Burke said the sheer number of banks in Longmont makes it especially difficult for a bank to distinguish itself from the crowd.
“There are nine banks on my block that I can walk to,” he said.
To gain market share, U.S. Bank focuses its marketing primarily on giving back to the customer, he said.
One of U.S. Bank’s main marketing tools is a checking account that gives customers rebates.
Wells Fargo and Centennial Bank of the West also use customer giveaways as marketing tools.
Wells Fargo gives away savings at various businesses when customers pay with a Wells Fargo card.
Centennial Bank of the West uses giveaways like last year’s PT cruiser drawing, in which a Chrysler PT cruiser was given to a customer.
FlatIrons, Vectra, Compass and various other area banks focus marketing campaigns on improving access to banking services.
Last year, FlatIrons unveiled a new check depositing system for business clients.
With the new system, the bank picks up deposits from business clients, instead of clients having to stop by the bank to drop them off.
Vectra Bank will introduce a program for its business clients in October that allows them to deposit and clear checks electronically.
The bank will give clients a check scanner so they can scan checks right from their office — no need to drop off a paper check.
“People are less and less excited about using paper,” said Nan Hinton, Vectra Bank marketing president for Boulder and Longmont.
Compass Bank uses various ATM-related marketing techniques.
One of them is the mobile ATM, a van equipped with two ATM machines that will attend various festivals and fairs in Colorado this summer.
While major banking chains use access-based marketing extensively, independent community banks take a different approach to marketing.
“We really rely more on word of mouth,” said Barbara Walker, executive director of the Independent Bankers of Colorado, which counts several local independent banks as members.
Walker said most independent bankers don’t use marketing gimmicks like mobile ATMs and house calls.
Instead, Walker said independent community banks rely on their customer service to gain market share.
Credit Unions also tend to shy away from access-based marketing techniques or gimmicks.
“The key to banking is access, but we would prefer to put equal energy into customer education,” said Rich Jones, vice president of marketing at the University of Colorado Federal Credit Union in Boulder.
The CU credit union’s customer-education program offers free advice on everything from buying a car, to finding the right phone service.
CU finance professor Sanjai Bhagat said he wasn’t certain that marketing gimmicks work for banks.
Bhagat said if gimmicks work, they only work to bring customers in, not to retain them.
Customer service, Bhagat said, is the most important part of banking.
“Once you bring customers in, if you can’t offer good service at a good price, no gimmick will help,” he said.
Brandon Johansson can be reached at 303-776-2244, Ext. 389, or by e-mail at email@example.com.