Reading Prep. In preparation for this chapter, use the Internet and printed materials to locate bank advertisements. Can you find any common themes in these advertisements? What does this tell you about the purposes behind bank advertisements?
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Selling the Bank
Section 11.1Marketing and Promotions
Section 11.2Building Relationships
Loyal customers are not born, they are created. For a bank to be successful, it must reach out to individuals and organizations that could benefit from the products and services it provides. Once a relationship with a customer is born, it must be nurtured. Banks nurture these relationships and create a positive public image by providing ex-ceptional customer service.
ObjectivesAfter completing this section, you will be able to:
market.
Meeting Customer Needsneed is something a
want is something a person would like to have, but does not need to survive. The difference between a need and a want is easy to see when comparing the purchase of a house to the purchase of a ring. The house provides shelter, so it fills a need. The ring is a want, because you can survive without it.
How do a bank’s products and services fit into a consumer’s needs and
This helps them get what they need as well as some of what they want.To create a customer from a consumer, a bank needs to be able to
give the consumer what he or she needs. Banks do this by identifying their target market.
Identifying a Target MarketBanks, like every other kind of business, set up locations in areas
where they can get customers. Banks design products and services to help meet the needs of the customers in the community they serve. No matter what product is being sold, not everybody will want to buy it. To reach the right consumers, banks first need to identify them.
recently buy a car? Knowing the characteristics that possible customers market segment
is a group of consumers that share common wants and needs. The wants and needs of these consumers are different from consumers in other segments. Figure 11-1 shows examples of the four types of market segmentation: demographic, geographic, psychographic, and
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Source: Shutterstock (Hannamariah)
A n eed is s o m eth i n g
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263Chapter 11 Selling the Bank
behavioralistic. By breaking consumers into segments, banks can focus their marketing efforts on those who are most likely to become customers. This group is the target market. The target market is the market segment that will be the focus of the marketing strategy.
Matching Bank Products and Services to Needs and Wants
Once the bank identifies a target market, it can match the needs and wants of these consumers to its products and services. Products and services are designed or modified by analyzing the needs and wants of a certain market segment. In Figure 11-2, characteristics of mortgage loans (the product) are matched to first-time home buyers (the target market).
When you think of marketing, you probably think of the advertisements you see on television. Advertising involves calling attention to a product or service, commonly through the use of paid announcements.
Marketing is the process of introducing a product or service to the consumers who can purchase it. Marketing includes creating a salable item, setting a price, selecting a delivery method, and developing a strategy for promoting the item. Figure 11-3 shows some of the many aspects of marketing.
Characteristics of Mortgage Loan (Product)
Needs and Wants of First-Time Home Buyers (Target Market)
Small down payment Small amount of money saved for down payment
Competitive interest rate Low mortgage payments
Few closing fees Low closing costs
Roll closing costs into the mortgage loan
Low closing costs
No penalty for prepayment Increased income over time
Figure 11-2. Matching Product Characteristics with Target Market Needs and Wants
City
Marketing
Advertising
MarketResearch
Pricing
SalesStrategy
CustomerSupport
Distribution
MediaPlanning
PublicRelations
Figure 11-3.
265Chapter 11 Selling the Bank
Marketing professionals develop a plan that will help the bank meet
around the four P’s of marketing: product, place, price, and promotion. Figure 11-4 illustrates these.
Product
What products or services meet the needs of consumers in the
target segment?Examples: certificate of deposit, savings account, mortgage, or
mobile banking app.
How much will the product cost the consumer?
Examples: fees and interest rates are paid as well as charged.
Place
How will the product be available to customers?
Examples: online, at a bank branch, from an ATM or smartphone; regionally,
nationally, or internationally.
Promotion
How will the product be announced?
Examples: through television advertisements, billboards, the
Internet, social media, or a combination of these.
Creating PromotionsPromotion is an activity that increases consumer awareness of a
commercial that recently made you laugh? The funny commercial made you remember the product and is one way the company promotes it.
The methods and locations for promoting a product have changed.
promotions on television and radio or in newspapers and magazines.
Promotions can include almost any activity:
milestones, such as buying a house, starting a business, or retiringThe banking industry has many regulations on promotions and
advertisements. Interest rates, for example, must be stated in specific ways. Select terms must be avoided or included. If a certain balance must be maintained to take advantage of an account feature, that must be included as part of the advertisement. For example, if a customer must maintain a minimum balance of $2,000 to avoid a fee, that needs to be stated. In addition, the phrase Member FDIC must be included in anything that promotes a deposit account or the bank as a whole. This signifies
Corporation. Member FDIC must also appear on the homepage of the
an example of a compliant print advertisement.
Making a SaleSome type of contact is needed for
a sale to happen. Selling occurs in many ways, but for banks, personal selling is the most common.
in contact with a customer, or potential customer, that employee is applying personal selling. Saying, “hello,” “how can I help you?” and “is there anything else you need?” are examples of personal selling.
Cross-selling is a personal selling strategy that encourages existing customers to buy new products or services based on their previous purchases. Cross-selling is the result of
Ethical Banking
It is unethical for a bank or any other business to take part in deceptive marketing. It is important for banks to not only comply with laws, but to ensure that any claims made are in no way misleading. This is not only an ethical and legal consideration, it is also good business.
Green BankingBanks spend a lot of time and money on advertising costs. Although online marketing is becoming more common, some promotional materials are more effective in print form, such as brochures. Many banks are now using environmentally friendly supplies for their printed advertisements, such as paper made from sugar cane, rather than wood. Sugar cane actually biodegrades faster than wood and is cleaner to make. This can be a perfect alternative for paper stock used for marketing and promotional materials.
267Chapter 11 Selling the Bank
an existing relationship formed by selling a bank product or service to a customer. Therefore, it is sometimes known as relationship-based selling. For example, conversations between a teller and a customer might reveal that a customer with a savings account is saving for a down payment on a house. Tellers are trained to ask a checking customer if they would like to open a savings account. If they have a checking and savings account, the teller asks if they would like to have direct deposit or automatic bill pay. The more services a bank provides to a customer, the more likely the customer is to stay with that bank.
a customer’s needs and wants along to a loan officer might result in making a mortgage loan to a savings account customer. Friendly interest from a bank teller reveals the customer’s needs, and good communication among bank employees and bank departments could lead to a cross-selling opportunity. Customers who have several relationships with the same bank, such as a savings account and a mortgage loan, are more likely to be loyal to the bank.
Event-based selling is when a bank employee contacts a customer because of an event that has recently happened with that customer. For example, a
BIZ TIPSThe Bank Holding Com-
1970, bans banks from making customers buy one product or service for them to be eligible for another product. For example, a
customer buy homeowners insurance from a company owned by the bank to be eligible for a mortgage from the bank.
30-Year Fixed Rate Mortgage
3.87%Annual
PercentageRate
24 Month CD
1.00%Annual
PercentageRate
Rates available to new deposits
only. Minimum to open a CD is
$2,500. Penalty may apply to CD
for early withdrawal. APR stated
accurate as of 1/3/XX.
Requires a 70% loan-to-value ratio and
1.25 points due at closing. Taxes and
insurance premiums are additional.
GREAT RATES
North CreekBank and Trust
Denotes thatNorth Creek
Bank and Trustis an equal
housing lender
Requirement for gettingadvertised rates
Required on alladvertisementsrelated todeposit accounts
the customer. The event provided an opportunity for personal selling from the bank.
Checkpoint 11.11. Why is setting up a target market helpful in marketing the bank?
2. What does a market segment of consumers have in common?
3. How have the methods and locations for promoting a product changed?
4. When must the phrase Member FDIC appear in a bank’s communications?
selling?
Build Your Vocabulary
of banking terms and add it to your portfolio. This will help you build your banking vocabulary. Write out a definition for each of the following terms, and add it to your personal glossary.needwantmarket segmenttarget marketadvertisingmarketingpromotioncross-sellingevent-based selling
ObjectivesAfter completing this section, you will be able to:
The Bank’s Image
and opinions you have of it from your image of the business.public image is made up of the ideas and opinions that
different because they focus on a particular product or service that is not offered by other banks. Small, local banks often emphasize their customer service or community involvement. By examining a bank’s promotions and, in particular, its advertisements, you can usually detect the public image the bank wants and how it is trying to achieve that.
The economic strength of a community often depends on its ability to get credit. Banks can contribute to the local economy by making loans to individuals and businesses. These loans help create jobs and bring revenue to its citizens. By working with the citizens, banks establish a positive public image. Banks provide the credit that helps the community run and grow.
In addition to the credit they provide, banks engage with the communities they serve in other ways. Banks often sponsor community events, such as marathons. Increasingly, they provide ongoing financial education to consumers. Bank executives often serve on civic boards
communities is through the customer service they provide.If the public image of the bank or the financial industry is damaged,
the bank may need to repair its reputation with customers. For example, the financial crises of the early 21st century had a negative impact on the banking industry. In hopes of repairing some of the damage, many banks chose to replace managers, change how they
These were important steps to reestablishing the positive image of the banking business.
What Is Customer Service?vacation. The teller smiles, says hello, and issues the traveler’s checks
satisfied the customer is with checking and savings accounts service at
When did the customer service begin? When the customer entered the bank? When standing in line? When purchasing the traveler’s checks?
Customer service includes all interactions between a customer customer is an individual, organization, or business that
purchases a product or service. Customer service starts when the bank and the customer interact for the first time. This could be a click on a website, a comment about the bank that the customer overhears at work, or
Good customer service adds value to the bank and increases the
The difference between poor customer service and great customer service is the difference between losing and keeping a customer.
though the bank may have dedicated customer service employees, each employee provides some type of customer service. Bank personnel must avoid any behavior that is unethical or inappropriate. Customers do not have to put up with rude or ignorant responses. It is easy for them to take their business to another bank that treats them well. Figure 11-6 shows examples of behaviors that reflect poor customer service and those that reflect good customer service. Remember that happy customers become loyal customers who will return to fill other banking needs. It costs
new ones. To provide positive customer service, employees should always:
The diffeservice i
thougheach persCusIt isthp
should
B a n ks bu i l d ra p po rt w ith
c usto m e rs th ro u g h pe rs o n a l
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c usto m e r se rv i ce.
271Chapter 11 Selling the Bank
Poor Customer Service
Good Customer Service
The customer… The employee… The employee…
the employee does not know the answer to.
says, “I don’t know.” says, “I will find out.”
behaves rudely to the employee.
is rude in return, or refuses to deal with the customer.
remains courteous and businesslike.
disagrees with information provided.
argues with the customer.
tries to defuse the situation while remaining courteous.
asks that the employee take an additional step.
does not follow through because he or she will probably never see that person again.
follows through with the promise.
is waiting. takes his or her time getting to the customer.
tries not to keep the customer waiting and acknowledges the wait when the customer is next.
is in front of the employee or on the telephone.
is distracted by another customer, coworker, or something else going on in the bank.
focuses on the current customer.
sees a bank employee doing something incorrectly.
corrects the coworker publicly.
waits until later to point out the problem or brings it to the attention of a supervisor.
does not complain about the service he or she has received.
assumes the customer must be satisfied.
asks if the customer’s needs have been met and if there is anything further the employee can do.
is present when a problem arises.
blames the customer, a coworker, or the bank’s processes for the problem.
takes responsibility and fixes the problem.
complains. ignores it. tells the customer that the employee will follow up on the complaint and fix the issue—and does just that.
Building rapport with a customer will increase his or her satisfaction with the bank. Rapport is a bond of mutual trust. It is central to a successful and ongoing business relationship. Never underestimate the power of a sincere smile. Other methods of achieving rapport are shown in Figure 11-7.
Financial products can be confusing for many people. Many of the financial decisions customers make will have a major impact on their lives. Bank employees should be able to explain the options the bank offers. If the employee does not know the answer, he or she should be able to readily find it. In some cases, the customer should be brought to an employee who is more familiar with the topic. For example, a loan officer could probably explain loan terms better than a teller, who does not deal with loans every day.
promotion, they are unlikely to continue as customers if their customer service needs are not met. When bank employees use what they know about the bank and its products to meet customer needs, they are contributing to the bank’s success.
Customers expect good service. Whether a customer receives exceptionally good or poor service, he or she is likely to mention it to others. Word-of-mouth advertising is a type of promotion in which customers tell others about their experience with a specific business. The only control banks have over word-of-mouth advertising is the customer service they provide. It is up to the bank to foster positive relationships with customers by excelling in every interaction.
Rapport
Language• Use speech and body language similar
to that of the customer• Be aware of your nonverbal
communication as well as that from the customer
Cultural• Find shared interests and experiences
with the customer• Be aware of cultural differences
between you and the customerOther• Create a positive environment• Be open to doing something for a
customer for no immediate return• Identify barriers between you and the
customer and work to remove themSource: Shutterstock (Pius Lee)
Figure 11-7.
273Chapter 11 Selling the Bank
Customer Services OfferingsCustomer service representatives are an important part of customer
image and generate customer loyalty:
Locations that are convenient for customers are important with any business, including a bank. Persons with disabilities also need to have access that is appropriate to their needs. Ramps, teller windows,
buildings that welcome the public to meet accessibility standards. For example, as shown in Figure 11-8, a ramp can be provided as an alternative to using stairs.
to money and account information while traveling abroad is another factor. Credit and debit cards that work in foreign countries as well as other travel-rated services are ever more important to consumers.
Many people are now conducting most if not all of their banking online. The bank’s website should be secure and easy to use. Information should be easy to find and services commonly offered by other banks should be available. For example, the ability to pay bills and check account balances should be provided.
Checkpoint 11.2 1. How does a positive public image help a bank?
2. List four ways that banks engage with the communities they serve.
3. How do banks control word-of-mouth advertising?
4. Why is it important for bank employees to be able to explain the options the bank offers?
image and generate customer loyalty?
Build Your Vocabulary
of banking terms and add it to your portfolio. This will help you build your banking vocabulary. Write out a definition for each of the following terms, and add it to your personal glossary.public imagecustomer servicecustomerrapportword-of-mouth advertising
275Chapter 11 Selling the Bank
Career LadderMarketing Manager
Marketing Specialist
Marketing Analyist
Careers in Finance Banking and Related Services
Marketing Specialist Marketing specialists are responsible for the marketing, promotion,
and sales of products and services. They are sometimes referred to as product specialists, because they often perform these duties for a specific banking product. Marketing specialists conduct surveys and make forecasts for the market for specific products. They develop advertisements, promotions, and pricing to accommodate the product’s marketing plan. Some of the activities performed by a marketing specialist include:
advancements.
What Is It Like to Work as a Marketing Specialist?
Marketing specialists spend time both traveling and working in an office environment. They are often attending conferences, meetings, and trade shows to gather information about market trends and competitors. Marketing specialists in the financial sector often specialize in one specific banking product and work under the direction of a marketing
career as a marketing specialist.If you possess an entrepreneurial spirit and enjoy conducting
independent research, a career as a marketing specialist might suit you.
16. Create a chart listing some needs and wants of consumers. In the second column, list the products or services that banks provide to satisfy these needs and wants.
17. Create a chart of target markets that a bank might identify. Indicate on the chart which markets you are included in or excluded from.
18. Using Figure 11-6, add a fourth column titled Customer Service That
behaviors that would exceed customer expectations.
19. Think about an occasion when you witnessed inappropriate customer-service behavior at any business. Write a short summary discussing the encounter and what you think should have been done differently.
20. With a classmate, take turns role playing a customer-service situation at a bank. Imagine you are a bank representative answering a
Working in TeamsInterview a classmate as if he or she were a client whose investment
portfolio you manage. What information would you have to know about your client to understand what investments would be suitable? Create a pie chart that shows what percentage of your client’s investable income you would place in stocks, bonds, treasury securities, and other assets, such as real estate. Present the chart to your client and your class, giving the rationale behind your choices.
G-W Learning Mobile SiteVisit the G-W Learning mobile site to complete the chapter pretest and post test and to practice vocabulary using
e-flash cards. If you do not have a smartphone, visit the G-W Learning companion website to access these features.
G-W Learning mobile site: www.m.g-wlearning.comG-W Learning companion website: www.g-wlearning.com
279Chapter 11 Selling the Bank
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Common CoreSpeaking. Plan a marketing campaign based on increasing sales of an existing banking product or service. Using mul-tiple types of visual and print displays, present your plan to
-ness of your marketing plan.
Writing. Keep an eye out for bank advertisements that you encounter. These can be found on television, in magazines, on social networking sites, on billboards, and multiple other places. Start a jour-nal that documents where you found the advertisement, what was being advertised, who you think the target market for the advertisement is, and any aspects of the advertisement that contribute to the bank’s public im-age. Update your journal throughout the semester, being sure to include advertisements from multiple types of media sources.
Financial MathFinancial math is a competitive event you might enter with your career and technical student organization (CTSO). The financial math event
may include an objective test that includes banking topics. If you decide to participate in this event, you will need to review basic banking concepts to prepare for the test. To prepare for a financial math event:
1. Read the guidelines provided by your organization. Make certain
It is important you follow each specific item that is outlined in the competition rules.
2. Review the checkpoint activities at the end of each section of the text.
3. Review the end-of-chapter activities for additional practice.
this text. It is important that you are familiar with answering multiple
