Taking Steps to Stand Out
Three Steps to Stimulate Organic Growth in 2006

By Mark Brandt, Brady Walen and Jim Perry

Organic growth strategies continued to command the attention of financial institutions in 2005 and three particular elements which contribute to organic growth are likely to be key drivers of the most successful strategies in 2006: differentiation , messaging , and leadership.

Differentiation

If you want to differentiate you must be different... truly different. In order to thrive in an increasingly competitive marketplace, it is critical that you identify and/or create ways to tangibly differentiate yourself from your competitors. In recent years, the financial services industry has been reshaped by big bank acquisitions, community bank expansion, credit union expansion through community charters, and online-based financial service companies. The branching trends of 2005 will continue in 2006, intensifying competition and ultimately creating more institutions with nearly identical product and service offerings.

To stand out among the "me-too" competition, you have to choose to be distinctive and actually do business differently than your competitors. There is no better example of a successful differentiation strategy than the one undertaken by Upmqua Bank headquartered in Roseburg, Oregon. Recently recognized by BusinessWeek for its groundbreaking approach to delivering customer experience, Umpqua stands out from their competition through a unique banking concept that very closely parallels the retail industry both in delivery and service.

The bank designed its branches as retail stores that do more than just merely provide financial products to their customers. Their branch design is atypical and even includes a computer cafe with free internet access, financial news on a flat screen television, and complementary coffee - Umpqua's own branded roast. Customers are encouraged to relax and take their time in making their financial decisions. Umpqua's CEO Raymond Davis, championed this unique delivery system as a way to set them apart and support them on a growth trajectory that has taken them from a few branches in Oregon to 94 locations along the I-5 corridor from Washington to northern California. According to Umpqua, every aspect of Umpqua's delivery system is designed to create an experience for customers that is anything but bank-like. In fact, Umpqua Bank has a tag line that reflects this differentiation point, "Umpqua Bank. Not a bank."

Differentiation should be viewed as an opportunity to stand out, an opportunity to convey a unique value proposition, and most importantly - an opportunity to tell your customers and potential customers how and why your organization is the choice for them.

Strategic Messaging

The most predictable approach to differentiation is the attempt to distinguish from competitors through market focus, pricing or product mix. However, in most markets it is becoming increasingly difficult to find meaningful differences in those areas. Many consumers today consider most financial institutions to be virtually identical. Therefore banks must look beyond differentiating with products or services alone, and examine their messaging: what they are saying when cultivating or interacting with customers.

Messaging is an often-overlooked element of an organic growth strategy. With more and more branches entering markets nationwide, financial institutions need to develop clear and consistent messages that convey their unique value proposition. During a recent analysis of a particular market area, Market Insights' staff discovered that two competing banks were actually using identical sentences on their websites to describe their uniqueness in that community. Sounding the same will hardly help you stand out.

Messages are often communicated by taglines or advertising campaigns and a powerful, memorable message can capture a customer's attention and imagination. Take a look at Citibank as an example. For decades their messaging has been designed to speak to our society's concerns about money and the institution's role in alleviating those concerns. Their "The City Never Sleeps" campaign of the 1980s projected the image of Citibank as a protector and partner in easing financial fears. Their post-September 11 "Live Richly" advertisements and commercials go one step further. This campaign invites consumers to remember that there is more to life than money - and implies that Citibank can help their customers achieve a certain level of stress-free financial success.

In each campaign Citibank communicates a distinctive value proposition. Moreover, their commitment to delivering their message is unquestioned as the campaign theme is routinely touted on billboards, radio, television and print - as well as branch signage, ATM screens and websites. Another example of consistent messaging emerged this past year in MB Financial's "Betsimpsier" campaign. The Chicago-based institution coined the word "betsimpsier" to deliver a message that MB Financial is better, simpler and easier banking. In order to stand out among Chicago's tough competition, MB Financial displayed their whimsical word on billboards, buses, in newspaper ads and radio commercials. Everywhere consumers look they are reminded of MB Financial's value proposition.

Of course, messaging goes far beyond tag lines and commercials. Messaging also involves employees and how they talk to current and potential customers. If you look at some of the most successful corporations in the world you will find that everyone from the CEO to the janitor knows the company's key messages. The messages must communicate a value proposition or differentiation statement, and must resonate with a target audience. Messages can be memorable, but they also need to be relevant, powerful, and consistent with your organization, business plan, and brand.

Market Insights' team of professionals will often ask members of a banking client's board or management group a seemingly simple question: "What's your story?" More often than you might expect, our question is met by anxious throat-clearing and blank stares because little attention has been given to messaging. If you cannot easily communicate what you do, what your brand provides and why it matters, you will struggle to build a customer base that embraces and communicates your message for you.

Leadership

It is absolutely critical that those in control of an organization are perfectly clear about and committed to the organization's differentiation and messaging strategies. The leadership and management teams need to be champions of communicating these messages.

Start at the top. The management team needs to have a clearly defined and agreed upon set of messages that can then be disseminated throughout the rest of the employees in the company. Uncertainty, disagreement and inconsistency at the management level is only magnified as it spreads through the organization. The key management personnel need to take ownership and decide what direction they want the bank or credit union to go. Again, this starts with a clearly defined strategic message which can then spread throughout the company and act as the steering mechanism for all other phases such as branding, merchandising and marketing.

Think a moment about the points of interaction between your customers and your staff. Does this interaction accurately represent your organization's unique value proposition? Are your strategic messages accurately communicated?

It all starts with the leaders of an organization. Acting as brand champions, the leaders of an organization are the key in representing the differentiation and messaging strategies. Once a management team is on the same page, once a consistent message is determined and used, once there is structure and definition behind the messages presented, the messages can be consistently communicated down the line from management to staff members and most importantly onto the customers.

Conclusion

Financial institutions nationwide will undoubtedly face competition in 2006 that is both significantly more intense and more resourceful. Successfully deployed organic growth strategies will help your organization create and/or sustain a competitive advantage. But if you wish to stand out and realize both short-term business improvement and long-term, sustainable growth; focused attention must be given to differentiation, strategic messaging, and leadership. What steps are you going to take today?