Switch to the Niche: Niche Marketing Means Identifying a Profitable and Growing Customer Segment and Then Targeting That Group. Here's How Six Financial Service Institutions Succeeded in a Variety of Niche Marketing Approaches. (Cover Story)

By Bernstel, Janet Bigham | ABA Bank Marketing, January-February 2002 | Go to article overview
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Switch to the Niche: Niche Marketing Means Identifying a Profitable and Growing Customer Segment and Then Targeting That Group. Here's How Six Financial Service Institutions Succeeded in a Variety of Niche Marketing Approaches. (Cover Story)


Bernstel, Janet Bigham, ABA Bank Marketing


Niche marketing. It's the opposite of mass marketing, but that doesn't mean banks have to think "small" to practice it. Many financial institutions are finding that marketing to a targeted group can quickly secure a captive--and loyal--audience.

By defining a niche market, banks can be more relevant to the customer as well as more effective in advertising. A niche approach can maximize an ad budget because banks know specifically what their targeted customers want to hear and exactly where to find them.

In this article, we'll look at six banks that market to targeted customers. We'll see how they define and approach their markets. From the small-business customer to ethnic communities and high net-worth clients, well-focused niche marketing pays off.

It Pays to Target Small Business

First Commerce Bank, Charlotte, N.C.

In 1996, First Commerce Bank opened its doors with the sole intention of catering to small- to mid-sized, privately owned companies. The first step was to create a board of directors with an intimate knowledge of how small business works. Half of the bank's directors have experience in publicly held companies (the bank is publicly held), and the others are made up of small-business owners.

"These are the type of people we will be serving, and they give us guidance and feedback," claims President and CEO Wes Sturges. "One of our board members was even in a business incubator, and he's on our loan committee. We call him our conscience." (Business incubators assist start-up businesses by providing low-cost office space and business advisory services.)

The next phase was bank development, where several specialized services were adopted, including:

* A 5 p.m. cutoff time on deposits--an extension of the 2 p.m. cutoff of most North Carolina banks.

* A courier service--for daily pickup of noncash deposits from small-business clients, most of whom have few employees and prefer to remain in the office.

* Internet banking for cash management: This includes a feature that allows account viewing without transactions, giving accountants and tax planners access on their own time.

* Check imaging online--a progressive feature for a small bank, but simple to add as the bank was designed to be fully PC driven for growth and flexibility (as opposed to having a mainframe legacy system).

Gobbling up the crumbs

Over five years, First Commerce Bank grew from $1 million to $131 million in assets with three branches-no small accomplishment in a city filled with large national banks. Early ads focused on this size difference and built on the insecurities that small-business owners have of dealing with large institutions. One ad presented a photo of a colossal tower with a single line of text underneath-"Your loan application is in there somewhere."

"The big banks in Charlotte were so focused on integrating mergers that we've picked up some of their business," says Sturges. "Their crumbs are tasty morsels for us."

Maximize the budget

When more small-business niche banks developed in the market, First Commerce Bank hired the services of Collins, Haynes & Lully to set them apart. The Charlotte-based ad agency spotlighted the bank's service levels rather than the uniqueness of a smaller bank in a large bank market. The goal: maintain a positive corporate image in the community as a small-business supporter.

"We didn't have a budget for multiple targets," explains Vice President and Communications Director Nancy Haynes. "So we put a laser-like focus on our target when purchasing media."

The new pinpoint approach includes:

* Business customer testimonials in radio ads on the commercial news talk station.

* Underwriting on the National Public Radio (NPR) affiliate for Morning Edition and All Things Considered.

* Sponsoring a business growth index of the leading economic indicators in the local market, published by the Chamber of Commerce.

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Switch to the Niche: Niche Marketing Means Identifying a Profitable and Growing Customer Segment and Then Targeting That Group. Here's How Six Financial Service Institutions Succeeded in a Variety of Niche Marketing Approaches. (Cover Story)
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