Western Independent Banker - January/February 2009 - (Page 21)

By Bob Sterner Turbo Charging Account Acquisition: Proven Strategies Capitalize on New Technologies WINNING NEW CHECKING account business has gotten tougher than ever for traditional banks as consumers ignore free checking and other giveaways that once hooked them and as they move online. Consumers continued to open accounts at banks with branches near their homes or work for years after they learned how to bank without actually visiting these offices very often. But that is changing quickly now. An estimated 20 percent of all transaction accounts are opened via the internet or with banks that consumers found with internet search engines. And that figure will only get bigger. As challenging as the environment is, however, a number of banks are turbo charging their account acquisition efforts with a timeless strategy that’s benefiting from the combination of science and technology. The Power of Referrals Recognizing the power of satisfied customers, many banks are actively managing the referral process. And it works. Topperforming banks regularly report that they get 30 percent or more of their total account openings from referrals. Banks with referral programs document that 10 percent to 15 percent of their current customers will bring in at least one additional new customer each year. With 1,200 customers at an average branch, that means an additional 120 to 180 new accounts per year. Before implementing an organized referral program, an average bank will open around 200 new accounts per year, meaning that those additional 120 to 180 new accounts will boost overall account openings by about 75 percent. Busey Bank in Champaign, Ill., turned referrals from existing customers at one branch into 246 new account holders in a recent month. As noted above, the average bank without an organized referral program struggles to open an average of 200 new accounts a year, much less 246 in a single month The work at Busey and other banks squares perfectly with the thinking in The Ultimate Question, a recent book by Bain & Co. management consultant Fred Reichheld. Reichheld argues that companies with sustained growth in just about all industries have enthusiastic support of their customers, who actively promote their interests. Indeed, he says a business’s growth potential can be defined by the number of referrals it gets. In banking, customers who come in on the recommendation of another customer are especially likely to fund and actually use their new accounts, to bring multiple relationships to a bank and to keep their business in one place for some time. In other words, they’re the best bets to become engaged and therefore handsomely profitable customers. Technology Transforms Process Building a business around referrals, however, demands a lot more than sitting back and hoping for the best. Encouraging referral business requires creating a buzz about a bank and careful execution of a process that leverages satisfaction of existing customers. Banks are learning to use social networks, the internet and e-mail to get people talking about them. In most cases, however, managing referral opportunities starts with Technology-based referral work is a must for branch banking operations. It works perhaps because it rests on one of the banking business’s foundation principles—that asset quality should be carefully nurtured. Western Independent Banker January/February 2009 21

Table of Contents Feed for the Digital Edition of Western Independent Banker - January/February 2009

Western Independent Banker - January/February 2009 Contents A Message from the President & CEO Managin Liquidity and Funding During a Recession Staying Liquid in a Time of Regulatory Sea Change Managing Liquidity in a Volatile Rate Environment Regulatory Outlook for Brokered Deposits Deposit Growth and Branch Network Effectiveness Turbo Charging Account Acquisitions FDIC-Insured Sweep Accounts Creating a Contingency Funding Plan WIB Service Corporation Report WIB Calendar New Members Index of Advertisers advertiser.com

Western Independent Banker - January/February 2009

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