Last week, The Financial Brand featured an article by Market Insights’ CEO Joe Sullivan entitled Purpose, Passion and Profits – Brand and Internal Culture as Profit Drivers in the New Economy.  In the article Joe talks about “profit tunnel-vision” — a condition that causes many to lose sight of what can be the new profit engines in our post-recession economy.  The entire article may be found here.  I know Joe would welcome your comments and feedback.  Have a great start to your week.

This past Friday an infographic hit my email box that I thought was worth sharing.  It pulls data from a variety of sources to help answer this question: Are Banks in Trouble?  The infographic’s answer: Bank on It!

While the message is clearly directed toward “big” banks, it does illustrate the degree to which credit unions (and some community banks) have benefitted from consumer frustration with fees, inadequate products and/or poor service quality.

Many of the statistics offered in the infographic source from a 2010 Global Consumer Banking Survey by Ernst & Young .  While the data may need updating; there was an important point made in the full report directed to anyone concerned with customer attrition:

Invest in customer analysis: Capturing and successfully leveraging customer information and insight to optimize offer development, pricing decisions and rewarding loyalty will be a major competitive differentiator.

It is a recommendation worth noting – in 2010 and today!

People with a purpose live longer. The same goes for companies. Companies that have a clear core purpose – one that guides its actions and drives its choices – are the companies that succeed. Purpose-focused organizations do not simply mark time.

Sunday’s Seattle Times featured an article about the transformation of Starbucks and the return of its vitality, its innovation, and (as a byproduct of a clear focus) the return of its profitability, not to mention its stock price. Howard Shultz, who returned to Starbucks as CEO in early 2008, acknowledged the company had lost its innovative edge and had much to say about the coffee company’s rejuvenation.

In the years leading up to its problems Starbucks had been on an aggressive growth phase, building as many as seven stores each day. This resulted in a dilution of focus and Starbucks was using growth to mask other deeper challenges at the company. In the article, Schultz was quoted saying: “We’re not going to allow ever again at Starbucks for growth to cover up mistakes. We’re not going to have unbridled growth that turns into a strategy as opposed to a purpose.” He is spot on.

I believe companies today, and financial services in particular, need to consider the topic of purpose. What is that set of ideas a company uses to set and pursue clear goals? How does that purpose accommodate changes in the market or shifts in consumer behavior?

Have a conversation with your senior management team and see what they say. Then talk to your tellers or call center staff. Regardless of their role in your organization, most are likely to say “profit”, “make money”, etc. For most in financial services, the idea of profit is central to the reason why we open the doors every day. But it is not your purpose. As Fast Company blogger Shawn Parr wrote last month – “To be clear, making money is absolutely imperative, but it is just one of the outcomes of a successful company.”

Howard Schultz learned, a company’s sense of purpose, its adaptability and its skill at executing strategy are what assure profit – and longevity.

So what is your purpose, your organization’s reason for being?

Ask this of your board, your senior management, your staff…yourself. Your collective answer can help you differentiate; realign with customer needs and save you from the fate of simply marking time until your own obsolescence.

Let me know how it goes.

Every sector has its race for the top.  Toyota came close to claiming the #1 spot in the auto industry before its 2010 recalls.  Mobile providers like AT&T, Verizon and Sprint constantly jockey for position.  So many examples come to mind.  What can we learn from these high profile brand wars?

This morning Advertising Age ran an article that offers a few important lessons from the fast food industry’s most notorious rivalry: the #2 spot in the burger wars.  In the article, Maureen Morrison takes a look at how Wendy’s positioned itself to move past Burger King for the spot behind category leader McDonalds.  I recommend the whole article, but here are the important takeaways:

• Understand your core brand and who it targets
• Even good products need updating
• Improve the customer experience
• Be opportunistic

Improving your position in the marketplace doesn’t happen by accident.  Understanding your brand, your market and your customer are essential if you hope to create competitive advantage.  Think about these while you enjoy your burger at lunchtime!

It is the first business day of the New Year and there are so many things to think about – emails to answer, calls to make, etc.  There are so many things that require attention, but if you’re like me, you are starting the day with enthusiasm and excitement. 

My own sense of optimism is fueled by a new initiative here at Market Insights.  I’ve developed a program called Purpose, Passion and Profits – A New Path to a Profitable Future.  The content of this program is adaptable to a variety of formats and can be delivered as a conference speech for an association or a seminar/retreat for a board or group of employees at individual banks and credit unions. I am completely psyched about this and will write about it frequently throughout the year. 

Organizations too often make profitability a strategic objective, when it is actually the result of executing on a clear sense of purpose and having the kind of team in place that is passionate about what needs to be done.  

In 2012, envision not what is possible or probable, but what your competitors think is impossible.  Please drop me an email if you would like to know more.

I tried to resist the urge to add one more list to the flood of 2011 reviews and 2012 predictions that fill our inbox…but these books, blogs, or articles really spoke to me this year so I hope this short list will offer you a few resources and a fresh perspective as you start new year:

1. Walter Isaacson’s book about Apple co-founder, chairman and CEO Steve Jobs.
2. The insights offered by Jeffry Pilcher at The Financial Brand.
3. Inc.’s Top 5 Most Common Networking Mistakes article by Jeff Haden.
4. Ron Shevlin’s Snarketing 2.0.
5. Any one of Chris Brogan’s posts on Entrepreneur.

Of course there is so much more I’d like to share…but these were some of my top sources for inspiration in 2011.  

One final insight: shifts and changes will continue to be fast-paced and far-reaching in 2012.  How we chose to respond to those shifts and changes will be the greatest factor in determining whether or not the new year turns out well.  Our team will do our best to help you navigate change and position your institution for growth.  Here’s to a happy, healthy and prosperous 2012.

P.S.  By the way…just wait until you see Joe Sullivan’s new initiative: Purpose, Passion and Profits. 

As I reflect on the past year I have this overwhelming sense of gratitude – for the opportunity to do work I love, and to partner with such great clients and colleagues. Our team has worked all over the United States in communities large and small. One thing we’ve seen in every area of the country is the negative impact of unemployment and joblessness.

So, this year as a way to express gratitude to our clients I have chosen something other than the classic corporate holiday or year-end gift. Who really needs another motivational book or basket of cookies? I have, instead, made a contribution in our client’s honor to the Opportunity Finance Network (OFN).

The OFN is a national network of community development financial institutions (CDFIs) investing in opportunities that benefit low-income, low-wealth, and other disadvantaged communities across America. OFN Members are performance-oriented, responsible investors that finance community businesses, sparking job growth in the areas that need it most, and delivering both sound financial returns and real changes for people and communities. They have invested more than $23 bil in disadvantaged communities, and this barely addresses the need.

Their Create Jobs for USA Fund mobilizes donations from individuals, the Starbucks Foundation, and other institutions to provide capital grants to nonprofit CDFIs that lend to Community Businesses. You can learn more here.

I hope you’ll consider joining us in support of this effort. As you reflect on what needs exist in your own community or that of your clients, it is not too late to make a commitment before December 24th to help create and sustain jobs. Your commitment can take many forms including a year-end donation or volunteering your time or expertise. So much is needed out there right now, and I hope you will join Market Insights (and me) in attempting to share the good you (we) have received this year.

Some of the most memorable, most successful marketing campaigns are the ones that are correctly aligned with the needs of a target market.  So it surprises me when I see community banks rolling out marketing campaigns that use “bank local” as their primary marketing message.  A few months back I noticed this billboard. 

In asking around, I also discovered the billboard was part of a broader campaign that included an online and direct mail effort.  At least they ran a coordinated effort.  But was it profitable?  Did it generate deposits?  I hope so. 

Don’t get me wrong.  I understand the basic “bank local” premise  and why the bank might think it would differentiate them from their strongest competition.  I’ve worked with community banks and credit unions for years and I know the Independent Community Bankers of America (ICBA) has been actively encouraging community banks to spread a “Go Local” message.  I’m just not convinced that it is the most effective message for a broad campaign in most markets these days – even with all the Bank Transfer Day publicity.

You’ll notice that the campaign’s subtext assumes that consumers would value a local bank because “you know your banker and your banker knows you.”  I get particularly frustrated when I hear one of the reasons to “Bank Local” is “because community bankers live and work in the same communities as their local customers, they understand their local marketplace.”  I hate to state the obvious but Bank of America, Chase, PNC, etc. branches are staffed with bankers that “live and work in the same communities as their local customers” and most consumers experience that every day. 

I’ll admit, research shows that “local decision making” is going to have some appeal to a small-business owner or commercial banking prospect.  And some retail customers will be motivated by the idea of local pride and supporting the local economy.  But for most consumers, a “bank local” message, received through the filter of their needs, can often be understood to mean less convenience, dated technology and fewer product/service options.  And for the particular bank referenced above, there were eight other local banks in that market…so it was hardly a differentiated message.

The challenge for community bank marketers is to craft a marketing message that will capture the consumer’s attention and appeal to their needs and concerns (e.g. fees, access, etc.).   Look at this bank’s ad campaign that addressed recent reactions to fees and access in their market area, but also speaks to post-recession consumer frugality – “helping you get more from every penny”:

If big banks are going to lose deposits to community banks and credit unions as a recent Brand Vulnerability Study suggests, it will be because marketers have tapped into what motivates the behaviors of their target customer.

I recently read an article in USA Today entitled “Will bank branches wither away?”  (see article here). Basically the article talked about the evolution of the branch to reflect the shifting consumer priorities and more tech savvy behaviors, and that the growth in branches has far outpaced population growth, among other trends.   I agree with the author’s take on the banking landscape.

What I found more interesting, however, were the comments at the end of the article, which to me, seemed to be polarizing, either all in favor of the demise of the branch, or a refusal to accept that things have changed.  I believe the author was not advocating one approach over the other, but simply drawing attention to the change itself.

Which leads me to what I fundamentally believe, and how we at Market Insights talk about these issues.   Know your market – period.

Every market is different, and there is no one size fits all approach to delivery of banking services. Recognize that banking preferences have indeed changed, and our job is to determine how these changes necessitate a realignment of our delivery channels.

Find a balanced approach and recognize that your mix of branch delivery, mobile banking, ATM availability, and online services may need to be adjusted given changes in your markets.  So ask yourself the following questions:

1. How has our market changed?
2. How will our markets change in the next two years?
3. What decisions do we need to make as a result of these changes?

The bottom line is that we have an economy built on choice, and we are a multi segmented society and we will continue to use multiple channels to access our financial lives.

Last week I was a featured speaker at the Community Bankers Association of Alabama’s Operations and Management Summit – speaking on the topics of marketing and cross-generational mentoring.  (A quick shout out to conference organizers for a great summit.  Well done!) 

Prior to my first presentation I had the opportunity to hear John Moser talk about the importance of having a winning attitude.  During his presentation he asked all of us to turn to the person next to us and tell about the possession we value most.  The young man next to me thought for a moment and said “my phone.”

A phone?!  Your most valued possession?

The response startled me a little – even with all that I think I know about the different perspectives of various generations.  I suppose I was expecting something like ‘my home’, ‘my family’, ‘my faith’ – responses that, at the end of that exercise, John indicated were typical.   His presentation continued and I didn’t think much more about this young  man’s comment until this morning when I read about new research from Cisco that cites Generation Y employees prefer device freedom over higher pay, and they would rather lose their wallets than their smartphones.

Here are some of the more surprising highlights from the study:

• 40% of college students and 45% of young employees would accept a lower-paying job if it had more flexibility on device choice, social media access, and mobility than a higher-paying job with less flexibility.
• 64% of college students would ask about social media usage policies during job interviews, and one in four overall (24%) said it will be a key factor in determining whether or not to accept an offer.
• 41% of young professionals said their companies marketed a flexible device and social media policy to recruit and attract them.
• More than half of college students globally (56%) replied that if they encountered a company that banned access to social media, they would either not accept the job offer or would join and find a way to get around it anyway.
• 29% of college students believe that once they begin working, it will be their right –- not just a privilege –- to be able to work remotely with a flexible schedule.

This report, and others like it, should prompt financial institutions to look closely at how they are responding to the needs and preferences of the various generations – in their workplace, in their customer base, and in their market.  Take a moment to look at the Cisco Connected World Technology Report.  You can find Chapter 1 here.