Many community banks and credit unions pride themselves on the contributions they make to their communities. This includes supporting local charities, funding scholarships, planting trees or otherwise helping their neighbors. While these great acts can certainly be their own reward, community banks also deserve public recognition for their great works. Other than the obvious benefits to the community, the contributions a bank makes to its community have two strong benefits for the bank itself.
The first is the influence on prospects, or non-customers. Many prospects learn about potential banks from advertising or from community involvement. Our studies show that advertisement is generally more effective at raising awareness among prospective customers than community works alone. Indeed, this is why many banks set aside large budgets for traditional marketing campaigns. However, our studies of bank customer behavior show that while ads are better at driving awareness, community contribution can be more effective at driving consideration. The latest results of the Q2 New York Bank Prospect Benchmark show that community contribution increases prospects’ consideration of your bank by an average of 126 percent. Not a bad side-effect! And for smaller banks with lower awareness, the increase is even higher.
Anyone wishing to receive the New York Bank Prospect Benchmark results can contact Customer Experience Solutions for the specific community contribution results as rated by each bank’s own prospects. All of the data cited in this article is based on that study.
Community contribution increases consideration by prospective customers by 126 percent.
The second impact that community contribution has on a bank’s business in on its current customers. When current customers see their bank’s involvement in the community, it can improve the esteem they already have for their bank. Our research has shown that the positive impact can increase their loyalty to the bank, meaning they are less likely to leave and more likely to increase long-term spending with their bank. The latest New York Bank Customer Benchmark report showed that recognition of community contribution increases customers’ share of wallet significantly with their bank and their long-term loyalty goes up by 88 percent.
Community contribution increases current customer loyalty by 88 percent.
While it is probably not a big surprise to some that contribution to the community has an impact on the top and bottom lines, many banks are not actually getting the benefit they should be. Many community banks and credit unions spend a lot of money and effort contributing to the community, but their current and potential customers simply don’t know about it. This is very frustrating to marketing and community giving leaders in some banks, and a wasted opportunity for many. It is very important to know just how much recognition you are getting for your good work, and how you can improve that ROI. The challenge for banks is breaking through the clutter to ensure your customers and prospects appreciate your contribution.
In our research, we saw that in one specific market, two community banks had equivalent amounts of community involvement in terms of gifts to charity, hours volunteered by their staff, sponsorships, etc. However, one of the two banks was rated 275 percent higher in terms of community contribution by their respective customers and 388 percent higher by non-customers. While each bank did similar levels of community outreach effort, one was using much more efficient channels and co-opting local nonprofit partners to get the word out. Not coincidentally, the bank with the better outreach is currently achieving stronger growth in new customers, especially commercial customers.
The first step to getting the maximum credit (and business impact) from your community contribution, is to understand how you currently stand with customers and prospects, in your specific market and in relation to your competition. Do your current customers see and appreciate your good work? Do your prospects? The second step would be to make reasoned adjustments and tweaks to the programs to see what the impact is. A bank may need to improve its community outreach to gain greater recognition, or it may need to emphasize different types of community involvement to broaden its exposure. Spring and summer are times of increased giving and involvement in community affairs so recognition can go up. But it can also be harder to differentiate since other institutions are increasing their involvement as well.
The third step is to measure how much the changes have moved the needle in terms of recognition of community contribution. And just as importantly is to track the impact that they recognition is having on awareness of the bank and consideration to use the bank in the future. Tracking your ratings over time will show you exactly how your community contribution, and all other marketing efforts, are truly impacting how your prospects and customers view you. This will allow you to fine tune your programs so you get the maximum benefit for the bank while doing the maximum good for the community.
So as the weather grows warmer, consider your community involvement activities – what are you currently doing? Are you sure you are getting the credit you deserve? What can you do differently? And most importantly, what you can you do to make sure your current and prospective customers see what you’re doing?
The New York Bank Benchmarks are based on over 75,000 unbiased consumer and business reviews in New York State, gathered in May-June 2017.
*Community Contribution Rankings, Q2 2017, as rated by banked adults in New York State:
- Watertown Savings Bank
- Tompkins Trust Company
- Glens Falls National Bank
- Adirondack Trust Company
- Canandaigua National Bank
- Richmond County Savings Bank
- Rhinebeck Bank
- Jeff Bank
- Ulster Savings Bank
- Adirondack Bank
- Solvay Bank
- Canandaigua National Bank & Trust
- Ballston Spa National Bank
- Walden Savings Bank
- Tioga State Bank
- Bridgehampton National Bank
- Fairport Savings Bank
- Saratoga National Bank
- Tompkins Bank of Castile
- TD Bank
*This is the contribution that the public sees, and does not necessarily line up with the actual level of community contribution.
Originally published in Banking New York 3Q 2017