1. Customer Relationships
Banking and Financial Services

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3. What do Banks Sell? Banking products Retail banking services
Checking and savings accounts
Credit cards
loans
Insurance
Financial Services
Retirement products such as IRAs
Stocks, bonds, mutual funds
Relationships (not really for sale, but major part of the sales process!)
Promotes trust
Potential profit
Additional business
Most people don’t think of banks in terms of selling something, but that is actually what they do. They sell their products such as checking and savings accounts, loans, and insurance. They also sell financial services such as retirement products like IRAs and investments such as stocks, bonds, and mutual funds. Banks also “sell” relationships (but they are actually free). Through selling their products and services banks can have a relationship with their customers. This makes every transaction seem more personal, promotes trust with customers, which in turn can create higher profits for customers and additional business for the bank. 3

4. What is Relationship Banking?
A banking philosophy
A marketing philosophy
Goals:
Establish long-term customers
Increase customer base
Increase business
Reduces costs of obtaining information with repeat customers
Builds customer loyalty
Builds company reputation
Used primarily with small- to medium-sized banks but spreading to large banks
Relationship banking is actually a philosophy with goals of establishing long-term customers and increased business. Costs of information gathering can be reduced with having repeat customers. Company reputation can also be built through relationship banking. Mainly small-and medium-sized banks have practiced this philosophy but it is spreading to larger banks. 4

5. Customer Expectations
Money in a safe place
Convenient access to money
Highest possible return on investment
Relationship with the bank
Relationship banking can be enhanced through meeting high customer expectations. These expectations include: keeping money safe, having convenient access to money, earning the highest possible return on investment, and excellent customer service. 5

6. Building Community Relationships
Community Reinvestment Act - CRA
FFIEC – Federal Financial Institutions Examination Council
Public relations – marketing
Provide a great deal of personal contact with customers
Sales campaigns
There are many ways banks can build community relationships. The Community Reinvestment Act provides financial services to communities. The FFIEC enforces the standards through examinations. Communities can also benefit through effective public relations campaigns. 6

7. Community Reinvestment Act of 1977
Promotes banking services to communities
Extends credit to community members
Prohibits redlining:
1960s - banks would not invest money in particular racial areas
Later – banks may charge more, or even deny, banking services to these types of areas
Monitored, evaluated, and examined by the Office of the Comptroller of the Currency (OCC), Federal Reserve Board (FRB), Office of Thrift Supervision (OTS), and Federal Deposit Insurance Corporation (FDIC)
The Community Reinvestment Act of 1977 brings banking services to communities. It was designed to make banking available to areas that previously may have been denied these services. Various financial institutions are monitored by government agencies to make sure they are complying with the terms of the Act. 7

8. Federal Financial Institutions Examination Council (FFIEC)
Established in 1979
Charged with enforcing standards and conducting examinations of financial institutions along with the appropriate agencies that supervise these institutions
The Federal Financial Institutions Examination Council was established in 1979 and is the organization that is charged with conducting examinations of financial institutions, as well as the government agencies that monitor the different types of institutions. 8

9. Public Relations-Marketing Types of Selling
Event-based selling
Cross-selling/
Up-selling
Cold-calling
Online
Aside from individuals and businesses calling or physically going to a financial institution, these institutions must rely on selling their services through a variety of other methods. Common types of selling are event-based, cross-selling, cold-calling, and online marketing. 9

10. Event-Based Selling Selling based on life events such as:
Marriage
Children
College
Retirement
Selling at community events:
Grand openings
Company anniversary events
Holiday gatherings
The word “event” refers to two different types of event-based selling. First, there is selling products or services based on life events such as marriage, children, college, and retirement. Second, there is the selling that goes on at physical community events such as grand openings, business anniversary events, and holiday gatherings. All of these types of “events” provide opportunities for financial institutions to make sales. 10

11. Cross-Selling
Selling products or services related to what a customer may already have
Example-if they have a checking account, offer a savings account where a portion of checking can automatically be transferred to the savings account
Example-if they have a savings account, offer a money market account which earns higher interest and allows a specific number of checks per month
Cross-selling refers to selling products or services that relate to what a customer already has. For example, if a customer has a checking account, offer a savings account or a checking account with more features. By the same token, if a customer has a savings account, offer a money market account where they can earn a higher interest rate. 11

12. Upselling
Selling an upgrade of a product or service which may have more risk but can provide higher reward
Example-if a customer has a savings bond, offer investment services of stock purchasing, IRAs or other investments
Example-if a customer has a savings account, offer investing in a mutual fund
Up-selling is similar to cross-selling except that instead of selling a type of ‘lateral’ service, you are offering an upgrade which may require a higher contribution of funds on the customer’s part. For example, if a customer has savings bonds, try offering a traditional or Roth IRA (Individual Retirement Account). Or if a customer has a Certificate of Deposit (CD), offer an investment in individual stock or mutual fund. 12

13. Cold-Calling
Can be a way to invite potential customers to community events
Used mainly to promote personal financial investment services
Cold-calling is a time-honored tradition in the field of sales. Calling potential customers to try and attract their business is an important part of sales. It can also be very effective when used as a personal invitation to attend a community event, whether the person being called is already a customer or a potential customer. The personal attention can have positive results. 13

14. Online Banking Less personal contact More convenience
Offer many services
Ease of access 24/7
Requires a very user-friendly approach
Assistance available if needed
Ease of navigation
Customer-friendly language (terms)
Because online banking can lack the personal touch of other types of selling, it must make up for in other areas. For example, web sites must be easily accessed and navigated. The interface (aesthetic design) must be user-friendly and appealing to look at. The language of the site must be customer-friendly and there must also be a way for customers to contact someone if they have questions or problems with the site. 14

15. Launching a Sales Campaign
Research
Who is your target market? What are their needs?
Consider campaign costs versus profit goal.
Use your leads
Current and past customers
Purchase lists
Conduct surveys
Launching a sales campaign is a major project for any organization and can contribute to the success or failure of the organization itself, or, at the very least, its employees. (Have students research the impact of the “New Coke” marketing campaign in 1985.) Regardless of the type of organization, similar strategies are following when creating a sales campaign. First, target markets and their needs and wants are identified. Remember that the customer needs as well as the profit goals of the company must be considered. Next, use the leads you have whether they be past customers, current customers, or potential customers. Obtain mailing lists to contact potential customers and conduct surveys to assess the needs of your target market. 15

16. Launching a Sales Campaign (continued)
Training
Staff training about the process
Training about products and services offered
Possibly offer contest for staff participation
Tracking process
Track customers (determine if they are new, former, or current)
Track sales (determine which products or services are most popular or successful)
Staff will need to be informed and trained about the process, for example, what products and services will be promoted and whether or not there may be any sales or participation contests involved. After the campaign, and possibly during, the process and status will need to be tracked. You will need to determine the amount of customers who were past, current, or new. The sales will need to be tracked as well to assess which products or services were the most popular or successful. 16

17. 4 P’s of Marketing Components of a marketing plan:
Product – What is for sale? What meets the needs of the target markets?
Price – What are the costs, fees, or interest?
Place – Will products be available online, through an ATM, or at a branch location?
Promotion – What types of advertising will be most effective?
Regardless of the type of selling that any business conducts, there are standard components of any marketing plan that should be incorporated into a sales campaign. The specific areas of product, price, place, and promotion must all be considered and specified to contribute to an effective sales campaign. 17

18. Sales Campaign Marketing Ideas
Prizes for opening more than one type of accounts
Seasonal-putting or pitching to earn a rate reduction on a new loan
Secret code for a bonus to be deposited into a new checking or savings account
Referral programs
Social media-”like” on one of these sites and receive a bonus
Pair up with another business for a joint campaign
Incentives should be offered to entice customers to buy your products or services. Some of the more common ones are: prizes for opening multiple accounts, seasonal events, secret codes for bonuses, referral programs, social media incentives, and creating a joint campaign with a complementary type of business. 18

19. Utilizing Social Media in Sales
Using web sites to promote online services
Using social networks
Facebook
Twitter
LinkedIn
Requires more personalization due to lack of face-to-face contact
Today social media can have a major impact on a sales campaign. People of all ages seem to be utilizing many different types of social media such as Facebook, Twitter, and LinkedIn. Social media approaches do need to be more personalized due to the lack of face-to-face contact. 19

20. Managing a Customer’s Investment Portfolio
Customer should:
Make a list of what you own:
House, car, bank accounts
And what you owe:
Credit cards, loans
Components of a portfolio:
Emergency fund, usually six months
Retirement savings
Pay off debts – highest interest rate first
Banker should:
Determine customer’s financial goals
Regularly monitor portfolio
Make frequent customer contact
Provide easy-to-use tools
Phone calls – follow-up
Paper updates-news notifications
Face-to-face meetings
Show progress
Once a financial institution has attracted customers, a goal is to develop and maintain an investment portfolio for that customer, whether it is an individual or a business. Customers should make a list of what they own and owe, pay off debts with higher interest rate first, ideally have a plan for about six months of emergency savings in addition to a plan for retirement savings. A banker must determine the customer’s goals, regularly monitor the portfolio, and make frequent contact with the customer. 20

21. Independent Practice Assignments
Community Reinvestment Act Research Assignment #1: Students will conduct research on their city. They can type in «city search data city name» in the search box of a search engine. Locate the number of financial institutions in their city and notice the demographics of their city. Then search for a city that seems to have a totally different demographic from their own city. Students will create a table that compares demographic percentages for each city, geographic location, as well as the numbers of financial institutions, or percent of financial institutions, in each city. At least 2 other specifics that the student feels are important to compare can be included such as median household income, average home price, or violent crime. Students should make a summarizing statement explaining their opinion on whether or not they feel there is a fair distribution of financial institutions in the two cities compared and the types of financial services that the student feels would be most appropriate for the cities researched. Sales Campaign Assignment #2: Students are to create a sales campaign for a grand opening of a fictitious bank. The student should clearly identify the 4 P’s of Marketing through their documents. This campaign will contain several documents. First, the student creates an outline detailing the steps of the plan (using the presentation slide as a guideline). 21

22. Independent Practice Assignments (continued)
Second, create a flier which would be mailed out to community members (potential customers) including pertinent facts such as the name of the bank, the date of the grand opening, the times, the activities for individuals, families, and kids, and contact information in case they would like more information. Their third document is a table that shows at least 5 products/services available to customers, including the applicable fees and interest rates. Examples are checking accounts, savings accounts, safe deposit boxes, auto loans, certificates of deposit, and many more.
Community Outreach Venn Diagram Assignment #3 – Students will conduct Internet research and locate three banks or financial institutions that participate in various community outreach activities or programs. The institution name and URL will be included in each of the three circles. Also included will be a listing or description of at least three different programs. In the center overlap of the three circles will be an activity or program that is the common to all three institutions. This Venn diagram can be created on posterboard, flipchart paper, or on the computer. 22