Kevin B. Tynan, president of Tynan Marketing Inc., thinks small banks have a unique opportunity to attract and keep core customers through "integrated marketing" using such "new media" as special events and data bases.

His views are detailed in a new book, "Multichannel Marketing: Maximizing Market Share Through an Integrated Marketing Strategy," which Chicago-based Probus Publishers is bringing out today.

Q.: It's been said that all banks, big and small, market badly -- and that banks, in general, are just awakening to the necessity for strong, retail marketing. Do you agree?

TYNAN: Yes. Banks are still operating, for the most part, as they did at the end of the 1970s.

As a percentage of marketing budget for most American corporations, advertising has fallen from two-thirds of the budget to to one-third. Now, it's promotions -- publicity events, pricing incentives and the like -- which make up the lion's share of marketing budgets.

But banks still spend half their marketing dollars on print advertisements. If banks want to reach consumers, they have to alter how and where they market.

In 1980, the three television networks reached 91% of consumers, and now they're reaching 70%. The drop serves to demonstrate the fragmentation of our society.

Many marketers are adjusting to it, but I don't see the adjustment at many banks. They don't seem interested in innovation.

Q.: Where would they start if they were?

TYNAN: They would tap the "new media," which have gained prominence over the last 10 years. That means studying data bases for cross-selling and staging events, among other things.

Small banks should be doing much more data-base marketing. They should invest in data bases so customers are classified by households, which will enable the bank to know their profitability.

Once you know what the households have, you know what they might need, and that's where you start your cross-selling -- not in mass media.

Specifically, small banks should start by identifying all, the households with one-account relationships, and then additional services to sell them.

If the relationship is limited to a checking account, the bank has just a 50% chance of retaining the customer after two years. If there are two relationships, there's, a 70% chance. they'll keep them. Add a safe-deposit-box relationship to the first two, there's a 95% chance.

Q.: What about the "events"?

TYNAN: Events are intended to broaden the interest of people in the bank, which will make them more receptive to traditional marketing, like newspaper ads.

We put a psychic in the driveup window of a de novo branch, along with a disk jockey doing his show in the lobby, and that worked out well.

But there should be numerous levels to any promotion. Besides advertising the psychic, we sent out thousands of fliers that explained the four steps a customer would take to establish a full relationship with the bank. It was a full-court press.

Q.: How much money should a bank should spend on marketing? Is there a percentage of income, for example, that might serve as a benchmark?

TYNAN: The notion that there's a percentage is antiquated.. For a bank it used to be two-tenths of 1% of total assets. But this if, antiquated now, because there are so many variables.

Are you in a rural or an urban market? Is your market extremely or moderately competitive. A set percentage ignores your degree of difficulty. Budgets should be determined by goals.

Q.: If a small, plain-vanilla bank is running with strong profits and safety, is there any reason to take the risk of finding and exploiting a niche?

TYNAN: Yes, because the only thing that's certain is change. And those people who are comfortable today can be equated with the Sears Roebucks, the IBMs, and the Apples of the early 1980s. If you don't understand, and keep up with marketplace, you'll end up a follower -- not a leader.

Q.: What are examples of markets that the small, simple banks should try to exploit?

TYNAN: To my way of thinking, to look for a niche you have to audit your competitors and you have to talk to your customers.

The basis of marketing is meeting consumers' needs profitably. Most bankers don't market, they sell.

Q.: Small banks that make small-business loans or otherwise involve themselves in the affairs of their towns are regarded as community banks. Is it in the interest of community banks to increase the range of their specialties?

TYNAN: No. It's in best interest of banks to improve what they're doing.

If it's operating profitably. they should make sure they're meeting top quality standards. It's more important to offer a few services well than many services adequately or badly.

The only thing that makes one bank different from another is service.

Q.: The title of your book touts the merits of "integrated marketing." What does that mean?

TYNAN: Integrated marketing always existed, but its value has not been exploited or the need for it hasn't been as apparent as it is today.

It means making sure your message is consistently communicated in all media and channels of marketing.

For example, it's not making sure the graphics in your ads and direct mailings are all the same. That's a small, superficial aspect.

What's most important is that the same message is given out in newspaper ads and articles, in the way your customers are treated, in the way you collect checking fees.

We've had too many slick ad campaigns that have promised consumers everything and delivered far less -- and that's why we have a nation of cynical consumers and savers.

Q.: Should small banks with "outstanding" Community Reinvestment Act ratings market that as part of an integrated promotion?

TYNAN: Absolutely.

The first responsibility of the bank is deciding how it wants to be represented. If one of its marketing goals is integrating itself into community and making worthwhile contributions to neighborhoods, it should boast, market, and promote a top CRA rating.

Banks have primarily relied on advertising to put this message across when there are so many other venues, like seminars, available. Small banks with limited budgets are limited only by their own creativity, and many times a small budget is an excuse for limited marketing.

Q.: What other excuses do small banks have for limiting their marketing?

TYNAN: Many times there's a paralysis that results from the presence of big banks. Small banks many times choose not to compete because they think they can't.

But there's a misperception about big banks, a confusion between their resources and their ability to provide quality service.

Small banks are in an enviable position because the CEO is just a few layers above the consumer, so management can stay in touch with consumers much more easily.

The big bank spends hundreds of thousands of dollars on focus groups. At a small one, management just wanders through the lobby and talks to customers.

Q.: What causes marketing campaigns to go poorly?

TYNAN: Sometimes things don't work out because the marketing director failed to accurately assess the marketplace.

Q.: Given the limited resources of small banks, how long should they wait for a marketing strategy to work?

TYNAN: A Harvard Business Review study showed that half of all advertising is wasted.

The usual reason is poor timing. For example, advertising should not be used day in, day out without testing at branches.

Many banks have an automatic insertion order, where they run a newspaper ad every week. That's a waste.

Advertise when you have a new product and you think it's got appeal. If you don't see results in two months, drop the ad.

In addition, at the end of the year, start from zero; don't automatically add 6%.

Q.: Do small banks need a public relations firm?

TYNAN: No. Only big banks. Small banks are in a position to develop their own, and best,

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.