In the fight for small-business customers, banks are increasingly turning to how-to publications to get the attention of advice-starved entrepreneurs.
With a glut of newsletters available, banks like Chemical Banking Corp., Wells Fargo & Co., and Keycorp are using full-color glossy magazines and pamphlets to differentiate themselves.
Chemical Bank and Wells Fargo were the first to enter into a magazine venture with Group IV Communications of Thousand Oaks, Calif. to publish Business94 magazine. Not only does the name of the magazine change every year, but Group IV allows participating banks to customize each issue for their market.
"The response in terms of our readership coming back to us when we put reply cards in the magazine has been tremendous," said Robert McBride, a senior vice president who runs Chemical's commercial and professional banking group, which handles companies with $1 million in revenues or less.
Besides having the bank's name pasted across the top of the magazine and in the table of contents, the magazine contains a combination of small- company profiles, general information designed to help small companies, and regional and bank-specific business information.
Chemical has been able to use the magazine not only for its marketing efforts, but also to find out more about its small business customers. The first page of each issue of Chemical's magazine is a fax survey. The last page contains the results of last issue's survey. The bank also promotes specific products with tear-out cards that readers can use to send away for information on SBA loans, for instance.
While the survey asks small business owners for their opinions about specific issues like health-care reform, the surveys provide the bank with critical information about their clients.
"We've been able to identify a segment of our customer base that communicates via the fax machine," Mr. McBride said. With this information in hand, the bank knows to use the fax machine to reach those customers.
The bank is also building good will by giving customers a forum for airing their views and comparing them with those of their colleagues.
So far, only the biggest banks are using the magazine format. While the six-times-a-year publication costs less than 60-cents a copy, Group IV requires a minimum circulation of 75,000. In return, the company grants each bank a regionally exclusive market.
Besides Chemical and Wells Fargo, NationsBank Corp. reached a multiyear agreement with Group IV in December to have the magazine sent to small business owners in the bank's Baltimore-to-El Paso territory. Group IV publisher Mike Carpenter confirmed that Bank of Boston has signed a letter of intent to use the magazine.
NationsBank signed on with Group IV because they wanted to show owners of small firms that the bank cares about their success.
"We want to provide added value to our customers, and this magazine can help us do that," said Scott Scredon, a spokesman. "We think that with a magazine of this magnitude we can really show that we care about small business."
Magazines are not the only alternative, though. Greer Growth Systems of Westlake, Ohio, publishes a series of booklets and binder-bound information used by banks including Keycorp., First Chicago Corp., and Banc One Corp.'s Columbus bank. Articles have covered topics like succession planning and building an organization.
But President Mike Greer said such publications can lose their effectiveness if banks do not use them in conjunction with their other direct sales efforts.
"Unless you can get your line people to increase new business through account retention, improved close rates and cross-sells, these things are not going to generate profits," said Mr. Greer. "You can't just buy these things, have a direct mail out, and be done with. There's more to it."
Mr. Greer, who used to be a small business banker with the former Society Bank, said timing is also important to the success of these tools. By sending the publications at spaced intervals and following up later, the customer becomes familiar with the services the bank can offer.
He added that the goal with prospects is to position the bank in the mind of business owners in case their current banks screw up.
"Before you can create a share of the market, you must create a share of the mind," he said. "What we do with our program is to teach the customer or prospect frequently in an added-value kind of way."
Finally, the means of delivery is important. Mr. Greer points out that booklets or brochures put into bank statements can have their desired effect for up to 80% of the market. These are typically the customers the bank cannot afford to call directly.
For the 25% of the market that deserves special attention, though, he advises using the binder-bound series. These have longer shelf lives than magazines and newsletters, which often get tossed. And some customers have been known to keep the binders next to their desks as a reference tool.
"If you package it correctly, the business owner will put your information on the bookshelf for future reference," he said.
But Group IV's Mr. Carpenter said the real key to the Business95 magazine is that the guts of it have nothing to do with banking or loans, but deal with general business topics. In this way, the bank is sending the message that it is interested in the success of their customers.
"It allows them to communicate regularly with the customer in an environment that's efficient and respectable," said Mr. Carpenter.
Chemical's Mr. McBride said his officers have used the magazine to help them understand how the bank intends to market its products to small business. It also lets the officers know the bank is committed to the market.
While evidence is hard to come by, both the publishers and the bankers say these products are valuable.
NationsBank's Mr. Scredon said the return is measured in being able to reach out to the customer. "We feel in turn we'll see increased business from the magazine," he said. "We also hope to make our customers more profitable."
