Word of Mouth Takes Hold in Bank Marketing

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Close is only good in horseshoes and hand grenades - well, and marketing, too. If a company gets a five percent response on a direct mail campaign, odds are the marketing department will be thrilled. For TV it's worse.

But there's one marketing strategy that is almost guaranteed to get a 100-percent response rate: free food.

If a man calls Paulie's Pizzeria, asks for a large pie and finds out the pizza is gratis thanks to a local bank, that man is going to remember that bank's name. And it's quite reasonable to expect that he will tell his friends and family about the free pie. Pretty soon his Aunt Beth has told her hairdresser, who passed the word along to Joe, the man behind the counter at the local deli, while buying lotto tickets. At least that's what TD Bank, was hoping when it recently delivered 20,000 pizzas, in TD-branded boxes, to customers of pizzerias up and down the East Coast.

TD Bank was created last year when Toronto-Dominion Bank's TD Banknorth Inc. acquired Commerce Bancorp Inc. of Cherry Hill, NJ. In rolling out the new brand in Commerce's markets, which stretched from Connecticut to Florida, TD tested a number of word-of-mouth (WOM) marketing techniques that played on the slogan it inherited from Commerce, "America's most convenient bank."

It gave away 40,000 TD-branded laundry bags, handed out TD-branded umbrellas and offered free gift-wrapping services at kiosks during the holiday season, says Allegra Sandelli, TD Bank's head of marketing and communications. And the crown jewel of the $20 million campaign was the free pizza, she says. "What we were trying to do was differentiate our convenience message," Sandelli says. "It's an unexpected experience with our brand that would really set us apart from any other financial services providers and establishes a one-on-one personal experience with the brand in a way that we hope is spread through word of mouth."

Some refer to WOM marketing as guerrilla marketing, but it's that and more. At its base, it is a strategy used to create a buzz, a conversation, about an institution. When done well, media organizations are filing reports about the campaign, bloggers are blogging about it, and, like wildfire, the message spreads.

"If you give people something worth talking about, they will do your marketing for you," says Jeff Stephens, CEO of Portland, OR-based Creative Brand Communications, the parent company of PSST!, a marketing agency that specializes in WOM marketing strategies.

According to a Nielsen Media Research survey of more than 26,000 Internet users, consumer recommendations were found to be the most credible form of advertising among 78 percent of the respondents. Research company Jupiter Media says that nearly half of online shoppers choose shopping sites based on recommendations.

WOM cuts through the clutter of traditional advertising. If you turn on a television, you expect to see commercials; read a newspaper, you expect to see ads; open your bank statement, you expect to see a stuffer. WOM marketing is something that people aren't expecting to see.

Umpqua Bank in Portland, OR, has been a leader in WOM because several years ago its, CEO Ray Davis, charged the marketing department with reinventing the way the bank presents its message, says Eric Lucero, Umpqua's vp of marketing strategies. By switching to WOM strategies, like giving away free ice cream and offering Internet access at its branches, the $8.3 billion-asset bank has cut its marketing budget by 20 percent, Lucero says.

"Really, the thought behind this was: How can we become less dependable on traditional kinds of media and find new ways to take our culture from inside our stores out to the community," Lucero says.

Among its more successful efforts was its "Lemonaire" campaign in which it gave children of small business owners in the bank's footprint startup capital ($10) to open a lemonade stand. While children were the beneficiaries, the campaign was really aimed at small business owners, the message being that no business is too small for Umpqua. The 2,100 lemonade stands it financed helped the bank bring in roughly 1,000 new business customers 2,331 new accounts and $113 million in new deposits, Mr. Lucero said.

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