Enhance satisfaction by targeting segments. (Customer Satisfaction).

Community banks are beginning to plan marketing strategies around market segments, as the larger banks have been doing for some time. This is not a new idea, but the growth of competitors like American Express, which is targeting America's small businesses, and E-Trade, which is reaching through the Internet into small-town America with both brokerage and banking services, is causing even smaller community-based banks to think about focusing marketing initiatives on differing segments of customers.

As I speak with community bankers about the ABA Client Satisfaction Index service, more and more of them are interested using this service to gain an understanding of how different segments view their bank.

The three key segments community banks seem to be focusing on:

The upscale retail segment comprising, roughly, the top 10 percent of consumers. This segment might be called "wealth management or private banking."

Small Business. This segment is made up of business enterprises with annual sales of less than $5 million, depending on market size.

Mass market retail. This is the bottom 90 percent of the market of consumers.

The ABA Client Satisfaction survey suggests that while these customer types see many banking features similarly, there are enough differences to build three distinct marketing concepts.

What each segment values

The ABA survey looks at satisfaction scores on 20 different attributes of banking service. Six of these are: Professionalism of Employees; Friendliness of Employees; Location Convenience; Internet Banking; Service Charge; Interest Rates on Deposits/Loans.

These are all relatively important attributes to customers. However, the idea of dealing with highly professional, competent bankers is more important to the Wealth Management and Small Business segments, while "friendliness" is more important to the Mass Market group. Likewise, location convenience is important to all three groups, but significantly more important to the mass-market customer.

Interestingly, pricing-related attributes are not as important, generally, as people-related factors, but are still influential. The Mass Market appears to be driven more by the nuisance factors of service charges, while the Wealth Management segment is driven more by rates. However, even among this group there is the perception that "all rates are about the same," so customers gravitate to factors where they do perceive a difference. The most potent of these for the upscale almost universally are people-related attributes.

The 'techie' segment

Also of interest is the fact that the Internet is of equal importance (or lack of importance) to all three groups. It appears that regardless of group there is a small, but growing segment of customers who love the Internet and want more and more functionality put there. In focus groups these people actually show degrees of anger that their bank "doesn't get it" and isn't moving fast enough. These Internet devotees are not limited to the youthful, either. They are equally represented in all segments, which seems to suggest they might be considered a behavior segment of their own.

Just as interestingly, the other group of non-Internet users are just as opinionated in their view that they will not use the Internet for banking. They don't trust it--and don't plan to anytime soon. These folks want eyeball to eyeball banking, though I suspect that over time, as we have seen with other technology diffusion, many of these nonbelievers will switch over.

The conclusion to be drawn here is that community banks are growing increasingly aware of the fact that market segmentation is critical to their long-term success. National competitors are aiming at very narrow segments with well-crafted plans; and some are hitting the mark. Banks need to be aware of what target customers want--and give it to them.

L. Biff Motley is president of Motley & Associates, New Orleans.