Marketing on a shoestring.

With the uncertain economy, budgets are being frozen or cut back.

We offer some advice on stretching the effectiveness of your marketing dollar during a time of fiscal austerity.

Cutting expenses is a natural reaction when the overall economy is sluggish. Unfortunately, marketing and advertising budgets are easy targets. It's no surprise to find that media spending by financial services institutions dropped by 22.6 percent in 2001, according to Advertising Age magazine's 2002 report on the 100 Leading National Advertisers. Even if budgets aren't actually cut, they often get reallocated to other areas during the year.

"Marketing budgets are definitely getting tighter, and while flexibility is built into the plan, it can be frustrating when you suddenly have to pull all your resources from one place and put them into another," explains Alisha J.R. Johnson, senior vice president and director of marketing for Highland Bank, an institution with $80 million in assets in St. Paul, Minn. "But that's the nature of the business--they want you to do more with less, so despite the fact that the money is there, it doesn't give you the right to spend it."

Jeff Bargerhuff of Nevada State Bank, Las Vegas, agrees. Competition in the growing Nevada market is intense, he says, with both large and small banks advertising more. But his marketing budget remains static.

"Basically we're doing more with about the same," says Bargerhuff, senior vice president and marketing director of the bank, which is the third largest commercial bank in the state. "I think the majority of folks will find their budgets are either going to be flat or go down a little bit. People are pulling back."

Seasoned marketers understand that it's crucial to maintain their marketing investments during downturns. So the pros meet these economic challenges with gutsy, money-saving, revenue-generating ideas like the ones discussed below.

Negotiate everything

Rule number one when maximizing the marketing budget: Everything's negotiable. Haggling with the media and advertising agencies is not for the squeamish, though. It takes a lot of creativity and sometimes, sheer bully tactics.

"Because we've been beating up the (media), we're getting more coverage in print and especially broadcast," explains Bargerhuff. 'We got together at the beginning of the year with our ad agencies, told them to talk to the media and get it on a cost-per-point basis (for broadcast media) and get an annual contract."

They all "pitched a fit," he says, but it worked. He also tracks ratings numbers when they've been guaranteed. If the ratings are lower than promised, the TV or radio station will make good with additional airtime.

Do it yourself

Johnson is able to save money for Highland Bank by doing much of the advertising work herself, from laying out ads to editing and copywriting. In fact, she hasn't paid for ad agency help in years.

She uses freelancers for producing brochures and ads. "When you work with freelance people, there's more work on your part, but it costs considerably less than using an ad agency."

Besides bidding out the printing herself, she does her own media buys and demands the media agency discount.

"I get it because I give them the ads in the specified electronic format, and there's no work for them, which is why they give discounts to agencies," explains Johnson.

And don't be too quick to change the ad, especially if it's working. For example, Highland Bank had great success with a home equity line of credit (HELOC) campaign that places the emphasis on monthly payments versus rate, and the bank continues to run it.

"We've had a phenomenal response on that ad," says Johnson. "The creative was done in 2001, and I've used it in 2001 and 2002, and we'll use it one more time in 2003. That's really been a cost saving for us."

Sales and marketing consultant Thomas Hershberger of Cross Financial Group in Lincoln, Neb., also likes that HELOC information piece from Highland Bank for several reasons:

* It stands out as part of the sales process. "They used their marketing communications to support the most effective way to sell the product," he explains. "If you're not going to be the low cost provider in your market, or waive fees, what do you do? Focus on how much the customer can borrow for how much a month, not on the dynamics that would impact a purchase decision like rates and dosing costs."

* It leverages the creative work. "Every dollar spent on a newspaper ad today should be money that's helping reinforce the ad they place tomorrow."

He counsels that any bank sensitive to budget issues needs to create some core corporate messages related to vision or mission. Each message needs these qualities to be presented throughout all communications:

* Consistency.

* Continuity.

* Standardization.

* Clarity of copy points.

Repeating those messages, regardless of medium, is one of the most successful ways to build brand.

Try something new

The Nevada State Bank marketing team expects to cut expenses for customer satisfaction surveys expenses in half next year by abandoning paper surveys in favor of telephone ones.

We will save so much time and be able to help our customer service people to hop right on the information," explains Tern Ramage, the bank's marketing officer.

They've also increased their use of some other tactics to drive more traffic to the bank, such as:

Premiums. They run a premium every couple of months, for two reasons:

* It gets the branch staff excited about selling the product.

* It gives staff a good reason to open a dialog with customers when they ask why they're giving the premium away.

Sweepstakes. A recent contest to promote online banking with Nevada State Bank offered entrants a chance to win a PC. Post-campaign assessments showed that online banking usage was up 80 percent and online bill pay rose 250 percent.

Bargerhuff also recommends partnering with vendors to help pay for campaigns and contests. Their in-store partner in Nevada is Smith's Food and Drugs. In a recent prize-drawing campaign, Smith's dished up a $500 store gift certificate for each of the 30 locations. Shoppers picked up entry forms at the checkout counter and dropped them off at the in-store branch, thereby increasing awareness of the bank location.

"We got over 2,000 new sign-ups and we saved 50 percent on the campaign costs," says Bargerhuff.

Make news

One of the most cost effective ways to promote bank brand and awareness is through the news media. Everything the bank does should be publicized through press releases. Television, radio and newspaper reporters are always looking for news, and your release may spark their interest.

Bargerhuff points to a recent toaster giveaway promotion. The bank's communications officer, Tiffany Averett, brought bagels and toasters to the two top area daily newspapers. They both ran an article on the front page of the business section on the campaign's first day.

"Obviously there's no guarantee it will run on the front page, but we shoot out press releases for every campaign, product promotion and every event we do," explains Bargerhuff. "I've noticed that we get a lot more business press now, and people call us for expert opinion quotes. We're consistently there for them."

Averett also does an annual media lunch to develop a rapport with reporters. She brings a bank profile kit to distribute at the event The comprehensive package of bank facts and figures can be a lifesaver for reporters not familiar with the financial industry.

Don't neglect the data

Stretching your budget means using your dollars more effectively to get a greater return. Targeting your most profitable customer can help generate the best return. Enter the MCIF, now more portable and user friendly than ever. Nevada State Bank marketing officer Tera Ramage can now take her laptop out to branch managers, pulling up real-time reports on customers and prospects. Appended data and geographical mapping information are no longer expensive add-ons, but are integrated in the package, thereby improving effectiveness.

"It's changed how we focus on our market because you can drill down a lot further and be real specific on both the customer side and the prospect side," explains marketing officer Ramage. "And with householding, we can get a feel for what types of accounts are growing or maybe that we're losing."

Positive trends

While limited marketing budgets have always been a problem, Hershberger sees the situation changing. "Actually I'm pretty optimistic, I think trends are good," he says.

For encouragement, look at the diversity of expenditures in the marketing area today. There are more budgets in support of training or research, telephone surveys, mystery shopping, and customer satisfaction surveys. That's a great sign, he says, that banks realize there are more dynamics within the marketing function, beyond mass communications, that support the development of the organization.

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RELATED ARTICLE: Sidebar

Some Campaing Idea-Starters

What do the best marketing ideas have in common' According to Marketing consultant Thomas Hershberger of Cross Financial Group in Lincoln, Neb., they are

* Memorable.

* Easy to understand and deliver (in other words, no fine print and no three-page applications for customers to fill out).

* Needs-based, with the value directed to the customer.

* Focused on bank visibility in key markets.

Prioritized in this order: Gains the support of the employees, builds on current customer awareness and attracts new business.

* Based on a low expense to results ratio.

Some of Hershberger's favorite marketing ideas include two from the Geneva State Bank, in Geneva, Neb.: "The Right Glove--Right Bank" campaign and the "Buy A Banker" promotion.

Right Glove--Right Bank

In this promotion, customers and prospects were sent one leather glove along with a personal letter and a coupon to claim the left glove at the annual agriculture fair.

"We had a 78 percent response rate, probably the best promotion we've ever run," claims Alice Tatro, Geneva State Bank vice president and marketing officer.

The idea could work with a pair of any item the target audience would really use, like garden gloves or salt-and-pepper shakers.

"I like the concept because it created interaction and pushed the consumer through the response mechanism," comments Hershberger. When you get that kind of interaction, you know you've had the right offer with the right audience, and that the communication worked, he adds.

Buy a banker

Customers were urged to place bids for the "rental" of each of eight bank employees. The bank matched the winning contributions, and all proceeds went to a charity of the bidder's choice. Promotion photos showed bankers behind a desk in a variety of farm locations, on top of hay bales, near grain bins, tractors and horses.

"They were talking about it all over town," said Tatro. "We raised $2,500 for charity, but I think our officers could have promoted it even more."

Keep coming back

Creating interaction and anticipation is Tatro's forte. People come to the bank's booth every year at the home show in Carney, Neb., just to see what she'll display next. They've given away pies with a "Get a piece of the pie at Geneva State Bank" tag line; thrown paint on an old sheet draped over a ladder and given away ladders and carpenter pencils to promote home improvement loans, and this year they'll give out bank-branded bottles of water to promote a "refreshing approach to banking."

"We can give the water bottles out pretty inexpensively and get a lot of exposure," says Tatro. "I can buy pallets of it and hold it for the Geneva ag show and also have it on hand for the heart or cancer walks."

Tatro's tip for scheduled events and shows: Have something to catch the kids, and the parents will follow.

"We found this out almost by accident last year, when we gave out some leftover insulated sandwich bags and the kids were dragging their parents into the booth," says Tatro. "That's the age group you want, the ones who're going to build homes and remodel, etc., so this year I bought 1,000 of those plastic slinky toys."

Sidebar

Two Easy and Inexpensive Campaigns

1. Name the Landmarks and Win

* Place full page, full color ads.

* Include 15 tightly cropped photos of historic buildings in the community.

* Initiate a contest to identify the locations.

* Grand prize: $1,000, one year, 10 percent CD.

* All entrants provided with a bank T-shirt.

Goal: Increase brand awareness and connection of the bank's heritage to the community.

2. Targeted Gifts

* Prepare lunches and deliver them during seasonal peaks to certain target businesses, such as accounting firms in tax season.

* Lunch can include food, drink, dessert and information about bank products.

* Lunch is delivered by bank employees.

Goal: Reaffirm for top producers that the bank appreciates their business, and cross-sell bank services.

(From the ABA Marketing Conference, September 2002, presentation by Thomas Hersbberger and Alisha Johnson)

Add Value, not Expense

Here s a way to add value for the customer without using up precious budget resources. Consider low cost, turnkey benefits programs offered by companies such as Progeny Marketing Innovations, Nashville, Tenn. For a small initial licensing fee, a bank can begin to offer customers either individual insurance products, or construct a more robust benefits package. Banks set the monthly fee for the customer, and the vendor does the rest.

"We market these benefit packages to account holders, and add on benefits around the person's checking account," says Dan Tarantin, president and CEO of Progeny (formerly called FIST Madison Financial Corp.). "It's a no-cost proposition for the bank, because we create all the marketing materials and train the employees on how to sell it. It's basically a revenue generator."

Financial institutions can choose from a menu of 32 benefits, from travel discounts to relocation services, all tailored with the bank's name and logo. The two latest offerings include:

The Wellness Extra Benefits package:

This contains perferred pricing on vision and dental, pharmacy discounts, health hotlines and accident insurance.

The Small-Business Customer package:

This contains numerous discounts and services such as Avis rental car discounts, business equipment discounts, overnight delivery, travel insurance and a subscription to Business Asset magazine published by Inc.

Not only do these added benefits generate fee income, they aid retention and assist in branding efforts because all materials are customized and branded by the bank, Progeny says. Sky Financial Group decided years ago that some of Progeny's products dovetailed with their strategy to proactively provide products that enhance their client's financial well-being.

"It allows me to offer my client one additional product at a very low cost to me, with a turnkey marketing solution that not only makes us more money but really develops the client relationship," explains Curtis Shepherd, senior vice president of marketing and product management for the Bowling Green, Ohio-based firm.

Progeny mailed 200,0000 Wellness Extra pieces to Sky Financial customers and prospects in the spring of 2002, and received a 2.7 percent response rate.

"Those are pretty solid numbers for this type of offer," adds Shepherd.

Cost-Savings Through Permission-Based Marketing

Gaylyn De Martini

When en the bank falls on tough times, marketers need to stretch their budgets more. Here's some simple and straightforward ways to do it.

It's all about wallet-share. Customer acquisition costs today are out of orbit. The fact is a loyal customer is a returning customer and this means extending your wallet-share of that customer and increasing his or her lifetime value. The highest dollar spending and lowest ROI is investing in campaigns to attract new customers. Instead, you can achieve more results with less financial outlay simply by maintaining the relationships with customers you have--and the referrals they generate.

Rise above the noise. With all of the messaging drowning your customers and prospects, you cannot win the advertising "arms race." Instead you need to find a new method that starts with gaining your customers' and prospects' permission--permission-based marketing. Develop mechanisms to cut through the noise with succinct, meaningful, anticipated, relevant and trustworthy messages. A way to start: When acquiring customer information from any point-of-sale, add a "yes/no" question for permission to contact them in the future with opportunities of interest to them. This approach will ensure that your campaigns gain the attention they deserve.

Know thy customer. If you build campaigns on the customer intelligence you have, your response rates will skyrocket. Customers want to know that they are more than merely a customer number and a revenue event. Customers who are treated in a personal way will act more favorably. For example, a simple addition to gathering customer data is to ask for a preferred name or nickname. Always use the nickname in communications thereafter because it personalizes the message and avoids sounding like the computer that generated it!

Minimize campaign costs by automating as much as possible. This truth is well established, but ironically, it is counterintuitive and therefore not widely accepted. It's not necessary (nor advised) to blow your entire budget on a full CRM system But, it is very reasonable to apply the old adage that to make money you have to spend some money. And there are a multitude of reasonably priced automation techniques for the most critical elements of relationship marketing: customer data acquisition and messaging. In fact, no CRM system can flourish without relevant data. The long-term operating costs are best minimized up front by intelligent data gathering and use. Smart and incremental steps to automating your customer communication campaigns will, in turn, reduce campaign launch costs. Not only will the investment in the automation offset the cost of developing and implementing traditional campaign methods, it will likely reduce your budget outlay. In fact, it's not unusual to see paybacks for carefully crafted incremental automation within a single campaign.

Gaylyn De Martini is president of DataLode Inc., San Rafael, Calif.