Growth = (# of sales opportunities X closing ratio) – client/profit attrition

What if we knew going into every year what your attrition rate was?  We could simply plug it into the formula.  The average bank/credit union loses 15% of their clients each year.  Now the formula looks something like this.

Growth = (# of sales opportunities X closing ratio) – 15% attrition

OK, what if our stated growth goal is 10%.  Can we modify the formula?  Sure…see below.

10% Growth = (# of sales opportunities X closing ratio) – 15% attrition

So, faced with an overall growth goal of 10%...and knowing full well that you will first have to replace 15% of your clients/profit who will leave through attrition,…you will have to do a mighty work inside the parenthesis to the right of the equals sign. 

How will marketing create more sales opportunities?  Can sales close a greater percentage of the opportunities they get?  Both are worthwhile objectives and necessary to gain 10% overall growth.  But don’t give up on retaining your clients.  Don’t assume that losing 15% of your clients every year is a given.  By reducing this number dramatically, you can achieve your growth goals more easily. 

In fact, Retention is the Key to Growth. 

J 

Some of you embrace the idea that direct marketing (e-mail, mail, etc.) is both effective and provable.  Some of you don’t.  That is a shame.  Think for a moment.  Is direct marketing the only marketing tactic that has a provable ROI? 

NEWS FLASH:  This just in, research now shows that 76% of on-line traffic and buying customers are influenced by direct mail.  Hmmmm, is this by chance…or another completely provable marketing technique?  Yes, Virginia. 

Your 2011 marketing budget planning will begin shortly.  Are you planning to include money for direct mail?  You should.  Of all the things you can do….direct marketing is the one tactic that will prove the Return on your Investment (ROI) most directly. 

We can help.  With a comprehensive Creative Agency and Printing facility, we can help you create the list, the offer, and the creative…and then print it, mail it and then most important of all…measure the results – for you.  If you are planning to get more aggressive with direct mail in 2011, then MARQUIS is your huckleberry. 

J 

Just yesterday I returned home from four days of fishing in Canada.  We had a great time.  I will spare you the details of grown men acting like teenagers in the wilderness and how exactly the gasoline found its way onto the fire…    

What struck me on the plane ride back home (one of four) was how similar our fishing experience was to marketing at a financial institution in times like these.  The water level on the lake was about 6-8 feet low.  This simply means that the fishing conditions aren’t optimum.  Much like the economy isn’t optimum, to say the least. 

Over four days, we fished over 40 hours.  How did we do?  We caught enough little ones to keep us interested.  Though, when you focus on anything for 10 hours straight, for four days in a row, you expect exceptional results.  You are working long and hard in marketing; are you getting exceptional results, or just enough to keep you interested?

Like fishing, if you want to change your luck, you have to match the right lure with the conditions.  In the same way, your marketing tactics have to change to fit your current sales environment.  Have you changed lures?  Are you still using the same tired ideas hoping to catch the big fish?  You can focus long and hard…and it won’t make success happen if your tactics don’t match the opportunity. 

Know your market.  Identify your risks and opportunities.  Use the right bait (offer).  Take consistent action.  Measure the results.

Now, about that gasoline…

J 

Looking to reduce your Fair Lending Risk?  What bank isn’t…  To help you make sense of at least the broad brush stokes of what is important in Fair Lending, see the six points below.  Not sure how to get started?  We can help.

• Have Written and Communicated (from the top, down) your Fair Lending Policy.
• Written Pricing and Underwriting Guidelines.
• Centralized Credit Decisions.
• Narrow Discretion, if any.
• Fair Lending Risk Assessment.
• Annual Performance Process Review.

Fair Lending in the Macro sense is somewhat easy to grasp.  Yet when you dig deeper into each area, it can almost seem like your head will explode from the intensity.  It shouldn’t be this way…but it is for many.  Let us help. 

J

One of the top initiatives for B2B and B2C companies in 2010/2011, as researched by Aberdeen Group, is achieving a smooth integration between marketing and sales, tracking ROI of campaigns and establishing best practices for the routing and management of leads.  How are you doing?

Managing the flow of leads through marketing and sales is an increasingly important step in banks and credit Unions.  Leads both generated by marketing campaigns and through standalone sales efforts need to be tracked electronically, reviewed, followed up on consistently, and results measured for every style of lead.  How are you doing this?  Can you even do it electronically?  And then, how do you manage the incentive process?  Manually?  Really?

Please explore the MCIF/CRM solutions we offer that provide a nightly updated MCIF/CRM view which will automatically track and measure referrals and incentives.  Aligning Sales and Marketing in this endeavor will improve your results dramatically.  This inexpensive solution will absolutely enhance your ability to grow your institution, and prove the results!

J       

What is the latest from the DOJ on Fair Lending?  Recently, Assistant Attorney General Thomas Perez reiterated that the DOJ has made fair lending a top priority and has created a fair lending enforcement unit in the Civil Rights Division's Housing and Civil Enforcement Section to devote more resources to enforcement of fair lending laws.  The Fair Lending Unit has dedicated attorneys, economists, investigators, support staff and a Special Counsel for Fair Lending to ensure that fair lending issues receive immediate attention and high priority.

Perez stated that the Fair Lending Unit already has 50 matters open, including 18 investigations.  DOJ has identified large, mid-size and small lenders as targets of enforcement efforts, which include national, regional and local institutions.

Cases currently under investigation include:

• Discrimination in underwriting or pricing of loans, such as discretionary mark-ups and fees;
• Redlining through the failure to provide equal lending services to minority neighborhoods;
• Reverse redlining through the targeting of minority communities for predatory loans;
• Steering minority borrowers into less favorable loans; and
• Marital status, gender and age discrimination in lending.

The DOJ has begun to "fundamentally reshape" relationships with other federal agencies to combat unfair lending and mortgage fraud, and ensure aggressive and core competencies are in place...across the alphabet soup of federal agencies.  It was the Wild Wild West for all too many years."

The DOJ expects the pipeline from the federal bank regulatory agencies for "pattern or practice" referrals to build, including an increase in both the number and quality of referrals  Perez stated that government must be a credible deterrent to unfair lending practices, adding that DOJ's Fair Lending Unit "will use every tool in our arsenal, including but not limited to disparate impact theory." 

While much of DOJ's focus will remain on mortgage lending, the Fair Lending Unit will address discrimination in all types of lending, including unsecured consumer lending, auto lending and credit cards.

Are you ready?  We can help.

J 

The House of Representatives has passed the new Financial Reform Bill.  Will it get through the Senate after the 4^th of July Recess?  Yes.  The necessary horse-trading will happen to get the votes required.  And then of course, the President will sign it.

What will this mean for the scores of compliance professionals throughout the country?  Three things:  Job security, more work, and a great deal more stress.  The required changes will be phased in, but the added stress will begin almost at once as everyone tries to figure out what the don't know about what has just happened... 

What will be the result of this Financial Reform?  Not sure.  Yet there is simply too much political hay to make from passing such a bill.  Could some of the changes lead to dangerous unintended consequences, all in the name of “consumer protection?”  Likely. 

More compliance obligations and costs will add to the financial crisis felt on every bank’s income statement.  Add to these compliance burdens, reduced fee income from Reg. E changes and interchange transactions…and the hits just keep on coming.       

Is there anyone else standing on the ledge?      

J

In August, CRA will be open to public hearings.  HMDA will soon, as well.  What might tht look like?  As a champion for banks and credit unions alike, I would like to see some of the regulatory burden lighten. Will that happen?  Yeah, right!

Pressure to improve oversight in a myriad of ways is welcome.  However, when the only result brings additional expense and little real impact for consumers, it simply adds costs to the business of banking.  But Washington will feel better for having done it.  I guess that is something.  The rest of us simply have to grin and bear it - and fight the expansion of powers the whole way...

J

Huh?  Yes, profitability is like sausage.  Everyone loves it, but no one wants to know how it’s made.  Yet for marketers, you need to respect that nothing is more important to your shareholders. 

Often, growth and profit are linked together.  Do you understand how your institution makes money?  Can you look at the income statement and see where and how the dollars fall to the bottom-line?  You must.  In order to get true value from the marketing investments your institution entrusts to you, you must make the case for how you drove both growth and profit. 

Career growth and advancement will follow when sr. management sees that you are focused on what keeps them up at night.  How will you drive the short-term and long-term value of your bank or credit union’s franchise?  Get a seat at the management table.  Yet can you do this without knowing how to make sausage?   

J 

In the name of growth all across America, financial institutions are echoing the phrase, “get me more new accounts!”  What exactly does this mean?  On its face, it seems pretty clear.  Yet given some thoughtful discourse, there may be more to it – in how you do it. 

Every year, banks and credit unions lose over 14% (on average) of their existing portfolio of clients.  This is according to a Celent Communications study.  This doesn’t even begin to quantify the number of clients who have reduced (in some cases dramatically) the dollars they have in their accounts.  Where is all the money going and how do you keep these clients you worked hard to attract way back when?  Indeed.  The answer is…introduce the clients you have today, another product or service that brings them value.

OK, where is this story going?  The point is simply this.  Alex Sheshunoff Management (ASM) states that it is 8-10 times easier to cross-sell existing clients something, than it is to attract a new relationship.  In addition, they maintain that it costs over $250 each to bring in new relationships vs. $25 to cross-sell your existing ones.  So the point is again, simply this:  Why would you look for new accounts in the open marketplace, when it is more cost effective and dramatically more successful to mine your own client base?  Especially now, when marketing dollars are tight?  

OK…so what is the leaky bucket thing all about…how is that a part of this equation?  How difficult is it to grow your binstitution by better than 10%?  Now, how difficult would it be if at the same time, 15% of your clients are spilling out the bottom.  Talk about pressure?  This means that before you can even grow, you have to replace that which has drained out the bottom.  Yet, in order to retain your clients – especially those who generate over $15,000 in profit annually (i.e. your top 5%) you must identify them and keep them from leaving.  Retaining these high value relationships will go a long way towards patching the hole. 

At most institutions, 40% of existing client relationships have only one account.  By simply adding one product or service to each of these clients relationships, you will reduce their potential for churn by greater than 50%.  WOW! 

By all means, add new accounts.  But the smart money is in adding accounts to existing relationships where, a) it will cost you dramatically less to get the new accounts (reducing marketing costs), b) they are likelier to buy from you (improving the ROI of the campaign), and c) it will help you across the board with your retention efforts (fixing the hole in your bucket).  This is the strategic way to add new accounts. 

Isn’t it time that you addressed the hole in your institution's leaky bucket?  Your growth depends on it.

J 

Fair Lending is like a baseball? 

Yes. 

Really?  Just follow me on this a minute, OK.

From a distance, everything in Fair Lending looks clean and easy...and all is good.  The same is true with a baseball, as the seams are not visible from a dozen or so paces – and the ball is pretty and clean. 

Looking closer, you might see flaws in your fair lending process and/or performance review - and the risks become evident.  Too much coercion of the numbers will make them rat you out like an old time mobster (or an eager examiner.)  When you apply enough strain on the seams of a baseball…it will unceremoniously unravel (unless you are Robert Redford in “The Natural”, who hit a ball which unraveled with a great deal of pageantry.)

So, why the unusual comparison?  To get you to read this: Over half of all of the banks we have surveyed don’t look closely enough at their fair lending risk, but they think they do.  You can’t look from a dozen or so paces.  You must get close enough to fair lending to examine the seams.

J 

Marketing success (ROI) can only be recognized, when it is measured.  Any print-shop can mail merge and send letters or postcards for you…but will they measure the results?  Candidly, they are not wired for this.  They are printers.  They print stuff and that’s it. 

Especially now, when marketing dollars are as rare as cooperation in Washington D.C., you must confirm that everything you mail has both purpose and results.  Is this how you are managing your direct mail projects and plan?  In 1984, a Wendy’s TV commercial asked the questions, “Where’s the beef?”  In other words…”are you getting any results with your direct mail?  Prove it!”

Results are all that matter.  One of the great advantages of direct mail is the ability to directly and scientifically measure the results.  This is what we are all about.  As more than just a printer, MARQUIS has a complete Creative Agency.  And everything we do is measured.  Marketing is about results.  Nothing else matters.  Can we help you find the "beef" in your direct mail?  Yes.

J      

Last fall we all planned 2010.  Here it is almost June…how are you doing?  Planning is the first step.  Executing the plan and following through with all of the details that you deemed vital to success last fall, often gets left undone.  Does this sound like you?

Why?  Is it time?  Is it because of new priorities?  Is it because you are more comfortable doing the other things that are also your responsibility? Is it because you don’t have a partner in the process? 

Have you asked us for help?  We are all about helping you get results.  Nothing else matters.

J

What is required to satisfy the insatiable appetite of the regulators in regards to fair lending?  Unfortunately, the web is wider than just the regulators.  Add the Department of Justice (DOJ) and the soon to be Consumer Financial Protection Agency (or Bureau) into the mix. 

Can you ever really be prepared enough?  Yes and no.  Many are not even trying.  They are simply living under the ill-conceived notion that “if our intent is not to discriminate, then our risk is low.”  Really?   I have yet to come across an institution whose objective was purposely to discriminate.  Yet some product pricing, lending policies, officer discretion practices, etc. can be found to have disparate impact.  Do you know?

Isn’t it time to get in the game.  The recent article in the ABA Compliance Magazine about “Fair Lending in Plain English” is a good start.  Or call us.  We can give you the rundown on what you need to do to get a better handle on your Fair Lending Risk Management Program.

J   

Here are guidelines for losing sales developed by John Graham, consultant and author. Share them with your sales and service folks.

1. Always have an excuse. Develop a series of phrases and rehearse them regularly so you’ll always have one ready when needed: Examples: “My car wouldn’t start.” “Our prices are too high.” “The alarm clock didn’t go off.” “I didn’t have time.” The economy is bad.” Never be caught speechless when it comes to making excuses for yourself.
2. Never stand out from the pack. Losers know that it’s important to be invisible. Vanilla is their favorite flavor. Never call attention to yourself. Look, act and work the way you really are – mediocre.
3. Keep your eye on the competition. Think and breathe the competition. Know all about them – their weaknesses, their opportunities, their problems and their needs. Never think about your customers.
4. Avoid taking risks at all costs. Risk-taking is extremely dangerous. You may either fail or succeed. Either one will put you in great jeopardy. Risk-takers lead the pack by always wanting to test themselves. They’re never satisfied with their performance – they want to do better. They welcome risks as opportunities. Such thinking makes you shudder.
5. Never let yourself become enthusiastic. If you do, you will want to do more, become more deeply involved in your work, and place your company, co-workers and customers ahead of yourself.
6. Always put yourself first. Before you agree to anything, ask yourself this question: “What’s in it for me?” If something requires extra time and effort, it could lead to more sales, increased productivity, and higher profits for your company. By putting yourself first, all these problems are avoided.
7. If something goes wrong, blame someone. This is very important. Taking responsibility causes difficulties, so make sure you always have someone to blame. Taking responsibility only makes you more valuable. You may even come to be viewed as a leader.
8. Spend a lot of time second-guessing the boss. This is your real job – a top priority. By never showing any initiative, you’re guaranteed a permanent position – at the bottom of the ladder.
9. Never learn anything new. Knowledge is dangerous. It means you may become a problem-solver. If this happens, customers will view you as essential and your company will give your promotions.
10. If all else fails, say, “I don’t know.” The less you know, the more customers and your boss will leave you alone. Whenever you’re asked a question, just say, “I don’t know.” You will quickly become exactly what you are – useless.

Becoming a winner is easy. All you have to do is break these Ten Commandments.

J

Another compliance conference in the books!  Check that…another “successful” conference.  One client emailed me right after the event to say, “the conference was wonderful (as always).  The information we walked away with was above anything we typically gain from any other conferences.  The presenters (even the regulators) at the CenTrax-Marquis conference are willing to actually answer your questions instead of dodging the subject.  And the time we have to interact with our peers is both great and invaluable.” 

WOW!  Isn’t that what these conferences are all about?

Thank you to all of you who attended and made the event a success.  We look forward to next time.  One thing is for sure…things are always changing in bank regulatory compliance.

J

Each year, MARQUIS hosts the National Conference on Marketing.  We should add the word Sales to that title...as true marketing success happens when Sales & Marketing align. 

This year's eleventy seventh version of this event should be another exciting one.  First, we oversold the event beyond our expectations.  Secondly, we pulled in some truly remarkable speakers.  

Every year we hope to highlight how marketers should and can elevate themselves to "senior management."  To do so requires thinking like an Executive.  None of us can get stuck in fonts and colors and expect to be taken seriously by the big boss.

So, who is speaking?  Kelly McDonald of McDonald Marketing will speak on "Working with Generational Differences"; Mary Beth Sullivan, principal of Capital Performance Group will address the "State of the Financial Industry"; Virginia Miracle, SVP of Ogilvy PR 360 Digital Influence will drive home "Word of Mouth Marketing"; Dennis Snow of Snow and Associates (formerly of Disney) will share "Lessons from the Mouse"; and Lance Kessler of Lance Kessler and Associates (and multiple banking schools...) will address how to "Define, Develop and Deliver a highly Differentiated Customer Service Experience."

In addition, MARQUIS experts will tackle Onboarding, How to assure success with Sales - CRM, Creative Direct Marketing, the Value of Appended Demographics and Life-stage Codes and how to use them, MCIF/CRM Success Stories, and more.

For those of you who are joining us next week...we look forward to spending time with you.  For those unable to break away and attend this year, we hope that next year's "banking" environment enables you to come.

We love our clients, and we love the National Conference on Marketing...and Sales!

J 

Ever gossip at your neighbor's fence?  Ever stand at the coffeee machine at work to gab awhile?  We all love the juicy inside story.  We each like knowing things well before they become public.  

Such is the case for Fair Lending, CRA and HMDA.  What is the latest news that only insiders seem privy to?  I want to know!  I have an "Inquiring" mind...  Is there a new report or analytical view that is required of me to "comply."

Next week is our umpteenth annual National CRA, HMDA and Fair Lending Forum.  All the major players wil be sharing the "inside skinny."  Join Andy Sandler - Buckley Sandler LLP; Calvin Hagins - OCC; Carol Evans & Anna-Marie Tabor - Federal Reserve; Julie Banfield & Everett Fields - FDIC; Robert Cook - Buckley Sandler LLP; Joe Barloon - Skaddon, Arps, Slate, Meagher & Flom; Donna Murphy - DOJ; Jerry Buckley - Buckley Sandler LLC: Loretta Kirkwood - CorpRA; and Linda Crank - CenTrax MARQUIS, as they share the latest news from Washington DC and from exams all across the country. 

For those of you joining us...we look forward to seeing you and chewing the fat!  And for those who were not able to make it this year...we will certainly share the juicy bits we gain from this week with all of you. 

Change can be good.  And the faster we understand the changes coming our way and embrace their reality...the easier it will be to comply.  Bring it on.  We will be there to support all of you through these uncertain times.  It is what we do. 

J

Back in 1988, CenTrax began offering its software to solve CRA & HMDA to financial institutions.  As many of you know, 1989 is the year when the new HMDA Loan Application Register (LAR) requirements came into play.  Quickly, CenTrax found an exuberant following.  In a few short years, this relative unknown company was not only the leading CRA & HMDA vendor nationally, but also hailed as the pioneer in solving these challenges.  

Now, more than 20 years later, CenTrax still rocks compliance.  Hundreds of financial institution's count on CenTrax to help them manage CRA, HMDA and Fair Lending by relying on our software, services, and consulting.  We have found that by partnering with each client, giving them the personal attention they deserve and providing easy to use products...we can assure their success.  

We thank each and every client for the opportunity to serve them!

J