To be successful – even viable – any business must be seen as valuable by its customers, either by providing advice or solutions, being convenient, or cheap. And to effectively support your company’s value proposition, marketing strategy has to differentiate your company, create competitive advantage, and support profitable growth.
Such strategy doesn’t just write itself. To deliver value you have to understand what is valuable to your customers – what do they need and want? To create competitive advantage, you need to understand how your competition is addressing those same customer needs and do it better – with better product solutions, smarter advice, greater convenience, or a lower price.
To differentiate you must decide where and for whom you want to compete – not be all things to all people – and position your products and services accordingly and define why your company is better. To support profitable growth, you need to understand which customers and markets afford the greatest opportunity to make money.
The Market Opportunity Analysis does all of this, which is why it should be the basis for all planning involved in any strategic project you undertake: from strategic marketing planning to brand development to product development to channel optimization. This is especially important now, when we have endured a tumultuous 24 months that have seen massive changes in how customers are prioritizing their values, their behaviors, and their purchasing of financial products and services.
What will a Market Opportunity Analysis determine?
The research is extensive and for good reason. A thorough Market Opportunity Analysis can tell you:
Which customers your FI attracts, in which markets, and what value they drive
How well is your FI performing compared to the market and to its competitors
Which segments and markets afford the greatest opportunity
Which segments and markets should your FI target
What are the needs and banking priorities these customers have
Does your FI’ deliver a distinct customer experience
What gaps should be addressed.
For one midwestern bank client, such an analysis framed their entrance into a new market. We researched which markets, current or new, could support their desired growth goals and discovered that a staggering 80% of their growth opportunity was in this one market. But an analysis of the types of customers and businesses in this market showed that its composition was markedly different than the bank’s current markets. Using the same strategy in this new market would be doomed to failure. Furthermore, the analysis revealed that the 150+ year old bank’s brand would need to be positioned very differently. Capturing this type of important insight allowed for a successful market entrance and rebranding of the bank. And in the three years since, this market has been responsible for almost 90% of the bank’s overall growth.
In 2019 we began work with a $1.3 billion FI considering a rebrand. Many of their current markets weren’t growing, others were changing demographically, with younger, more affluent households who didn’t connect with the bank’s legacy brand, and future growth seemed most likely in new, affluent, and growing markets to the south. Before investing in the new brand, we recommended the bank undertake an analysis of all these factors to ensure a better alignment of marketing strategy with growth opportunity. Our Market Opportunity Analysis confirmed the bank’s concerns and became the foundation of a three-year strategic marketing plan. We moved forward with a rebrand, targeting the needs of those affluent, more financially sophisticated customer segments, the main priority, while being mindful to not alienate customers in the legacy markets. Twelve months after launching the new brand, the bank’s performance has been impressive, including generating over $78 million in commercial loans in 12 months from a vanguard business banking office in one of the newly targeted southern offices.
Market Opportunity Analysis
It’s no surprise that the process of conducting a Market Opportunity Analysis is a detailed endeavor – it’s worth taking the time to have the information needed to guide informed decisions as your FI establishes your strategic objective.
The process starts with confirming growth goals, both long-term growth and performance goals bank-wide and by market. These goals should be realistic. Setting lofty goals that can’t be supported by the market is a recipe for disaster- not only in overall performance but for the morale of your team.
Next, we’ll take a deep dive into your customers by segmenting your customer base. We’ll calculate your FI’s segment, trade area, and market penetration rates, and measure the relative value delivered by each retail and business segment. For each segment, analysis will be conducted on key segment needs, which products they use, how they bank with you, and what they think of your offering. The analysis reveals areas where you can enhance the perceived value of your offering to key customer segments, which is the basis for retaining and expanding customer relationships.
Then we analyze the composition of your markets – which types of customers are in play – and calculate the overall growth opportunity available to the FI by segment and market.
Once customer segmentation and market analysis are complete, the information is pulled together in a format that facilitates strategy discussion with the FI. First, the total growth opportunity is reported: From the revenue the FI might gain by improving customer retention, the revenue opportunity to expand wallet share with current customers, and the revenue impact from acquiring new customers. We discuss with the FI how they wish to prioritize customer segments and growth opportunities.
This prioritization drives the next phase of the analysis – research into the needs and priorities of your customers and the segments you wish to target. It’s imperative to evaluate customer experience to find out what your customers think of you, how well you meet their needs, and what value you are bringing to their financial lives. Customer commitment research is conducted to gauge how satisfied customers are with your products, pricing, channels, customer services, advisory capabilities, community presence, and their overall experience banking with you. These evaluations allow us to look at your customers in two key categories: Fully Committed and Less Committed. Once we’ve identified these two groups, we determine the key factors that separate one from the other and leverage this insight to enhance customer experience.
Customer commitment research allows us to identify gaps in the customer experience. We assess which gaps to address, which strengths to leverage, and how these might influence your strategic priorities moving forward. We use this insight to also evaluate your FI’s current marketing mix to determine how well the products, pricing, and delivery channels are aligned to customer priorities. We also compare your marketing mix to that of your leading competitors to further reveal competitive opportunities to leverage and gaps to address. We’ll develop recommendations to address the competitive gaps in the customer experience and marketing mix, being mindful of the powerful impact the advantage of personalized touch has for a community-based FI. When community banks and credit unions skillfully leverage their ability to deliver personalized service and care, they can be wildly successful.
At the end of this process, we will have compiled a robust report of the research data, findings, and recommendations that we will review with you in detail, and with your board if necessary. Having conducted this detailed analysis provides us – and your FI – the data needed to develop an effective marketing plan that aligns resources with opportunity to maximize FI performance and marketing ROI.
Galapagos works with clients to develop objectives that are aligned better with growth opportunities to achieve positive results. Tackling a large project such as a rebrand or entering a new market without fully understanding the potential available is a wildcard. Nobody wants to spend a lot of money…and lose. We can deliver the insight you need to make these decisions and strongly execute on your strategic growth plans. Fill out the form below to request a no-obligation appointment to learn more.