INSIGHT

First Federal Bank has a strong, market-leading brand in its legacy markets and wanted to expand into the fast-growing Boise, ID, market. Though the Bank had a physical presence in the Boise market for a couple of years already, it had struggled. The current legacy brand had not resonated; the Bank had not defined a distinctive value proposition and promotions had not been successful.

First Federal engaged Galapagos to develop and launch an effective marketing strategy and to reintroduce the Bank in the highly competitive Boise market and lay the foundation for significant future growth.

Galapagos employed its Market Opportunity Analysis as the guiding methodology for understanding the dynamics of the Boise market. The process identified:

• Market composition of the current and proposed Boise branch locations

• Market potential across various consumer and business segments

• Market opportunity by product line and customer segment

• Specific segments to target

• The primary needs of prospective customers in the market

• Key competitors, their performance, and positioning

• Required changes to the current marketing mix to optimize its appeal and to better differentiate the Bank

• Required changes to the current brand to better engage key prospects and differentiate the bank

• An effective marketing plan, including media mix, promotional tactics, and product offers to generate awareness, new business, and support a successful market launch

STRATEGY & EXECUTION

Using data from the market analysis as a foundation, Galapagos developed a market entrance strategy and campaign that differentiated the Bank and aligned it with the best growth opportunities, while still allowing it to remain true to its roots. With a re-invigorated team and a growing brand presence, the Bank is now building on a successful footing for further market expansion.

MANAGEMENT

The results have been robust thus far. Within the first 12 months, the Bank has realized an 11% acquisition rate for new business customers; 24.6% acquisition rate for new consumer households; and consumer wallet share expansion of 1.9% for deposits and 9.8% for loans. In addition, business loan volume generated in the new market is now 3x the loan volume in the Bank’s legacy markets combined.

INSIGHT

When the expertise or the resources aren’t available internally, Galapagos can partner with a financial institution via our Strategic Essentials Program to maximize the impact of those resources. The program aligns an FI’s strategic goals and marketing priorities to develop and implement a plan with a focus on those initiatives delivering the greatest impact and best return.

One Midwestern bank has a team that wears many hats. Although they are committed to executing on their strategic priorities, each member of their team is stretched thin. Despite the desire to accomplish a broad range of initiatives to achieve their strategic objectives, they simply don’t have the bandwidth in terms of time and expertise internally to tackle the full scope of marketing programs they would like to execute each calendar year.

STRATEGY

Enter Galapagos. First, we spent time with the bank’s executive team to understand their business objectives and key challenges. Then we performed a competitive assessment, as well as an audit of their current marketing. This analysis gave us a detailed view of their performance and opportunities and allowed us to determine how best to align marketing initiatives with the bank’s priorities. We recommended a 12-month plan prioritizing six high-impact programs likely to generate the best return, replacing the bank’s current plan which contained over 20 projects and programs.

EXECUTION

Working alongside members of the bank, we designed and managed each program from concept to launch to measurement. The experience and resources of Galapagos meant that we could hit the ground running. Regular status meetings ensured all projects hit each designated program milestone. Programs were designed with an understanding of compliance guidelines and the unique marketing challenges faced by FIs. And successes learned from other FIs were put to use to drive better results.

For this client, the engagement delivered:

• A customer expansion program that targeted customer households with the propensity to expand relationships with the bank

• A new digital checking account designed to engage younger customers and those single-service mortgage and consumer loan customers from the bank’s southern markets where branch distribution was thinnest

• Two product promotions: The first for business banking and the second for home equity lending

• Development of three new landing pages, designed to augment prospect engagement and drive more sales through the online channel

• A social media and website content program designed to support the bank’s business and mortgage expertise and its commitment to community involvement

• A community relations plan and calendar that prioritized over 100 sponsorships and contributions into a series of higher-impact community events designed to showcase the bank’s major commitments to its local communities and to local businesses

MANAGEMENT

As a result of the Strategic Essentials Program, the bank was able to cut its annual marketing expenditure by five percent, while increasing its focus on key business lines and markets. The annual media budget was reduced by 11% while increasing the number of customer impressions significantly; 85% of the bank’s budget spent on sponsorships, events, and donations now targeted its three main business objectives, compared to 35% previously; customer wallet share increased by six percent and the program generated a 4:1 return on marketing investment; web traffic and click thrus increased by over 150%; the number of social media content posts tripled; and new accounts generated by promotions increased by 25%.

INSIGHT

What happens when, after a century of achieving growth in its legacy markets, your community bank maxes out its potential? That was the challenge for one Midwest community bank. They needed to look for new ways to grow without putting their current franchise at risk.

Some initiatives demand more than incremental growth to be considered successful. Our Go-To-Market approach focuses on creating a winning customer experience for the right customers while driving the highest possible sales at the lowest possible cost.

STRATEGY

To help our client achieve their objective, Galapagos utilized a unique and comprehensive methodology that incorporated industry-leading analysis and relevant demographic, psychographic, and firmographic data to review new markets for potential and fit. After identifying several potential locations for consideration and consulting on different market growth models the bank could deploy, the bank’s executive team agreed on an approach that could generate a staggering 80% of their future bank-wide growth opportunity from one specific market.

But an analysis of the types of customers and businesses in this market showed that its composition was markedly different from the bank’s current markets. Using the same strategy in this new market would be doomed to failure. The 150+ year old bank’s brand and customer experience would need to be positioned very differently.

EXECUTION & MEASUREMENT

Working with the Galapagos team, the bank decided on a specialized LPO approach that focused on Wealth Management, Commercial, and Mortgage, then took the necessary steps through strategic talent hiring and the development of a new professional services office to add this high-potential, higher-income market to the mix.

To further support a successful market entrance, Galapagos rebranded the bank in a way that illustrated the unique value proposition of the new office and engaged those higher-income retail and commercial customer segments that the bank prized. Once the approach was finalized, Galapagos developed a go-to-market plan, utilizing a unique mix of digital, targeted, and in-person communications to create awareness and successfully position this bank’s highly engaged, expert local team as the preferred option for Wealth Management, Mortgage, and Business banking. In the three years immediately following the market entrance, this market has been responsible for almost 90% of the bank’s overall growth.

INSIGHT

Channel Optimization strategy is designed to best align your delivery channels with growth opportunity, customers’ expectations of access and convenience, and the capital and staff resources needed to support long-term competitive advantage and profitability.

Branches have long been the primary sales and service channel for community FIs. And even as the use of digital channels increases, especially for transactional services, the branch is responsible, on average, for 65% of new product sales (Galapagos, 2021.) However, as usage of digital channels increases, a growing percentage of an FIs customer base can potentially be serviced by a fraction of its current branches.

STRATEGY

For one Midwest bank client, the traditional branch network remains the most important channel in servicing and acquiring customers, yet because of changing market factors and customer behavior, the bank made the strategic decision to analyze its branch distribution network annually to ensure it plays an optimal role in effectively servicing customers and capturing new growth opportunity.

The following methodology was used to conduct the analysis:

• The transactions conducted at every branch were analyzed and tracked to the individual customer performing the transaction

• Every branch transaction was given a value based on the value of the customer performing the transaction and the percentage of transactions that customer performed at the branch

• The value associated with the transactions performed at each branch was thus totaled, indicating the relative value of each branch in servicing the needs of the current customer base 

• The available wallet share of each customer using a particular branch was estimated and, together with the frequency of that customer’s branch usage, used to estimate the potential for cross-sales for every branch

• The total non-customer sales opportunity within each branch trade area was calculated, based on the type of customer household and the density and historical performance of competitors

• A total sales opportunity based on both current customers and prospective customers was assigned to every branch

• All branches were then mapped in a matrix based on their growth opportunity and the value of the business they serviced

• Using market growth, household and business density, and competitor density and performance, heat maps of the market were developed to identify areas of high growth potential. The current branch locations were overlaid onto the heat maps to identify current branch coverage of opportunity and potential new markets

• Further analysis of market coverage and opportunity was conducted to identify optimal locations for full-service banking offices using concentrations of key segment households

• “What If” models were generated to identify optimal coverage of the greater market area

• Finally, opportunities to optimize market coverage and branch network resources were identified, including reassignment of staff based on branch need and employee skillset, branch consolidation, and redesign of branches as transactional service centers versus sales hubs

For this client, at the time of the first analysis, customers were heavily dependent on the branch for transactions. Their 22 branches were servicing 34,000+ customers and it was estimated that closing a branch could lead to significant attrition —between 28-44%— of the customers served by that branch were at risk of attriting, depending on location. But based on projections assuming migration rates for transactions conducted via digital channels and demographic changes in the bank’s customer base, the estimated attrition rate two years later for a branch closing dropped to just 9%. Under this scenario, the bank could service 85%, or 29,000, of its current customers with only five branches and its current distribution of ATMs.

EXECUTION & MANAGEMENT

While the numbers were compelling, it was important not to overlook the reputational issues of significant branch closures or the important role branches play in sales and delivery of consultative service. Merely closing branches could not be the solution. Additional work was undertaken to design a phased rollout and to ensure the success of the optimization strategy.

First, the Finance team calculated the cost and ultimate savings of the strategy. Second, the facilities planning team began work on acquiring locations for proposed new branches targeting growth trade areas. Next, a branch refurbishment plan was developed to enhance those branches identified as sales hubs and reconfigure those identified as service centers. Staffing models were developed that assigned branch staff based on their skillsets. Lastly, a communications plan was designed to accelerate the adoption of digital and other channels for transactional services to further mitigate the risk of customer attrition as a result of branch closures or consolidation.

Ultimately, the client decided on a more cautious and phased approach, focusing on the optimization of one market region to test the concept. Four branches were consolidated into two, another branch was refurbished as a sales hub, and two others were scaled back to serve as transactional centers. Increases in annual customer attrition within this test region were negligible.

INSIGHT

Turbulent market conditions. Competition. The rapid evolution of customer needs. And, most recently, staffing shortages. These are monumental challenges that your marketing team is facing. If, like most community banks and credit unions, your marketing department is staffed with generalists, it may be time to consider a different approach. Galapagos offers outsourced marketing services for community financial institutions. Outsourcing is a cost-effective solution to engaging the expertise and resources you need to maximize your marketing spend and boost competitiveness. Whether it’s specialized expertise for a one-off project or the resources needed to manage every detail of the annual marketing plan, we deliver the right team and a solution that works.

STRATEGY & EXECUTION

For The State Bank, a Galapagos client in the Midwest, outsourced marketing has played a key role as the bank has come to rely on our specialists as an extension of its marketing team. Galapagos works closely with the management team from The State Bank to establish a clear strategic direction for its marketing. An annual marketing plan and budget is developed which supports both the strategic initiatives and the day-to-day tactical needs of the bank. The approach also allows the flexibility to pivot when market or competitive opportunities arise. This year, for example, we have supported the bank’s teams through a recent acquisition and the conversion to a new online and mobile banking platform.   

The benefits of outsourcing marketing functions are numerous. Because this engagement places a team of experts at The State Bank’s fingertips, they are able to save in corresponding payroll expense. There is no costly learning curve typically encountered with advertising agencies who don’t know the banking business. A greater level of consistency and professionalism has been established across all marketing activities and customer touchpoints. Detailed tracking and reporting demonstrate the impact of marketing and underpins a new ethos of accountability. Marketing initiatives are not delayed or dropped because of increased demands on bank staff’s time.

MANAGEMENT

And the work is paying off: In 2019, Galapagos redesigned the bank’s brand to convey the expertise and approach of a billion-dollar bank and repositioned the bank for long-term growth and entry into new markets. Since then, the bank has experienced a 15% increase in brand awareness in its legacy markets. It entered a new market in 2020 and saw the office grow to $98 million in 15 months. The likelihood of customers recommending The State Bank has increased 16% and their propensity to purchase the bank’s products has also increased:

• 14% for checking accounts

• 16% for mortgage

• 13% for financial advice