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How to Maintain and Grow Your Customer Base in a Competitive Environment

June 13, 2013

In the midst of the drastic changes affecting the community banking industry over the past decade, small business customers are changing as well – as are their expectations of what a community bank should be. Young entrepreneurs who have grown up with the Internet don’t find physical bank branches important and find some of the alternative sources of business financing available today more appealing.

To succeed in this changing environment, community banks must shift how they think about their position in the competitive marketplace. Competition is no longer large regional or super-regional banks, or even other community banks in the area. The plethora of alternative financing options available to small businesses on the Internet and through other non-traditional banking outlets will force community banks to refine their value proposition.

Use Change to Strategic Advantage

For most community banks, a higher level of personalized service is what differentiates them from their big-bank counterparts as well as providers whose presence is primarily or exclusively online. Turn what a customer might perceive as a cost into a benefit by taking full advantage of your ability to serve as a trusted small business advisor. Here are some ways to take advantage of the trusted advisor role.

  • Show small business owners how using the financial statements you require could possibly reduce their financing needs.
  • Help owners choose the most appropriate type of financing (e.g., line of credit, term loan, working capital loan, equipment loan) to meet their specific funding need.
  • Show owners how they can improve their margins by digging deep into their financial statements, and use industry reports like RMA’s Annual Statement Studies to show how they compare to their peers.
  • Cross-sell bank products and services like insurance, treasury management, wealth management and merchant services, which most other financing sources don’t offer. If these are services you don’t offer, establish relationships with strategic partners that do.

  • Adopt a New Mindset

    Succeeding in this new competitive environment will require community banks to look at competition in a different light and then adopt a new strategy based on the unique benefits they offer current and potential customers.