Pub. 1 2013 Issue 3

www.uba.org 6 E very spring the major banks launch campaigns and start battling to be recognized as the #1 small business lender in Utah. Bank marketers use any- thing they can think of to promote their bank as the best small business lender. Unfortunately, the way we marketed small business lending five or ten years ago isn’t as effective as it once was. How a bank marketer spends his or her budget to acquire new customers is often the difference between success and failure—and it starts with three simple questions: 1. How do you identify your best potential customers? 2. How do you find more of them? 3. How do you close more small busi- ness loans? Know the answers to these questions, and you’re well on your way to success. You might even end up as #1. Identify your best potential customers As a marketer at Lendio, I’m always ask- ing myself, “Who am I talking to?” A little analysis can identify borrower profiles you can categorize within a range of “profit- able to not-very-profitable.” 1. Your most profitable prospects: Identifying what differentiates your most profitable small business cus- tomers from the others is the first step to understanding your “sweet spot.” Once you know who they are, you can create a profile. What characteristics do they share? Credit score, time in business, annual revenue? Once you know what the customers you really want to lend to look like, do the same with the others. You’ll likely discover many of them fit into similar and interest- ing groups. 2. Balance quality and quantity: If your bank is like most, some of the business owners that don’t fit into your “best” category, are still good customers that likely still fit into your small business lending criteria. Your true “sweet spot” isn’t your perfect customer, but rather, a variety of profiles balanced between quality and quantity. 3. Analyze your business loan prod- ucts: To maximize efforts, you need to identify which loan products go best with each profile. For example, the profile that matches an SBA 7(a) loan is probably different from the profile that matches a line of credit or equipment loan. Knowing which products make the most sense for your identified customer profiles helps you more efficiently spend your marketing dollars. Ann Muhnkerjee, SVP and CMO of Frito-Lay North America, said, “I think the days of traditional mass marketing are kind of over.” Nowhere is this truer than how we market small business loan products. Targeted messages to a targeted audience succeed while mass market messaging falls flat. Finding more customers In a perfect world, when a small business borrower needs a loan he or she will make a visit to the bank, meet with a banker, complete some paperwork, and get fund- ed. Times have changed. Today, banks rely on several “channels” to find new customers. Some are definitely more effective than others. • Current Customers: Many potential loan customers already patronize your bank. Target them with loan products designed to match their profile through email, direct mail, or by phone. • Centers of Influence: Many bank- ers rely on professionals like CPAs, attorneys, real estate agencies, small business workshops, and chambers of commerce to identify potential small business owners who are good candidates for a business loan. • Business Databases: Hoovers, Ex- perian, and other contact databas- es can be a pretty good source of information about the businesses within your bank’s footprint. • Traditional Cold Calling Ap- proaches: Many banks target borrowers with door-to-door contacting or cold calling by tele- phone, but usually only as a last resort—when nothing else seems Effectively Marketing Small Business Loans By Ty Kiisel