F&M Featured in ABA Bank Marketing Magazine

6/25/2008 - An article praising BLF-client F&M Bank featured prominately in the May 2008 issue of ABA Bank Marketing Magazine. The article titled "The Chicken Salad Strategy" explores the growth of F&M Bank through innovative marketing strategies.

The Chicken Salad Strategy

Virginia Graves, Sr. Account Manager, BLF Marketing
ABA Bank Marketing Magazine, May 2008

When tiny Farmers & Merchants Bank moved from Bumpus Mills, Tenn., to the state’s fifth largest city, Clarksville, few noticed. Even its top executives admit they had the ugliest bank building in town, located in a less-than-savory part of the city. Local residents and businesses didn’t know the name. Stalwart competition with deep community roots weren’t concerned.

So how did this small rural bank go from zero presence to tops in market share?   When American Banker newspaper recognized Sammy Stuard, president and CEO of the now F&M Bank, as their 2007 Community Banker of the Year, the bank was honored for its "offbeat but powerful marketing strategies."  But look closer and you’ll see that F&M Bank is equally successful at maximizing the unique strengths of its personnel, targeting choice banking relationships and gaining new deposits, one customer at a time.

Taking top spot in a 200,000-person metropolitian statistic area (MSA) was no walk in the park. For more than a decade, six of the 12 banks in the booming Clarksville/Montgomery County market had been duking it out – each holding on to double-digit market shares. But in 1991, with little money and even less name recognition, F&M Bank and new marketing director, Fred Landiss Sr., relied on a rather simple Southern-hospitality strategy to boost their presence in the market place. He brought out the chicken salad. Smile if you like, but today F&M enjoys the number one market share in the Montgomery County, Tenn./Hopkinsville Ky. MSA, with assets that have grown from $22 million to over $650 million.

Ladies First
Today banks talk at lengths about niche marketing, relationship building and word-of-mouth advertising. Every community bank talks the personal service and relationship talk. At F&M Bank they not only walk the walk, but frequently spread the bread.

From the day F&M moved into Clarksville, Tenn., it targeted select, high-net-worth individuals and families in the market, and invited the ladies to lunch - not to fancy restaurants, but to a modest conference room on the bank's second floor. There ladies dined on homemade chicken salad and sat side-by-side with the bank’s top echelon, who poured iced tea and offered help with certificates of deposit, annuities and checking accounts.

Why the ladies?   F&M felt strongly that women in its market were opening and controlling a high percentage of household banking relationships. It was likewise a low-cost, high-touch way to pursue deposits. As Landiss, senior vice president and director of marketing observes, “When money is tight, the cost of one newspaper ad buys a lot of croissants!”

Thus was the beginning of a networking practice that created the bank’s customer base. When F&M ran out of women to invite, it called an existing customer and asked her to host the next luncheon, with the bank footing the bill. She invited six to eight friends. “By the time guests arrived, we knew whether or not they were customers of the bank,”  explains Landiss. “Guests never left the bank without one or more individualized offers from our bank, tucked into a gift bag.” More chicken salad was served and more bank relationships were secured. 

According to Landiss, marketing efforts geared toward women can often be accomplished with little or no cost to the bank. “We’ve created a social network that female customers of all ages enjoy,” he confides. “Whether we host a museum tour, theater outing or cruise, people are willing to pay their own way because we make the experience fun and treat them like royalty. Eventually they invite friends and new accounts walk in the door.” 

Workingwomen and housewives alike pay to attend bank-sponsored "Money Matters" lunch seminars. According to Landiss, mixing food, and entertainment with financial topics results in sell-out crowds of 300-plus. The pay-off for the bank’s female customer base is a good time, and the realization that F&M takes their banking relationship just as seriously as that of men.

Case in point: F&M pulls out all the stops in late November 2007, sending "Holiday Happening" party invitations to over 1,000 female customers. Food was plentiful and elegantly displayed. Entertainment ranged from live music, carolers and horse-drawn carriages to members of the Radio City Rockettes. Photos were taken of partygoers. Tree ornaments were the gift du jour, and many walked away with door prizes ranging from gingerbread houses and poinsettias to gift certificates. The bank hosted both a morning and afternoon holiday event to accommodate over 700 women who wanted to attend. So large has the list grown, and so coveted the invitations, that the bank rarely invites prospects, and scrutinizes the list by account balance. Landiss smiles as he recalls relationships that return to F&M after falling off the list.

When you’re F&M Bank, the marketing isn’t over when the caterer leaves the event. F&M adds the final touch  two days after the event, when photos are printed and handwritten notes are mailed to each attendee, along with her party photo. 

The Events Grow Bigger
Growing pains have been sweet for F&M, which now has 14 offices in middle Tennessee, five of which are in the Clarksville market. In 2006, the bank celebrated its 100^th Anniversary and hosted lavish customer events in each of its markets. The highlight of these soirees included bringing the General Jackson Showboat from Nashville to Clarksville to host over1,500 top customers for lunch and dinner cruises.

Savoring the taste of success, F&M finally escaped the ugliest bank building in Clarksville in early 2007 when it completed a six-story, 50,000-sqare-foot main office facility in downtown Clarksville. A quick trip to the top floor further underscores that F&M recognizes the strength of their hospitality, and plans to keep the good times rolling. The bank’s new headquarters include a commercial kitchen, dining hall with dance floor, two smaller dining/meeting areas and four outdoor terraces overlooking the Cumberland River and historic downtown. Here the ladies now share the spotlight with other niche groups. 

Landiss is quick to point out that the same relationship strategies that worked for women likewise appeal to other demographics. Seniors, young professionals and business owners are some of the key groups who receive F&M Bank’s star treatment. Whether it’s a country ham breakfast, Derby party or Super Bowl extravaganza, F&M Bank never passes up an opportunity to rub elbows with key customers and keep their relationship close at hand.

“Everyone wants to knock off the top team,” remarks Stuard. “We have to keep our eye on the rear view mirror. The banking landscape is changing. Brokerage houses, insurance companies, retail outlets: everyone is getting into the banking business. We have formidable competition. To succeed long-term, F&M has to provide customers more than a me-too reason to bank with us.”

Believers of the theory that 80 percent of their bank’s profits likely came from 20 percent of their customer base – F&M set out to provide additional “stickiness” to their most cherished relationships, and deepen the bank’s wallet share within that key customer group.

The Next Step: The GoldCrest Program
According to Stuard, it’s never logical to assume that a bank has the entire financial relationship of its best customers. “In many ways, Clarksville is still a small town,” Stuard concedes. “My next-door neighbor may bank with me, but who’s to say he doesn’t attend church or golf with bankers from other institutions? If I don’t provide my good customers meaningful reasons to bring a larger portion of their deposit and loan business to F&M, what keeps them from being good customers with my competition as well?”

It was that belief that led F&M to develop its successful GoldCrest program as a way to deepen customer loyalty and enhanced profitability. The program was designed as a way to recognize, reward and retain the bank's top customers. In order to achieve GoldCrest status, a customer must have a checking account plus $75,000 in combined deposits or $100,000 in combined deposits and loans (excluding mortgages). The program was developed to provide an imaginative, measurable and sustainable method to build deeper loyalty and enhance profitability with the most sought-after customers, and provides a disciplined means of communicating regularly with these top customers. Each mailing provides the customer a punch-out, wallet-sized card that recognizes that person as a GoldCrest customer. The back of the card lists standards "perks," such as Free Checks, rate and fee discounts/waivers on various products, rate "bumps" on others. In addition to the standard perks, each mailer consists of five coupons that offer special opportunities for a shorter promotional period. With each offer, the bank offers an array of new products and services in an effort to increase the bank's wallet share with these customers. Variable data printing is used, so that different offers/graphics can be used by market or demographics.

In addition, GoldCrest provides front-line personnel a tool to help them deepen existing customer relationships. Example: If Mrs. Smith has a $100,000 certificate of deposit and no checking account, a banker can provide Mrs. Smith on-the-spot GoldCrest status, complete with card and the last mailer, if she just opens a checking account - which would also give her an immediate bump on her CD rate. Likewise, Mr. and Mrs. Jones, who have a checking account, money market and CD totaling $80,000 could be offered a home-equity line-of-credit, explaining that a $20,000 initial draw would get them GoldCrest status.

The program is entering its third year. GoldCrest customer deposits hvae grown 149 percent and have increased by $131.7 million. While GoldCrest customers make up only 8 percent of the bank's overall customer base, the group is responsible 40.7 percent of the bank's retail deposits and 24 percent of all bank loans. Also, the average number of accounts per GoldCrest customer has risen from 4.13 to 4.51.

“GoldCrest has provided us an excellent opportunity to recognize and reward the bank’s outstanding customers, and to communicate with them on a regular basis,” Landiss says. “GoldCrest isn’t about social perks, but meaningful benefits with significant dollar values attached to them.”

The program is paying off. “GoldCrest gives us leverage to make good customers better customers,” Landiss stated. When the bank launched the program in mid-2004, it had 566 GoldCrest customers who maintained $75,000 in total deposits or $100,000 in total deposit and loans, excluding mortgages. Using the GoldCrest carrot, we now have over 1,400 GoldCrest customers.

The institution understands that the “hooks” that make F&M the bank of choice will vary customer-by-customer. To one customer it’s about rate. To one it’s about electronic convenience. And to others, it’s those party invitations. So as F&M continues to grow, it resolutely explores every avenue to find out just what it is that attracts new customers and keeps choice relationships. The bank has introduced a lucrative points program tied to its debit card. It is on the verge of offering a super-high-interest checking account tied to electronic transactions. “We love the customers we have today,” affirms Landiss, “but we can never stop thinking about our customers of tomorrow either.” But when push comes to shove, F&M Bank knows that paying homage to the individual relationship will keep them at the top of their game. More chicken salad anyone?