Perhaps you’ve read one or two of those now-popular “What your doctor (or lawyer, flight attendant, hairdresser, etc.) won’t tell you” lists. They can provide an interesting view into the minds of folks who may be relevant, but distant, in your life. They can also be ironic, as the things the subject of the list won’t tell you are often the same things they wishes you knew. Professionalism and social conventions may keep the subject from speaking out, but small business owners don’t have the luxury of suffering in silence.
A report from Aite Group provided some relevant insights into what makes small business owner’s want to move on to a new financial institution. A key takeaway came from research director Christine Barry:
“Enjoying greater success with small-business customers is a top priority for most financial institutions, but achieving it requires a shift away from past practices. Aite Group recommends that banks evolve their strategies and implement best practices necessary to appeal to the new small-business customer.”
The key finding there is that your strategies from 2008 might not be working as well as you think they are. Here are six things financial institutions do (or fail to do) that frustrate and alienate small businesses:
- Giving little to no attention to relationship building. In a recent ICBA study, 66 percent of all Americans polled agreed that they wanted more personal relationships with their financial institutions. Relationship building is at the heart of every successful small business, and small business owners want to feel as important to their financial institutions as their own customers are to them. Relationship building takes time and effort, whether it’s ensuring new customers fully understand available products or simply greeting them by name when they enter their local branch.
- Failing to offer products and services they need. Small businesses need more than just loans and checking accounts. Is your financial institution aware of what small businesses need to be successful, and therefore offering the support, expertise and various products and services they need to market, manage and grow? The more useful services a financial institution offers to small business customers, the more likely they are to turn to their FI for all their needs – big and small.
- Making them wait. And wait. And wait. The rest of the business world moves at warp speed, so why should a small business have to wait on their financial institution when they need product information, quotes, supplies or credit approval? If a financial institution is slow to respond to the needs of small business owners, the resulting alienation can lead small business owners to take their business elsewhere.
- Failing to be flexible (a.k.a. one-size-fits-all approach). Business owners must be nimble and flexible, and they want the same qualities in their financial institution. small business owners want to know their FI will evaluate their credit requests and loan applications based on the big picture that includes their business plan, not just their business credit score. Community banks in particular must live up to this expectation, as personalized service and flexibility are two of the traits that spur small business owners to do business with smaller banks and credit unions.
- Being (or looking) like everyone else. What is your FI’s differentiator for small businesses? Why should they give you their business instead of anyone else? Even if you have a great differentiator, it may still be difficult to sell it to small business owners. A survey by ath Power Consulting found that the No. 1 differentiator financial institutions point to – customer service – is also the claim small businesses are least likely to believe; just 74 percent said they were convinced of the claim. Might it be this is simply table stakes? What really makes you stand out?
- Not being tech savvy. For those small business owners that are on the cutting edge of technology, they need online and mobile banking to help make their financial lives easier. The ath survey found that 66 percent of small business owners said a superior mobile offering would likely convince them to switch financial institutions. And a survey by strategy and marketing consultants Simon, Kucher, and Partners found that three quarters of small businesses say they use online banking weekly, and just 4 percent have never used it at all.
Small businesses are a great potential source of profitable business for financial institutions. In fact, two years after customer acquisition, 50 percent of small businesses garner sales of $1 million to $10 million, Booz reports. What are your small business owners saying about you? If you don’t know, ask, they are not afraid to tell.