RMS in the News
Local company banks on promotion
9/4/2006 — Fort Worth Business Press
Anyone for a free toaster? Not likely. With all the new banks and new branches setting up shop in Fort Worth, there are plenty of free checking accounts, low-cost loans, credit card offers and, perhaps most importantly, free gifts. But free toasters? Those went the way of "banker's hours."
Customers who sign up for a checking account with Capital One Bank, for instance, will not just get a free checking account and access to online banking, but also will get a Craftmaker 1 Million Candle Power Lantern.
"Not that many people will sign up for a new checking account just because a free offer," said James Gresham, chief executive officer at Rennhack Marketing Services (RMS), a Grapevine-based company that supplies financial services companies with branded merchandise for incentive programs.
"We want our incentive programs to create 'stickiness' on the part of the customer, so that banks and other financial institutions don't just attract, but retain customers."
Bankers such as Robert W. Semple, president and CEO of Worth National Bank, said Gresham's incentive programs have helped him compete with larger banks in the market.
"I think free checking is here to stay, so something we can offer, like a nice umbrella, can make a difference," he said.
But not every bank uses incentives, at least all the time. Wachovia is not currently offering any incentives, according to Joe Stroop, vice president for corporate communications with the bank's local operations.
"We have done cash and iPods in the recent past, but have no premium offers now," Stroop said. "We prefer to invest in customer-friendly rates and pricing."
RMS has been in business since 1976, and has seen financial community incentives evolve from free toasters to George Foreman grills to Apple iPods.
The hot item that banks are offering right now?
"The hot item is anything back-to-school," said Gresham. "We see a lot of real high-end Swiss Army backpacks, but since it's hunting season, the Bushnell binoculars are popular also, particularly in Texas."
Increasingly, banks are offering cash incentives to customers in competitive markets such as Fort Worth and Dallas, but Gresham said those programs often have short-term results.
"There are banks out there offering $100 cash for some accounts," he said. "The good side of that is that you can buy deposits, but the downside is the attrition rate is very high. Those customers are just chasing money, they won't ever stick. The reason a bank uses an incentive is because that money can be sticky; those customers can stick with you. We have gifts costing $10 to $25 that outperform $50 cash rewards."
Banks use RMS to gain a slight competitive edge over the competition, said Gresham. To keep customers, the banks have to do a good job in their own right, he said.
"What we want to do is create a tiebreaker," he said. "If your bank is on the short list, we want our product to make the difference and to do that you need to know what product is most appealing to your customer. That's why we do a lot of research."
Gresham and a partner purchased RMS seven years ago, and since then have added additional services beyond promotional items. For instance, RMS now offers BankingBonus, a rewards program for customers that allows smaller banks to compete with rewards programs from larger banks, such as CitiBank.
"We knew BankingBonus would fill a void where banks are fighting to keep the customers they're working so hard to win, as well as the employees who can help in that effort," Gresham said. "Since our February launch, we've signed up a dozen banks, and expect more to take advantage of the offering with these focused applications."
RMS also offers financial institutions national consumer research.
"Those programs were natural extensions of what we were doing, which was helping banks with customer retention," he said.
Since entering the business, Gresham has learned plenty about consumer behavior.
"There are different price points in different locations around the country that can impact people's behavior," he said. "In some parts of Dallas, you have to offer a product that's worth about $100 to attract a customer. In Fort Worth, it may be between $20 and $50."
Gresham said RMS has learned a few things not to do, as well.
"We generally don't put the bank's brand on an item we're giving away," he said. "Consumers don't like it for a variety of reasons. If they're wearing Bushnell binoculars at a football game, they don't want everyone in the stands to know they got those binoculars because they opened a checking account."
Another reason is re-gifting.
"Believe it or not, that's a factor," Gresham said. "We've seen it in our research. It can impact a promotion by as much as 20 percent."
Occasionally, RMS customers will demand their logo be included on a promotional giveaway and Gresham says they will accommodate that request.
"They usually quickly learn that is not going to be effective," he said.
One of the hottest items at the high end of the promotional give-away market remains the iPod, though Gresham says the allure is waning.
"I think as more people get them, they're not as special an item. We didn't use them much, but in a few markets you had to," he said.
Gresham has some advice for banks that are battling for more consumer dollars in the market.
"There is no silver bullet to bank marketing," he said. "You still have to out-execute the competition. We might have similar promotions going on with two banks in the same market and one might outperform the other dramatically. The difference is in the execution.
"Banks copy each other so fast now that you have to focus on getting the right strategy and you have to earn it the hard way. A lot of bankers don't like hearing that, but it's true."