Jeff Stephens

Creating a “people helping people” KPI for credit unions

// April 14th, 2011 // No Comments » // Credit Union, Credit Unions, Credit union business strategy, Innovation, Non-technical innovation

The credit unions I’ve worked with have all been very sincerely committed to the credit union principles that their industry is based on. The foundation of these, of course, is the idea of “people helping people.” The industry believes, in theory, that as long as they are delivering on this “people helping people” mission (and obviously as long as they are able to run a sustainably functioning business), that’s all that matters.

So, why aren’t more credit unions creating a custom Key Performance Indicator (KPI) calculation to measure their delivery of this “people helping people” philosophy? Or, why hasn’t the industry created one common KPI calculation for all credit unions to use and measure their effectiveness with? It seems to me that this KPI would be the most important number on any credit union’s management dashboard.

What factors would the formula be calculated upon? I would see it taking into consideration several criteria that would together represent a picture of what the credit union’s “total impact from people helping people” is. Here are a few inputs that would make sense for the formula:

• Number of first homes purchased by members with CU funding
• Revenue growth of businesses as a result of CU funding
• Jobs created by business member clients
• Jobs created by the credit union itself as an employer, or through the credit union’s growth (construction workers on a new branch, etc.)
• Cumulative interest expenses saved by members who refinanced with the CU
• Number of new members who were previously unbanked
• Cumulative credit score enhancement of members

This is just a starter list of the many things that could be included in this calculation to give a comprehensive view of the total impact of a credit union’s commitment to “people helping people.” Not only would this be key for management, it could also spur some great PR and word of mouth.

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What if? Re-intermediation in banking

// April 8th, 2011 // No Comments » // Banking, Banking business models, Banking business strategy, Banks, Credit union business strategy, Innovation, New banking ideas, What if?

As I was sitting in the presentation by Terry Jones, founder of Travelocity.com yesterday at the EO Texas University, I was reflecting on the overall trend Terry pointed out about how we’ve seen such an emergency of do-it-yourself (DIY) culture in the past several years–thanks to the Internet. Travel agents are obviously just about obsolete now because of this DIY movement.

It’s similar in banking.Thanks to the Internet, consumers can shop for the best rates, products and services online, and then after making a selection, take action. They can do it all by themselves, without any real help from the individual banks they are considering.

So I got to thinking, “what if….”

(Note: as with all my “what if” ideas, I’m not saying the following is necessarily a good idea–I’m just saying it’s an idea that should at least be pondered for a few minutes if you advocate innovation in financial services)

What if there were a layer of “banking agents”? Would they be able to add any value to the consumer or the bank, and thus earn revenue? Is there money to be made stepping into the middle of what is otherwise a DIY situation? Here are a few quick ideas I had:

• Buyer’s Agent: There is a (small) market for car buying agents–people who have established relationships with car dealers, and can help consumers get the best prices, sourced from a large network of dealers, without price haggling. What if a banking agent could develop special relationships with banks and credit unions, and be able to offer special exclusive deals to consumers who worked with that agent? The consumer would be willing to pay a reasonable fee for that. This model would work if….
• …The agent could guarantee the delivery of a certain volume of business to the banks and credit unions. It would like being an independent sales rep for the bank and credit union, and the financial institution would be willing to pay a commission for those sales.
• Commercial Loan Participations. A banking agent could be a great resource for coordinating the funding of large loans that individual financial institutions couldn’t or wouldn’t want to fund.  It’s likely both the borrower and the lender would pay for this matchmaking and coordination.
• Continuous Evaluation: A banking agent could continuously evaluate his/her client’s banking relationships (for both deposits and loans), and proactively create better deals and arrangements with other banks, and then let the customer know when it was ready. The customer would find value in this and would pay accordingly.

What are your ideas? Let’s add to this list. Or, on the flip side, feel free to disagree!

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Would banks change their business models even if they knew how?

// February 28th, 2011 // No Comments » // Banking business models, Banking business strategy, Entrepreneurial Lessons, Innovation, New banking ideas

I am currently reading Business Model Generation:  A Handbook for Visionaries, Game Changers, and Challengers by Alex Osterwalder and Yves Pigneur. I’m just at the beginning, but it’s a great book so far.

I’ve often pondered the need for a business model revolution in the banking industry. Until now, I always thought the problem was that bankers wouldn’t know how to evolve (or completely change their business model). But now, the book has me realizing this question is only half of the real issue.

The other half of the question is:  ”If a bank knew how to evolve or change its business model…would it?” In other words, would it have the guts? Would it have the resolve to stick out a painful transition? Would it be willing to go against the grain and be a champion of change?

This is an entirely different question. Deep thoughts.

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Tradition in Banking

// October 27th, 2010 // No Comments » // Banking, Banks, Innovation, New banking ideas, Traditional banking

I would apologize for the cynical nature of this post, but I know you readers are used to it by now. Plus, this is just downright funny. From the people at Despair.com (I know you’ve seen some of their work before) comes “Tradition.” Why not order a 24×30″ poster for your break room? Place your orders here.

Perhaps the funniest part is how I came across this particular item: I was talking to an entrepreneurial friend about banking, and without my prompting, he pulled this up on his phone. I think that says something about the financial industry!

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Growth: Improving the quality of your customer base, not the size of it

// September 3rd, 2010 // 13 Comments » // Banking, Banking business strategy, Decommoditization, Innovation, Jeff Stephens

There’s one thing I’ve been trying to be more clear and upfront about with my clients who I consult with: my number one goal is not so much to grow the size your customer (or member) base, it’s to improve the quality of it. In my mind, when you improve the quality of it, you are growing:  growing stronger as a company and as a brand.

So how do you define “quality” of your customer base?  I’d like to propose two criteria, both of which are given equal weight:

1) Profitability–your ability to make money from the people you do business with

2) Engagement–the amount that people give a damn about your bank or credit union (and thus, the more they are likely to be loyal, advocate for you, generate WOM, etc.)

In my experience, community banks and credit unions have a great deal of progress to make on both of these criteria. We find ourselves with lots of unprofitable customers because we don’t have the guts, market positioning and focus to say no. We don’t communicate our profitability expectations to customers, and don’t really even enforce the unspoken expectations.

We also find ourselves with very very few–if any at all–engaged customers. We may have a few not-disengaged customers, but have very few people who are truly excited about who we are, what we do, and how we are aligned with them. We have very few customers who have chosen to bank with us because they feel we are the one and only true fit for them. Instead, they have chosen us because we were most convenient, best priced, or passively recommended by a friend.

Do you have what it takes to improve your customer base–or just make it bigger?

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Create something that can get criticized

// June 21st, 2010 // 2 Comments » // Banking, Books I'm reading, Innovation, Jeff Stephens, Non-technical innovation

I have long argued–to creatives, my clients and bankers and credit union folks at large–that it’s better to create something that some people will LOVE, others will HATE…than to create something that people are indifferent to.  That stands true whether you are creating an ad for the local newspaper, a brand for a new financial institution, or a presentation you will give at a conference.  You need to polarize people–if you leave anyone indifferent, you have wasted your time.

As I was reading Tribes: We Need You to Lead Us by Seth Godin the other day (a book that’s been on my list forever, and I’ve finally gotten to), I realized Seth had given me a new way to phrase my message: create something that can get criticized. Our whole business culture is based on the idea of not getting criticized–the idea that criticism is a bad thing, to be avoided.  The truth is that if you want to change the world (which I’m assuming you do–if not, you might want to unsubscribe from this blog), you WANT to get criticized. Because when you get criticized, it means you’ve created something WORTH reacting to.  Most ideas and work is so boring that nobody reacts, because it’s not worthy of a reaction.

What can you create today that will get criticized…and therefore noticed?

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The Decommoditization Manifesto, Part 1

// June 1st, 2010 // No Comments » // Banking, Brands and Branding, Creative Brand Communications, Decommoditization, Innovation, Non-technical innovation

As I was preparing for my presentation last week to the Marketing Association of Credit Unions called The Art of Decommoditization, I found myself asking, “why do I enjoy this topic so much?” I realized the answer is pretty simple: it’s the perfect convergence of everything I believe in, in banking, branding and marketing. It brings together a strong business strategy that becomes one with brand strategy, word of mouth marketing, experiential brand development and multi-sensory marketing. As such, I admit it’s kind of difficult to articulate at times. But I hope my audience at MAC got the message.

That’s probably why I really enjoyed writing the newest position paper on banking business strategy and branding we created for Creative Brand Communications. We called it “The Decommoditization Manifesto, Part 1” and it’s now available for free download when you register.

I’m happy to say it’s already getting great reviews and feedback. How many “parts” will there be? Not sure yet–we’ll have to see as it comes, but I’m thinking at least three parts if not more.

I hope you’ll download the position paper now, and enjoy!

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Why banking?

// March 19th, 2010 // 4 Comments » // Banking, Banks, Innovation

It’s funny. When people ask me what I do, I tell them I fancy myself as a banking industry innovation entrepreneur.  After a few seconds of furrowed brows and a couple “hmmm’s”, the question is always the same:  ”why banking?” (This is even more pronounced when we’re talking about Creative Brand Communications: “you focus on BANKING? Do you ever think you’ll expand your focus?”)

Since that question I get is so consistent, my answer has become equally so.  I think banking is a great industry to be an entrepreneur in, because:

• There are VERY few real entrepreneurs in banking. There are lots of people who started or own banks, but that doesn’t really make them entrepreneurial necessarily.
• The industry bar is quite low. There’s not a whole lot of real innovation happening.
• Banking is ripe for revolution. Many of the old guys holding the keys to the banking kingdom are very protectionist, doing whatever is possible to resist change.
• Banking is among the most important sectors to the success of our nation. I truly believe that. In a funny way, improving the banking world is an act of patriotism.

If you’re reading this, there’s probably a good chance you’re in banking, too. Why do YOU like it?

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Affiliate Marketing in Banking

// November 18th, 2009 // No Comments » // Banking, Innovation, Jeff Stephens, New banking ideas, Non-technical innovation

As I was reading something businessy lately, a question popped up in my mind:  why isn’t there affiliate marketing in banking?

Maybe there is, in a few cases, on a B2B level—you might argue LendingTree is affiliate marketing for lenders.  But that’s not what I mean.  There’s not, to my knowledge, any affiliate marketing program that could leverage the millions of retail customers out there. For instance, how many Bank of America customers have blogs or websites? Probably millions. Why not take a page from Amazon.com’s book (pun intended) and set up a killer affiliate program to drive traffic to the bank and kick back a reward to the referring site for accounts opened online?

I think I know why.

Because that’s not what bankers do.

Because that’s not how banking works.

And because, likely, nobody has ever really thought about it.

If you can’t tell already from my first few posts on this blog, one of my big pet peeves is that bankers don’t tend to look at business concepts (like affiliate marketing) and try to figure out how it might apply in their industry.

In my opinion, the best and most important activity any entrepreneurial banker can do, is this:

Look at other industries, see what’s successful, and then ask, “how can I apply this to banking?”

I’m not here to tell you affiliate marketing should be the future of banking.  I don’t have an opinion at this point, because I haven’t given it much thought.  Maybe I can think it over and write another post about that.  But I do know this:  at least I remembered to ask myself “how can this apply to banking?”  The answer to that question is less important than the fact that it was asked in the first place.  That’s how innovation happens.

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Hi. It’s me. Jeff. Jeff Stephens.

// October 25th, 2009 // No Comments » // Banking, Being an entrepreneur, Brands and Branding, Innovation, Jeff Stephens

Um, hi.  Nice of you to stop by here.  If you can’t tell, this is my first post on my brand new blog. I’m excited to start this thing–I’ve been considering it for a while and decided it’s finally time to put some Jeff-think out there.  The wheels of my mind are turning all the time, much of the time about my family, friends and life, but also much of the time about business.  Here’s what we’ll be talking about in this blog:

• being an entrepreneur
• business philosophies
• banking
• “innovation”
• making people give a damn about what you do
• many combinations of the above, and surely a few random ingredients tossed in for good measure

Specifically, if I had to state the the thesis of this blog, it would be this.

I get fired up about injecting some entrepreneurialism and business thinking into banking.  Today’s banks are run by bankers, not business people or entrepreneurs–and the industry needs a dose of outside, ballsy business thinking worse than anything else.

You may disagree with me already.  I kinda hope so–now you’ve got a reason to keep reading.

Just so you know, in case you follow my other endeavors at all, this blog will not be redundant to the blogs run by my companies (http://creative-brand.com/thestory and http://psstmarketing.wordpress.com).  This blog will be broader, more personal and more, well, me.

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