How to Win with Small Business Banking
The small business market makes up a large piece of the retail banking pie. With more than 28 million small businesses currently operating in the United States — and a whopping 543,000 being created each month — ignoring the little guy could cost you big bucks. Since any business with fewer than 500 employees is considered “small” by the U.S. Small Business Administration, they have the potential to yield big profits and better customer relationships. Equifax National Account Manager Jeff Schwartzel tells you why small business banking is a big deal and how to help win in the current market — both with existing customers and new ones.
Capturing opportunity with existing customers
Working with existing small business customers is really a case of priorities: How can banks align theirs to better serve small businesses? “The common priority among banks is to grow the number of small business relationships while expanding on existing relationships,” says Schwartzel. “Financial institutions are looking to leverage internal resources (data for marketing, sales staff and branch personnel) to help them accomplish this growth strategy.”
Another top priority should be partial automation of the acquisition and marketing processes by utilizing segmentation. Armed with good data, banks can better segment current and potential customers based on their needs, thus helping broker a more personal experience and engender loyalty in the existing customer base.
Onboarding new customers
The better the data, the easier it is to serve small business needs. “Because Equifax has several databases that are focused on helping to create the complete financial picture of a small business, we have built a decision engine that standardizes the new account screening process, which, in turn, presents consistent treatment strategies for new accounts,” says Schwartzel. This “decision engine” helps you to screen potential customers, locate cross-selling opportunities and identify current customers who may also be small business owners. The same data can then be used to implement segmentation as a means of making marketing dollars count and helping improve offer acceptance rates.
Banks could be missing out on big opportunities if small business screening measures aren’t up to par. “The treatment strategies of new accounts for many financial institutions are very unstructured and rely on poor data, judgment calls or Internet searches,” warns Schwartzel. “For most financial institutions, there really is not a set method of screening new accounts surrounding the areas of authentication, compliance and risk.” Without a streamlined screening process, the onboarding process can be slow and inconsistent, resulting in wasted resources and frustrated customers. What’s more, some banks might miss out on current customers who also happen to be small business owners, consequently minimizing customer interaction and profitability.
The way to a small business owner’s heart may be the right offer at the right time. If financial institutions are to succeed in small business banking, each interaction has to count. Leveraging existing customer relationships and encouraging new relationships through timely, personalized offers can help increase your share of the small business pie.
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