Bank Takes to the Streets to Win Over Customers
And they say war is hell.
Glendale Federal Bank, no longer content merely to hector its big bank competitors with smart-aleck radio ads and billboards, is taking its guerrilla marketing campaign to the parking lots and lobbies of archenemy Wells Fargo Bank.
In the last week, “SWAT teams” of GlenFed employees have been dispatched to woo Wells customers by setting up tables to hand out cookies and punch, parking trucks with uncomplimentary billboards and even handing out aspirin to disgruntled customers, Wells officials say.
Other GlenFed employees pasted paper footprints on the ground leading customers away from a Wells branch and toward nearby GlenFed employees. GlenFed employees even entered branches to solicit resumes from Wells employees, Wells officials say.
Wells, to say the least, is not amused. GlenFed denies that it has ordered employees to trespass, but acknowledges that it is mounting a major campaign to lure Wells customers away with gimmicks such as an 80-foot advertising barge in San Francisco Bay.
It seems that extreme times demand extreme measures, at least in a banking industry that is in the throes of upheaval that has consumers’ heads spinning. As a result, California banks and thrifts are mounting an array of new marketing campaigns and services to grab new customers and keep old ones. Consumers may get more free checking accounts and other inducements, although the jury is still out on whether they will gain any significant, lasting benefits.
“Certainly in the short term, there is more competition for customers, and as opposed to just competing on the image, there’s an actual attempt to compete on price, which is fairly new,” said Ken McEldowney, executive director of Consumer Action, a consumer advocacy group in San Francisco.
The new spirit is remarkable in an industry that once considered free toasters and calendars the epitome of marketing.
“It’s a unique industry,” said Lee Lodes, a senior associate with Prophet Market Research & Consulting in San Francisco. “It has been kind of button-down. But with deregulation, they’re really becoming a lot more aggressive than they used to be.”
Among the most recent marketing salvos:
* Bank of America is touting a new debit card and a new online banking service, as well as scratch-off contest pieces for instant prizes.
* Home Savings of America is starting to offer some free access at non-Home Savings ATMs, partly to respond to large bank ATM networks, as well as a new series of commercials aimed at younger consumers.
* Wells Fargo Bank launched a major television ad campaign featuring its network of supermarket branches, telephone and online services.
The most aggressive campaign belongs to GlenFed, considered one of the most vocal marketers in the industry.
The thrift took to the streets to win the hearts and minds of Wells Fargo depositors just as Wells closed 101 former First Interstate branches, according to internal Wells memos obtained by The Times.
GlenFed employees have shown up at Wells branches in Burbank, Canoga Park, Northridge, Milpitas, San Francisco, San Mateo, Valencia, Ventura and elsewhere, the memos say.
They are “defaming Wells Fargo,” according to a memo issued Tuesday to all branch managers by Joseph P. Stiglich, a Wells executive vice president. “This week, it appears that activity is escalating,” he wrote.
Last Thursday, employees at the Monrovia Wells Fargo branch called police when GlenFed employees set up a table by the bank’s door and papered the outside of the building with flyers, said branch manager Fred Zago.
The GlenFed employees left after speaking briefly with police, said Wells visiting branch manager Robert Villasenor, who had placed the call.
Glendale Federal spokesman Ken Preston says the bank’s employees were given strict instructions not to trespass on Wells property, but to remain on public rights of way in the campaign. The effort is statewide and designed to go on for the couple of weeks that Wells closes down First Interstate branches.
But Preston admits that it’s possible that overzealous employees may have overstepped those bounds. “We have a lot of employees out there,” he said. GlenFed employees received a memo reinforcing the edict not to stray onto private property.
Preston denied Wells’ allegations that GlenFed employees have said they are not happy with the campaign, but they have been told that they will be fired if they don’t take part.
The activity recalls an earlier campaign when GlenFed rented a fully outfitted stagecoach--Wells’ sacrosanct trademark--and dispatched it to a Wells branch with an ad for GlenFed.
What’s going on?
The marketing onslaught is being driven by several factors.
First, deregulation of financial services has increased the number of places that consumers can go for traditional banking services such as loans, checking and savings accounts, as well as for investment programs such as 401(k) retirement savings accounts and mutual funds. That has boosted competition between banks and thrifts, prompting them to seek to steal each others’ customers, analysts say.
The same deregulation is changing the way that banks and thrifts do business, allowing them to offer a broader range of products and services or enter markets that have been the province of insurance companies or investment brokerages.
At the same time, banking mergers are triggering customer dissatisfaction. In the latest and most vivid example, the takeover by Wells Fargo of First Interstate Bank--and Wells’ current effort to close more than 250 branches--is spurring a higher than usual percentage of bank customers to look for a new financial institution. Competitors, smelling blood, are scrambling to win them over.
At any given point, only 10% of the most desirable banking customers--those with primary checking accounts, mortgages, auto loans and other accounts at a single bank--are “in play”: changing their accounts because they are moving, are unhappy with their bank or are seeking lower fees, said Tracy Britton, first vice president and director of marketing at Home Savings of America.
Wells’ takeover of First Interstate and its plans to close 257 branches statewide has boosted that percentage by several points, Britton said.
“The banks are in a defensive posture, and there are aggressive moves by others to win them over,” she said.
And the marketing frenzy is certain to heat up as the proposed takeovers of American Savings Bank and California Federal Bank makes them bigger and more financially powerful--and thus more formidable competitors.
Consumers normally benefit from such fierce competition. In this case, advocates believe that consumers will see a lot more free services offered, such as free checking accounts for direct deposit of paychecks.
Thrifts also may offer more attractive rates on deposits to lure customers into new banks that they are being allowed to form.
But critics remain cautious as to how much consumers will benefit. Profit margins are so squeezed in the industry that it is unlikely that banks and thrifts will significantly increase the rates they pay on deposits.
Even in the newly competitive environment, Glendale Federal’s actions are beyond the pale, Wells’ Stiglich said. “To have someone else come on to our property and . . . bother our customers . . . really amounts to harassment of customers and employees,” he said.
Nonsense, Preston said. “You can see what Wells Fargo’s gripe is here,” he said. “Glendale Federal Bank is being very aggressive about going after their customers, and they just don’t like it.
“But . . . this is an industry that’s become more competitive,” he said. “It’s also an industry that’s shrinking . . . and so banks are doing more to go after either new customers or the existing customers of other banks. They’re going to have to live with it.”
