Financial Wisdom: Solutions for Banks - The Newsletter Strategy for Small Businesses and their Owners: White Paper

Enhancing "Customer Value" with Communications
Your existing relationships with small businesses provide an opportunity to earn an increased share of their total financial services business. However, the competition is intense and probably will increase. Other banks, credit unions, brokerage firms, insurance companies and mutual fund companies are constantly offering your customers their products and services. They are trying to take business you already have and the future business you can earn.

Quality products, services and competitive rates are not enough to compete successfully. You must position your institution as the provider of choice. Customers must feel they are getting a "better value" from your bank than they can get elsewhere. Your deposit and loan rates are probably already very competitive. Perhaps you offer investment products, payroll services, retirement plan administration, and other small business services at competitive prices as well. So do most of your competitors. Your competitive advantage – and you’d better have one - is "providing solutions to small businesses and their owners." Your challenge is to articulate that message to customers and prospects effectively - so they choose your bank for all their financial needs.

The Financial Wisdom marketing program can be the means to communicate your bank’s "better value" proposition. To be effective, your marketing messages must demonstrate your dedication to customers’ financial well being and they must convey your status as a financial services organization with a full range of products and expertise. The actual messages must be attractive, informative and interesting.

The Financial Wisdom Marketing Program
The FinancialWisdom personal communication program consistently delivers personal, customized messages to small business owners. The program uses personal letters with four-page, four-color newsletters as inserts. The theme of the newsletters is financial education. The quarterly newsletter becomes the "reason" to communicate and the "means" to deliver your bank's messages to create an enhanced favorable presence of mind with this highly profitable group.

The Financial Wisdom strategy is effective for several reasons:

Description of the Financial Wisdom Strategy
Each quarter, small business owners receive a letter from my bank. The "letter" consists of a cover letter from the appropriate contact person with a four-page, four-color newsletter insert. Both the cover letter and the newsletter are highly customized for your bank. The cover letter is written in a somewhat "chatty" way and serves to demonstrate your commitment to each business and owner’s financial well being. It can also urge the recipient to visit the bank or call for any of their financial needs. The letter is personally addressed and signed by the designated contact person.

The front page of the newsletter features an article about the competitive advantages of your bank. It is attractive to use this article to describe a customer situation and tell how your organization helped resolve a financial issue. Perhaps, timeliness or helping the customer respond to a business challenge. "Success stories" are very readable and often portray the very situation of the reader. The front page also includes a commentary on some timely financial issue - Social Security, consolidation in the financial services industry or other such topic.

The second and third pages focus on the member's total financial picture. They include educational articles that address issues that help people make better financial decisions on important issues. The articles are not full of confusing financial jargon; rather, they present useful ideas in an attractive, interactive format. Subjects include retirement, college funding, investing, mutual funds, home mortgage refinancing and the general topic of "Mistakes to Avoid."

The back page includes a product article and a "State of the Markets" section. The article is chosen to make sure it is timely and perhaps can be the focus of other marketing efforts. The "State of the Markets" section includes information on the financial markets in general and also lists some of your loan and savings rates.

The Importance of "Production Values"
The appearance of your message says as much about your organization as the content. The "production values" of your communication must measure up to what customers expect to see from a quality provider of financial products and services. You are competing with other banks, credit unions, brokerage firms insurance companies and mutual fund companies. For that reason, the Financial Wisdom program uses a four-color printing process, printed envelopes, and stamps for postage. The Financial Wisdom program was designed on the basis that personal correspondence is the most effective form of communication other than one-to-one conversation. Every step is taken to assure that appearance.

The personalized cover letter is laser printed with the individual's name. It has the officer or relationship manager’s signature. It is on your letterhead. The use of matching cover letters demonstrates the personal nature of the correspondence and your respect for the customer relationship. The matching of cover letters and envelopes requires a high level of quality control. Since cover letters are printed individually, different segments of customers can receive different letters with the content tailored for their relevant issues.

The newsletter is printed using a four-color process. This makes it more attractive and enables the use of photographs. Photographs and attractive graphics make the newsletter more readable and engaging. It is three-hole punched to encourage retention.

The correspondence is mailed using automated-bar-coded processing. This allows for faster and more reliable delivery. The mailing also qualifies for lower mail rates. Stamps are used to eliminate "out-of-town" postmarks.

Pricing
The pricing of the Financial Wisdom personal communication strategy is all-inclusive. All content creation, design, printing, mailing and postage are included. Letters are mailed using bulk rate stamps. The price for executing this program is $1.25 per piece with a minimum of 5000. Quantity discounts apply for 20,000 or more.

Items Needed for Implementation

Timing
The Financial Wisdom program can be implemented quickly and efficiently. Once the proposal is accepted, we visit your offices to better understand your organization. Cover letter and newsletter content is determined. Of course, you have final approval on all content. Letterhead and envelopes are ordered.

The first issue of your FinancialWisdom would be mailed within 60 days and quarterly thereafter.

Integrating Segmentation into a Customer and Prospect List
To make the Financial Wisdom program even more effective, consider the creation of different newsletters for different business segments. This enables the content to be more relevant to the financial issues faced by different types of organizations. Due to the economies of four-color printing of the newsletters, this becomes economically feasible when segments include at least 5000 customers.

Using the nature of the business as criteria for determining the best marketing messages takes advantage of the different financial needs that organizations tend to have. While the accepted definition of each group may be different, this analysis uses four segments:
- Professional Practices
- Microbusinesses (under $1,000,000 in sales)
- Mid-range small businesses (over 50 employees, over $1,000,000 in sales)
- Women owned businesses

To determine the appropriate messages and financial products for each group consider the needs of a professional practice:

Financial Needs	Product Focus
Cash Management	Sweep Accounts Credit Card Processing Business Checking
Business Services	Payroll Services Qualified Plan Administration Equipment Leasing PC/Internet Banking
Owner/Partner Needs	Personal Checking Residential Mortgage Investment Products Trust Services

For a microbusiness, women-owned business or mid-range firm, much of the product focus would be similar, although the presentation would vary to reflect the nature of the organization: i.e.: the use of success stories from women-owned businesses, additional emphasis on core checking and line-of-credit products for microbusinesses, etc.

To achieve segmentation of a customer list, we would use the information from your system if available. Where not available, we would append the information from commercial databases. For prospects, this information would be obtained at time of list purchase. For each group newsletter content would center on the financial issues they are most likely facing.

Examples of Newsletter Content
Below are some of the topics that can be included in your FinancialWisdom newsletter. Other articles can be written to suit your organization and your needs.

- Mistakes to Avoid

The Entire Small Business Opportunity

- The Environment
The small business market represents both opportunities and challenges for banks. Small businesses, generally defined as businesses with less than $10 million or revenue, are a dynamic part of the U.S. economy. Today there are over 5 million small businesses. They produce over 40% of the gross domestic product and employ over 50% of the American workforce. Their financial services needs are significant and banks are the main suppliers of those services. It is estimated that the small business market produces as much revenue for the financial services industry as the entire home mortgage business and twice as much as the credit card industry.

- Associated Opportunities
The owners and other major decision-makers of small businesses also represent an excellent opportunity for additional retail banking business. These individuals are generally better financial services customers than the average retail customer. They are generally more affluent and are accustomed to making financial decisions. Most importantly, they are likely to consolidate their personal and business relationships with one institution. One study found consolidation of business and personal banking relationships in over 60% of the cases. They also tend to be more loyal.

Other potential sources of business include the employee base of the business. For instance, offering attractive checking programs for employees with direct deposit may generate more retail accounts. Opportunities for non-traditional banking products, such as insurance and investments, should not be overlooked.

About Financial Wisdom Marketing Services, Inc.
Financial Wisdom Marketing Services has extensive experience and expertise in the areas of financial products, services and relationship marketing. While the company is young, the principals have decades of experience dealing with the issues that are critical to the success of your marketing efforts.

Mike Patterson, a graduate of Marquette University, is a Certified Public Accountant with extensive experience in the financial services industry. After four years as a tax accountant with Price Waterhouse, he spent 15 years in the securities brokerage industry as a product manager, marketing director and executive with Blunt Ellis & Loewi and its successor, Kemper Securities. While with Blunt Ellis & Loewi, in Milwaukee, he created continuing education programs for brokers, accountants and attorneys. Mike was also a frequent public speaker, presenting over 100 seminars and workshops to individuals and professional advisors.

Larry Rine holds an MBA from the Kellogg Graduate School of Management of Northwestern University with a concentration in marketing. He attended undergraduate school at Northwestern with a major in organizational behavior and was an accepted Ph.D. candidate in the marketing department at the University of Illinois. Larry spent 19 years as the owner/operator of an advertising agency, concentrating since 1988 on database marketing. In that role, he became experienced in the design and implementation of preferred customer programs. He has further training and experience in the areas of relational database design, computer application development, networking and computer telephony. He has consulted in the area of automated bulk mail preparation.

Financial Wisdom Marketing Services, Inc.
42 Sherwood Terrace Suite 6
Lake Bluff, IL 60044

Phone: 800/723-7237 or 847/604-8372
Fax: 847/604-8405
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