GRAND RAPIDS — Gone are the days of receiving a new toaster from your local bank for opening a checking account …
… and here are the days of lower interest rates and incentives for using debit cards and opening multiple accounts.
Area banks are continually offering promotions to drive business in, and it seems that lately the loudest noise gets the biggest bang for the buck.
“I think you really need both components,” said Mark Erhardt, vice president of marketing for Fifth Third Bank.
“You need very attractive product offers in terms of rates and features and benefits, but you also need to have the marketing and the marketing dollars and the sales focus behind that to really make it work,” he added.
“I think if you have one and not the other you don’t really get the return that we are seeing right now at the bank.”
With three of the four campaigns Fifth Third is currently running, Erhardt said he has seen a significant increase in sales compared to when the promotions were not running. In some cases, he said, sales are double the rate he had seen.
Currently, Fifth Third is running four promotions for both new and existing customers. The firm’s free checking promotion is one that lasts all year and is available every day the bank is open. Gifts rotate on a seasonal basis. Customers opening a free checking account currently receive a soft-side cooler.
“This is our most successful program and Fifth Third Bank is kind of known for its totally free checking,” Erhardt said. “It is our most promoted product and the one that we probably see the most of.”
The second promotion is designed to target existing debit card customers who have not been using their card for purchases in the last month.
Customers have been mailed three discount coupons for Flowers USA, Blockbuster Video and Linens N’ Things, good when using the debit card at the three outlets.
“We are actually working with MasterCard who is our partner with debit cards and credit cards, so it is kind of a co-marketing program through Fifth Third Bank because it is mutually beneficial to both to have members use their card,” Erhardt added.
To drive customers to credit lines and loans, Erhardt explained, the bank also is offering a home equity loan promotion and a small business checking package offer called Business 53 Checking.
Business 53 Checking is a promotion designed to attract business customers by offering a few special services, packaged with the checking account. Beginning this month, small businesses, categorized by Erhardt as firms with under $5 million in annual sales, will receive seven special features upon opening a business checking account.
The maintenance fee will be waived for the first year, businesses will receive $50 off the first set of checks, and the annual fee on a business credit card will be waived, as will overdraft and debit card fees. The clients also will receive free Internet access and a discount on merchant credit cards.
“Some of these offers are a really great deal for small businesses,” Erhardt said. “And the discount on checks alone saves them a lot, because ordering checks and all of the paperwork that goes along with them is expensive enough.”
He told the Business Journal the waivers of fees for overdraft, annual fee for the business credit card, debit card and the free Internet access are permanent features of the account, while the discount on merchant credit cards only applies to application and reprogramming fees.
“Our home equity loan campaign is also going on right now and this is traditionally a time when there is a high volume in the home equity business. We have an initial rate of 4.24 percent on the home equity line of credit. It is for a new home equity line of credit. If you wanted to re-finance some existing debt, of course, you could re-finance it through Fifth Third with this product, also.”
The loan campaign will continue for several months but has been highly advocated lately. Erhardt added that the interesting thing about home equity business is that about 70 percent of the business comes from existing customers, specifically checking customers and home mortgage customers. He said he finds there is a high degree of affinity in having your home equity line of credit with the bank that either provides your checking account or your mortgage.
“Banking is very competitive in this market and if you opened the paper you would see tons of offers — and Fifth Third has always been a very focused sales and marketing organization,” added Erhardt.
“We have kind of picked up that flag and are charging up the hill because it has really paid off, and we have seen a tremendous amount of growth over the last year and a half with the very aggressive marketing that we have put out there.”