S ALES DEVEL O P M E N T
| BY BO B BY M A RTIN
Vertical Expertise Helps Banks
Catering to Businesses
C
OMPETITION FOR BUSINESS BANKING CUSTOMERS HAS ALWAYS BEEN
INTENSE —but today it’s become fierce.
within a particular industry. Despite
opening its doors only five years ago,
Business customers have always been desirable for banks because they Live Oak is very profitable, earning net
income of nearly $20 million in 2013
maintain larger direct deposit account balances than consumers, pay
with a return on equity of 45.7 percent.
higher rates for loans, and purchase more products. To lure businesses into their
Live Oak’s latest vertical specialty
is
chicken
farms. “We just hired five
banks, senior leaders mandate increased calling activity from their officers, offer
bankers
from
Arkansas who have been
incentives for businesses to switch accounts, invest in creative marketing cam
working with chicken farms for a long
paigns, and spend money building free website tools to help them succeed.
time,” says Mahan. By creating financial products and expertise tailored for
Businesses,
especially
small
ones,
chicken growers, Live Oak believes it’s
But one strategy that’s gaining mo
growing the economy by helping cre
mentum has been deepening the bank’s greatly value industry expertise. Ac
cording to Barlow Research, a bank
ate small businesses. “Fundamentally,
vertical expertise to solve industry-spe
what we’re doing is allowing young
cific challenges and to carve out its own market research organization in Minneapolis, 51 percent of small busi
people in America to get back into the
niche. To win new accounts, the bank
farming business,” Mahan says.
learns the industry’s jargon, tailors solu- nesses said having a bank that “caters
to my specific industry needs” is a “top
Many established banks are also
tions, and gets loans approved faster
priority” or “very important.” Only
getting on the vertical specialization
based on its expertise. The results can
44 percent said having a bank that is
bandwagon—touting their industry
be lucrative—the bank benefits from
expertise on their websites. Regions
powerful word-of-mouth marketing by “involved in my community” is a “top
priority” or “very important.”
Bank, with $116 billion in assets, ofgaining “industry insider” status.
fers an “industry solutions” page on its
Banks
that
are
taking
this
website showing its expertise within
Under this strategy, the bank
approach
agriculture, medical specialties and
learns the industry’s jargon,
Today, banks are capitalizing on this
even McDonald’s franchises. North
dynamic more than ever. Live Oak
State Bank, a community bank with
tailors solutions, and gets loans
Bank was founded in Wilmington, N.C. $673 million in assets, offers “custom
in 2008 to cater specifically to veteri
banking packages” for accountants,
approved faster based on its
nary practices across the United States, attorneys, dentists, physicians, non
expertise.
primarily by helping them gain SBA
profits, and religious organizations
loans. Its marketing strategies include on its website. For example, it offers
educational seminars at veterinary
attorneys “Daily pickup of banking
Bank calling officers have been spe
schools for new students opening prac
- transactions so you don’t have to leave
cializing in industries for years—that’s
nothing new. They gain a few customers tices and a website specifically designed your office.”
to attract vets. Live Oak has also added
in a particular industry—i.e. dry cleandentists, pharmacists, funeral home
ers, physician practices or furniture
ABOUT THE AUTHOR
stores—then build momentum by find
- operators and independent financial
ing similar customers. The sales process advisers to its list of specialties.
BOBBY MARTIN
is president
To make sure Live Oak intimately
occurs naturally; they do a good job
and co-founder of Vertical
knows its customers, it recruits board
serving one dry cleaner and earn refer
IQ, Raleigh, N.C., which
members who have what its founder
rals to other ones—all the while learn
delivers industry knowledge
and CEO, Chip Mahan, calls “domain
ing unique financial challenges their
for bank calling officers.
expertise”—or years of experience
bank can solve.
Email: [email protected]
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| ABA BANK MARKETING AND SALES
| MAY 2014
©2014 American Bankers Association. Reprinted with Permission. All Rights Reserved.