Marketing Transit Services to Business (1998) / Chapter Skim
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Chapter 7
Chapter 7
Pages 143-164
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From page 143... ...
A key innovation stemming from this medium-sized business practice has been the "Relationship Team." By using a team instead of an individual account manager for each business customer, BofA is able to offer a one-stop shopping experience for almost all financial services. New business needs also are identified far more quickly through the Relationship Team structure than through the traditional market research avenues, since a needs-identiOcation process is a part of the Relationship Team experience.
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From page 144... ...
After this initial research, BofA developed the Alpha/Prima account, and completed a marketing plan for this product. The marketing plan stated the goals of stemming the flow of customers to other financial institutions and to establish a competitive and aggressive position in interest-bearing checking accounts.
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From page 145... ...
While there are several goals for the company as a whole, each BofA division - from retail banking or commercial banking to Merchant Services also develops its own specific objectives. As part of the Bank's retail and commercial banking vision for the 2Ist century, BofA has targeted small businesses.
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From page 146... ...
New Product Development for Small Business Much of BofA's success in the small business market can be directly attributed to the company's ability to develop new products specifically geared to the needs of the small business owner. In a few short years, BofA has augmented its small business product lines with expedited processing (including express loan approval)
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From page 147... ...
Willing customers also can participate in market research efforts by completing a Supplier Diversity Questionnaire. AN f01' mB N_ 0f Smog The Business Checking Account, Business Interest Checking, Specialized(Business Checking Accounts (for businesses with high transaction volumes and for businesses that need consolidation of multiple accounts or locations in a particular state)
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From page 148... ...
"Small business owners in the 10 western states BofA serves can now call a toll-free number to apply for business loans and lines of credit over the phone, seven days a week." During Small Business Month, BofA also featured several special promotions. Businesses received a 50 percent discount on set-up fees for ABC loans and lines, as well as special deals on payroll processing services and merchant services electronic processing.420 Finally, in celebration of Small Business Month, BofA promoted a "$25,000 for Your Thoughts" contest.
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From page 149... ...
It has promoted these services to small businesses using the print media, press releases, literature at its various branches, and with the Internet, via its Web page and America On-Line. In 1994, BofA introduced a new concept specifically geared toward the mediumsized business customer ($5 to $200 million in revenues)
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From page 150... ...
Table 7-~: Bank of Im0riea Market Share 10/8' 10/87 Checking Households 32.9% 25.4% Checking Balances 29.6% 13.3% Checking Accounts 24.7% 21.5% "BofA checking account closures exceeded account openings since early 1984. Account closures exceeded openings by ~ ~ percent in 1985, 28.6 percent in 1986 P8gB 7~
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From page 151... ...
Table 7-2: changes in Main Bank Share |0/~' 4/87 Bank of America 22.7% 21.1% Savings & Loans 8.5% 19.3% Credit Unions 6.7% 1 1.3% 3 Major Banks 28.3% 25.3% (Source: Market Share Audit) While BofA's share of main bank households declined slightly during this time period, it is important to note that the S&L and credit union segment were fragmented, with no one thrift holding greater than a 2.6 percent share of main Pasted
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From page 152... ...
The Goals for the Alpha/Frima AGCOUI' The Alpha/Prima Account is a product development response to the above described adverse trends for BofA in the retail banking marketplace. By the mid-19SOs, the California Banking Group designed a preliminary Alpha/Prima product.
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From page 153... ...
· One monthly fee for the entire package. Or, customers could eliminate that fee entirely when the combined balance of a linked checking or savings accounts exceeded a minimum level.
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From page 154... ...
. The Alpl~alPrima Account allowed for relationship pricing - a single monthly fee or combined balance level for the entire service bundle.
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From page 155... ...
This allowed customers to link only regular savings accounts for the purpose of waiving service charges. In response, the California Banking Group proposed de-marketing another product, Combiner!
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From page 156... ...
Sensitivity Inaly~' The relative profitability of the Alpha product was expected to be sensitive to variations in average account balances, internal and external account volumes, fees collected and overdraft line usage. The product had an upside potential of having an internal rate of return of 167 percent.
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From page 157... ...
1.5 1 67.0% 33.4% 3.0% $64.7MM $3.2MM $3.3MM 2.5 NA Market Research Findings Quantitative research using personal interviews was fielded in February, 1988, to determine the appeal and effectiveness of what is called "alternative positioning" for the Alpha/Prima Account and to identify the greatest opportunities within target segments. These findings indicated an extremely positive response to the Alpha/Prima Account concept, proposed pricing, and; planned positioning.
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From page 158... ...
The biggest reasons those rejecting the account gave for saying they would not open the account, even if it were at their own institution, were that they were satisfied with what they already had, or that they needed more information. Implementation issues The Alpha/Prima Account launch was the primary focus for the California Banking Group during the third quarter of 1988.
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From page 159... ...
This medium - which allows interaction between the presenter and audience - provided an opportunity to reach a large number of retail and commercial bank employees in a single day. In addition to the external and internal marketing efforts, the bank also made changes to its internal systems to accommodate the new product.
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From page 160... ...
Approximately ~ million mailings, promoting the Alpha/Prima Account and offering a prescreened credit line. were mailed to the following targets: households having what was called a "Liquid Savings Account," households with a BofA consumer loan, and households with no other relationship.
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From page 161... ...
TlmelIne The following timeline identified the key target dates and milestones for successful implementation of the Alpha/Prima Account. D~vembb Target Dam 131881 Pricing Committee Approval RSVP/AMG Manager Presentation Statewide Video Teleconference Procedures Documents to Branches install System Enhancements Media Advertising Begins Direct Mail Begins to Drop Campaign Ends March 25 March 25 early June June 10 June 24 - 26 July 18 August ~ September 30 Ouicome The financial case pivoted on four key variables: average account balances, account volumes, fees collected, and overdraft line usage.
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From page 162... ...
Value was characterized by "with this account, you get the most for your money, because while your money earns a competitive rate of interest, you get the banking services you need at no charge." The appeal of "Value" positioning stems from the perception that this account would reduce fees and pay interest. About four in ten preferred "Value," compared to one-fourth who preferred the second place position, "Simpler.'' This finding represented a change in the market opinion from earlier research, showing the need to update the marketing approach to this market.
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From page 163... ...
Some transit agencies also undertake market research of their users and non-users to better understand their respective characteristics, and to identify which markets segments are most promising for increasing ridership. · BofA developed a detailed marketing plan for the Alpha/Prima account, which specified expected financial results as well as costs.
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