Bye Bye Mass Appeal; Hello Niche Appeal November 24, 2009
Posted by nichebanking in Bank customer segmentation, Niche banking, Nicheruptive, The Long Tail of Banking.4 comments
In the last post, “Why Small Slices Didn’t Work…In the Past,” we discussed how in the “olden days” (like last year) a brick-and-mortar bank would need to have mass appeal in order to attract the critical mass of customers needed to make the bank viable. This resulted in very bland, diluted brands that don’t offend anyone…but also don’t really resonate with anyone.
With the Internet, however, that’s no longer the case. In fact, the Internet is making that approach totally obsolete. You see, the web is amazing at delivering tailored, specific and relevant content to people, based on what they’re interested in. You’re into left-handed crocheting? No problem. Love baking your own vegan dog biscuits? Easy to find others who share that passion.
In fact, not only has the Internet enabled this, it’s training us to expect this level of niche information. It’s showing us that we no longer have to put up with boring, generic content or experiences.
Thanks to the Internet, banking today knows no geographic boundaries–and there’s no need to try targeting every-other-person in a specific region, in order to create a viable bank.
Let’s look at a rough, crude calculation, just to make a point. Each US-based Internet direct bank has access to the 227 million Americans online. If you assume an average $2 billion bank might have maybe 50,000 customers or so (just a ballpark), that means each of those banks needs 0.02% of the US population as its customer. Two one-hundredths of a single percent. That’s a pretty small and narrow slice of the population, and you don’t have to cast a very wide net to get that portion of the market. So why are banks marketing as if they need to be attractive to everyone?
See–there is no need to be generic anymore. In fact, there’s a need to NOT be generic anymore. There’s a need to be so ridiculously focused that you can deliver a highly specialized niche experience that a certain group of people will LOVE, and all the others (the vast majority) will hate. Today, mass appeal is almost off-putting. It’s niche appeal that gets people fired up and passionate.
The question then, of course, is how exactly do you go about doing that? The answer to that question is exactly why we formed Nicheruptive, and we look forward to sharing our plan with you.
//2FVVEF9FJXPW
Banks: Target How Many Market Segments? November 4, 2009
Posted by nichebanking in Niche banking, Nicheruptive, The Long Tail of Banking.add a comment
Today, in my normal Twitter activity (@nichebanking), I came across this good post on BankInnovation.net, called Target Niche Markets with Enhanced Online Experience. It starts out with a good, simple question: ”How many different market segments should banks target?”
I’d like to respond to a slightly different question: ”how many different market segments should the banking industry target?” My answer: infinite. This is exactly what the long tail of banking is all about–going further and further down the tail, “slicing and dicing” customers into lots and lots of unique segments based on psychographics rather than demographics or geography. Right now, as the article points out, the industry’s idea of segments is “consumers, small businesses, and micro-businesses.” These segments are about .2 centimeters down the tail. Instead, there is an opportunity for banks to go MUCH further down the tail, as the article (and the speaker at the BAI Retail Delivery Conference) points out.
As for the question of how many different segments an individual bank can target, that answer is depends on the bank’s ability to commit to a new model of doing business. Based on the Nicheruptive way of thinking (and I believe what Harris Bank‘s Nate Wehunt was insinuating), a “bank” could target dozens of different segments…and the customer wouldn’t even know or care. That’s because the key, of course, is that it may just technically be one entity (a “bank”) but in practicality and customer experience, it would appear as dozens of different banks.
What is The Long Tail? October 29, 2009
Posted by nichebanking in Niche banking, Nicheruptive, The Long Tail of Banking.4 comments
Who We Are…In Case You’re Wondering October 15, 2009
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If you’re following us on Twitter (@nichebanking) or reading this blog, you may be wondering who we are. After all, our website, http://www.niche-banking.com, doesn’t give any names or much contact info. So what’s the deal?
Well, it’s not a secret. We’re not trying to play games with you (although this anonymity is kind of fun, we admit). Seriously, though, we’re simply trying to get a few more ducks in a row before we open the kimono completely and share with you the full extent of what we’re up to. Believe us, we are REALLY excited to share it with you. And yes, we think it will be big. Super big.
Thanks for your patience, your interest and letting us participate in your communities: your blogs, on Twitter, etc. We look forward to sharing all with you shortly! In the meantime, carry on…
The current idea of niche banking October 12, 2009
Posted by nichebanking in Niche banking, Nicheruptive, The Long Tail of Banking.add a comment
Currently, if you Google “niche banking,” the first article you’ll get is at http://www.commercialappeal.com/news/2007/jun/29/execs-plan-new-niche-banking-firm-in-miss/. The headline this article is “Execs Plan New Niche Banking Firm in Miss.”. Then, in the second paragraph, there is a quote from the organizer, “We’re going to be a commercial and private bank.” The articles goes on to explain that the founder has a vision to create banks “catering to small and medium-sized businesses and individuals who need everything from banking service to insurance and investment advice.”
This, my friends, is the current idea of niche banking. Small and medium sized businesses, and individuals, who need anything at all? Wow, that’s really narrowing it down. Way to identify segment that market into niches, folks. Exactly who is NOT included in your target market, then?
Of course, this is also the reason there’s a market opportunity for Nicheruptive, so I shouldn’t complain. But the point is clear: the banking industry’s idea of what a niche market is (and why you might want to serve one) has got to change. Today, “regular banking” is like this: we’ll accept anyone who can fog a mirror. Using this metaphor, today’s idea of niche banking, then, is like this: we’ll accept anyone who is an individual or business with less than 250 employees and can fog a mirror. See the problem? This isn’t niche banking at all–this is merely taking a target market definition from 60,000 feet to 58,000 feet.
A real niche bank would identify its market much much more specifically, knowing that it was intentionally excluding more customers than it was catering to. More on this topic, of course, to come.
Welcome to the long tail of banking September 7, 2009
Posted by nichebanking in Niche banking, Nicheruptive, The Long Tail of Banking.add a comment
Welcome to a new paradigm in banking.
With Nicheruptive, the long tail of banking has arrived–and it’s about time. The day has come for a new perspective on consumer banking. One that recognizes:
- banking products and services, and banking infrastructure, are a commodity
- what is not a commodity is the delivery of banking products and services
- communities are no longer defined by geography
- customers want a banking experience that aligns with what they stand for
In short, there are big profits to be made in serving very small customer segments, by tailoring banking experiences to narrowly defined niches.
On this blog, www.thelongtailofbanking.com, we’ll discuss and dissect all aspects of niche banking as the emerging business model for innovative, successful Internet banks. We hope you’ll follow along and join in our discussion. After all, you can change with niche banking, or be changed by niche banking.
The choice is up to you.
