Independent Banker - April 2019 - 61

opened each year, down from 15 percent to 20 percent.
" You still have to perform, because $200 is not worth
a bad experience with your bank, " says Krieps, who says
excess capacity at the bank made it possible to keep pace
with servicing the new accounts. " You've got to meet
expectations, or they are going to leave. "
Lessons learned
While Krieps is pleased with North State Bank's
promotion, he recognizes there's at least one thing the
community bank should have done diff erently.
" We should have done the instant-issue debit before the
promotion, " he says. " We're about a year out. It's better
if you get ready for that stuff ahead of time, so when a
customer walks out the door, you can get them using the
card as soon as possible, so they don't pull out Bank X's
card and start using it. "
Citizens Bank also made adjustments. While the bank
has found success in off ering incentives for both new
accounts and referrals, either the month's promotional gift
or a $10 Amazon gift card, a campaign targeting parentteacher
associations didn't take off . The bank thought
PTAs could promote the bank's accounts in exchange for a
" You still have to perform, because
$200 is not worth a bad experience
with your bank. You've got to meet
expectations, or they are going
to leave. "
-Jonathan N. Krieps, North State Bank
$10 gift card for each account referral, but the bank didn't
get many takers, Deterding says.
In the end, the value of a free gift may correlate with a
community bank's market. According to our sources, cash
bonuses appear more common in the Northeast and in
urban areas, while free gifts appear more popular in the
rest of the country.
One thing remains true throughout the country, though:
No one is giving out toasters.
Kelly Pike is a writer in Virginia.
independentbanker.org Q 61
When 'free'
things are
worth more
It's no secret that people like free things. But
given a choice between a discount and a
freebie, people will almost always choose the
freebie even if the discount actually yields more
or equal benefits.
Consider research published in
the Journal of Marketing
in 2012. Researchers
created packaging and
promotions for a lotion
and sold it in stores.
In some retail stores,
researchers sold
9-ounce bottles
of lotion at a
35 percent
discount.
In other
stores, it sold
9-ounce bottles of
lotion at the price of
a 6-ounce bottle worth
33 percent less, and
promoted it as a 6-ounce bottle that came with
50 percent more lotion for free.
Guess which bottle sold best?
The bottle with the 3 " free ounces " sold 73
percent better than the discounted bottle, even
though the discounted bottle was actually a
slightly better deal. The researchers concluded
that " consumers are inclined to perceive addons
such as bonus packs as gains but view price
discounts as reductions in losses. "
In other words, many people might not
understand fractions, but everyone understands
the word " free. " -Kelly Pike
http://www.independentbanker.org
Independent Banker - April 2019

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