When marketing is a no-no: how to painless educate your customers about a bank service when promotion is taboo.

• Author: Flowers, Robert Sr.
• Position: Overdraft Privilage

Overdraft privilege is one of the most popular services that banks can offer. But, this popularity comes with a few strings attached. Because of concerns expressed by regulators, banks can only inform or educate customers about such services. They cannot market them to the general public or to nonqualified customers.

Your bank should not have difficulty meeting these requirements, however, as long as your informational or educational campaign is based solidly on an understanding of the nature of overdraft privilege--that is, based on what an overdraft privilege can and cannot do.

Naturally, as a marketer, your first inclination when you start an overdraft privilege service is to quickly get the word out to your customers. You want to share the news about the availability of this new program and how it operates as fast as you can. But don't. Take the time to get to know the product thoroughly, and then--and only then--inform your customers.

Why proceed deliberately? This is because of the nature of the overdraft privilege. The service creates a financial "safety net" for your customers, and that's a good thing. In the event they have nonsufficient funds (NSF) items, you pay them. However, if you follow your normal marketing inclination and encourage customers to use the service, you would, in essence, be encouraging them to overspend.

And, that creates a dilemma for you, the bank marketer. How do you--on the one hand--inform your customers about the availability of the service without, on the other hand, necessarily promoting its use (one of the principal concern of regulators). Our opinion is that it is not all that difficult if you follow these three steps:

1. Apply to your overdraft privilege educational campaign all of the ethical and regulatory guidelines that you would normally incorporate in a marketing effort. Truthfulness about a service and clear descriptions of how it operates are bedrock roles that never change.

2. Consider what is most important to you--improving customer retention/loyalty or building market share. We suggest that your objective should be the former, because we all know how cost-effective it is to cross-sell existing customers in comparison with the expense of attracting new ones.

3. Think about the type of information you want your customers to receive. What do your customers need to know about this new service?

Let's look at how you're going to educate your existing customers. You already have names, addresses...