Today's Version of the Toaster Giveaway.

• Author: Dumont, Elinor
• Position: Bank marketing strategies and techniques - Industry Overview - Statistical Data Included - Polling Data

Problem:

Our bank is looking for ways to attract new customers. Several decades ago, banks used to give away toasters to customers who opened new accounts. Are giveaways still a draw? Or have they gone the way of "your father's Oldsmobile"?

Solution:

In the 1950s and 1960s, it seemed a lot simpler: Banks offered toasters; gas stations gave away juice glasses; and grocery stores, green stamps. And "they"--the customers--came!

Banks still give away lots of free incentives, according to the "ABA Bank Marketing Survey Report for 2000." The survey was conducted in the Spring of 2000 with figures from year-end 1999. If we look at the category of "Sales Promotions," we see that banks spend a portion of their marketing budget on "Specialties" (giveaways). More than 42 percent of the banks in the asset category of under $25 million reported this type of marketing expenditure, while more than 85 percent of the banks in the asset category of $5 billion or more reported expenditures for giveaways. Looking at statistics from the 1997 "Analysis of Bank Marketing Expenditures," as the survey was then called, we see 62.5 percent of the smallest banks and 67 percent of the large banks were putting dollars into in this marketing category.

A comparison of the two surveys shows that fewer of the smaller banks are using the premium as a means to increase market share and grow their business. More of the largest banks seem to be moving in this direction. A search of the banking literature indicates that the giveaway is still with us, but there are changes that time and ingenuity have wrought. It is in size and complexity that we can see the differences.

Perhaps a toaster no longer does the trick, but the incentive for opening a new account, buying a CD, or taking out a mortgage continues to work. The question facing a bank marketer today is how creatively can he or she devise the "just-right" giveaway. Premiums are more elaborate than ever before and they are more highly targeted to niche markets. Financial institutions have gone to great lengths to invent and innovate. If the toaster is out, what is in?

Targeting is important

The "one size fits all" school of marketing is, indeed, a thing of the past. A "Mr. Gadget" toy will tempt a tot or a "tweener"--and help reach a parent. A chance to win a leisurely cruise in the tropics will draw the interest of the senior set. Airline mileage could well be the right way to interest the 30-somethings in choosing their...