Tapping the untapped: some sample ways that banks are locating and taking advantage of previously overlooked or underserved demographic segments.

• Author: Brown, Warren
• Position: Market Segments

Looking for growth during a stagnant time? One way to achieve that goal is to identify underserved customers and untapped markets, and to satisfy the needs of these ignored segments.

When considering an underutilized market, we often first think only of immigrants--Asian, Hispanic or others--because the language barrier represents a significant obstacle to effective marketing to these groups.

But, while immigrants do account for many untapped potential customers, we should not overlook others who--for a variety of reasons--are not using or fully using your bank's products.

Here are the major categories of underused markets as defined by Lena Robinson, a community investment specialist with the Federal Reserve Bank of San Francisco:

* Unbanked. A consumer without a checking or savings account.

* Underserved. A consumer who has a checking or savings account but may be in the market for a more sophisticated product, such as an investment account or credit line.

* Emerging. Potential candidates for significant financial commitments, such as a home mortgage or small-business loan.

* Immigrant. Any consumer in one of the above categories who is not native born and may not respond to traditional marketing efforts.

Here are some ways that you can penetrate untapped markets.

1. Learn more about your existing customers.

   Before you start looking for new customer segments to serve, first explore your current customers. Are there certain products that your existing customers are not using? Why are they not using them?

   Everyone knows that existing customers are usually the richest and most reliable source of new business. But, to successfully tap into more of their needs, you have to have more information about their lifestyles and financial situation--and the ability to shape that information into an effective sales proposition.

   Like many other banks, First Farmers and Merchants National Bank (assets: $870 million) in Columbia, Tenn., is using technology to help the institution hone in on underserved and emerging segments within its existing customer base.

   "We are in the process of launching a new software that communicates with our existing accounting software. It's a profitability model that analyzes our data on existing customers to let us know if there is a product they need that we can offer," says Kim Doddridge, director of marketing. "Once this software is in place, we can target direct mail to specific customers and solicit them with a product...