Is your credit union or bank still trying to be all things to all consumers? If your answer is yes, you certainly are not alone. Many financial institutions have resisted the idea that excelling in one area of business is a wise business decision. Instead, their strategies include adding locations and developing products and services which enable them to serve the masses. There’s a theory called the Myth of Excellence which challenges that idea.
The Myth of Excellence: Why Great Companies Never Try to be the Best at Everything, written by Fred Crawford and Ryan Mathews, uses research from thousands of businesses and consumers around the world to suggest that competing in one component of business is what makes companies successful. They advocate a strategy called consumer relevancy, which advocates dominating in one element of business, differentiating in a second and being at industry par
on the rest. There are five components on which to compete – price, product, service, location and experience.
By using The Myth of Excellence approach, companies become successful because they focus on what they do best, based on what is important to their key demographic. When they can focus on the customers/members most important to their business, they can start to find opportunities they didn’t realize were there. When they dominate in one area, they can direct more resources to that area and in the process, reduce operating costs, boost profitability and engage in meaningful dialogue with consumers. Companies with that kind of focus have no problem communicating their brand to their customers. The Myth of Excellence simplifies that and is widely used as a strategic planning tool by successful organizations. On the Mark Strategies uses it in our planning sessions with financial institutions.
The first step for credit unions and banks in using the Myth of Excellence is to decide which primary attribute to position their brand around. – price, product, experience, service or location. You should make this choice with the wants, needs and expectations of key customers/members in mind. Do not assume you know what consumers want. Listen to them, examine your organization’s strengths and weaknesses and decide where your financial institution dominates in the marketplace. On a scale from one to five, where five is the highest, choose one area where you will score a five.
For the remaining steps, and more insight on how the Myth of Excellence can work for your financial institution, read the latest issue of my e-newsletter, On the Mark.