While traveling through Oklahoma recently, I made a quick stop at Braum’s, a regional ice cream and fast food establishment. I ordered the standard combo meal and was caught off guard when the person at the register asked me if I’d like a chocolate or vanilla shake with my meal. I don’t eat a ton of fast food, but when I have, nobody has ever given me this option – not even Dairy Queen. I did not opt for the shake, but a quick scan of the room revealed that about 50% of the customers did choose the shake on that particular day during a busy lunch hour.
If your financial institution pays a third party for its checking account or reward product(s), this is a valuable lesson in Sales 101 for you. When we conduct marketing audits for financial institutions, we frequently find ourselves telling them to spend less money and energy promoting someone else’s product. In fact, we often encourage them to develop their own similar products using lessons learned from their current vendor relationship.
Think about it. The products you develop and manage in-house are like the burgers in a fast food restaurant. You own the magic formula for them. They are proprietary. The products you pay someone else to create and/or manage are the soft drinks in a fast food restaurant. Consumers want and need them, but they belong to someone else and you don’t make as much money selling them. Braum’s is not just a fast food restaurant. It’s also a dairy which makes its own milk and ice cream. Shakes are proprietary, and all the signage related to combo meals push shakes first – not soft drinks.
Let me pause here for just a minute to clarify what we are not saying. On The Mark Strategies is NOT saying every financial institution should always make its own products. Here’s what we are saying:
- You have to make that decision based on resources and a cost benefit analysis.
- Don’t assume you can’t create a product in-house. Do the math to determine how much profit a third party product will yield.
- At the same time, do the math to determine how much it costs your financial institution to not offer something created in-house.
- Consider brand equity when you market a third party name over your own. Brand equity refers to the value of consumers recognizing your brand name. You already pay that third party for the right to offer their product. Now you’re marketing their brand.
- The money you spend on third party products could be spent hiring a consultant who can help you create your own.
Braum’s made a wise decision to push its proprietary product first. Not only is that a more profitable option; it also differentiates the fast food chain from others who offer the same product but don’t push it like Braum’s does. What proprietary products should you be creating or promoting more?