Like Western Union, banks sell a service and not a product. Unlike a Mailgram, however, which is a national service, banking is still a regional service.
In fact, positioning a bank is much like positioning a department store, an appliance store, or any other kind of retail establishment. To successfully position a retail outlet, you must know the territory.
To understand how we developed a position for the Long Island Trust Company, you should know a little bit about the territory.
For many years Long Island Trust was the leading bank on the Island. It was the largest bank, it had the most branches, and it made the most money.
In the seventies, however, the bank battlefield on Long Island changed dramatically. A new law permitted unrestricted branch banking throughout New York State.
Since then, many of the big New York City banks have become firmly entrenched in the Long Island area. Banks like Citibank, Chase Manhattan, and Chemical Bank.
Also, a good number of Long Island’s residents commute to New York City everyday and do part of their banking at these same banks.
However, the intrusion of the big city banks into Long Island Trust’s territory was only part of the problem. The territory that really counts is in the mind of the banking prospect. And a little research turned up a lot of bad news.
By now you can appreciate the importance of knowing what’s in the prospect’s mind. Not only about your product or service, but about competitive offerings as well.
Often the insights are intuitive. Nobody needs a $20,000 research project to know that Western Union is strongly identified with the Telegram. Nor was much research needed to determine the positions of Milk Duds, Belgium, and Xerox.
More often than not, however, it can be exceedingly helpful to map the prospect’s mind by means of formal positioning research. Helpful not only in developing a strategy, but in selling the strategy to top management. (The chief executive who has spent 30 years with one company will obviously see that company differently than a prospect whose total exposure over the same 30 years can be measured in minutes or even seconds.)
“Mapping the prospect’s mind” is normally done with a research technique called “semantic differential.” This was the procedure used to develop a positioning program for the Long Island Trust Company.
In semantic differential research, the prospect is given a set of attributes and then asked to rank each competitor on a scale, generally from 1 to 10.
For example, price might be one of the attributes. In automobiles, it’s obvious that Cadillac would be ranked at the high end and Chevette at the low end.
In banking, there is almost no price perception, so other attributes were selected. The ones chosen were these: (1) many branches, (2) full range of services, (3) quality of service, (4) large capital, (5) helps Long Island residents, and (6) helps Long Island economy.
The first four attributes are the traditional reasons for doing business with a particular bank. The last two are unique to the Long Island situation.
As far as the traditional reasons were concerned, the situation was bleak for the Long Island Trust. Prospects rated them last on all four attributes.
Many branches
Full range of services
Quality of service
The positions were reversed, however, when the attributes concerned Long Island itself.
Here is how the respondents ranked the six banks on the Long Island attributes.
Helps Long Island residents
Helps Long Island economy
When the attributes concerned Long Island, the Long Island Trust Company went right to the top. A not too surprising result, considering the power of the name.
What approach should Long Island Trust take? Conventional wisdom says you accept your strengths and work on improving your weaknesses. In other words, run ads telling the prospects about the great service, friendly tellers, etc.
Conventional wisdom is not positioning thinking. Positioning theory says you must start with what the prospect is already willing to give you.
And the only thing the prospect gave Long Island Trust was the “Long Island position.” Accepting this position allowed the bank to repel the invasion of the big city banks. The first ad stated the theme.
Why send your money to the city if you live on the Island?
It makes sense to keep your money close to home. Not at a city bank. But at Long Island Trust. Where it can work for Long Island.
After all, we concentrate on developing Long Island.
Not Manhattan Island. Or some island off Kuwait.
Ask yourself, who do you think is most concerned about Long Island’s future?
A bank-come-lately with hundreds of other branches in the greater metropolitan area plus affiliates in five continents?
Or a bank like ours that’s been here for over 50 years and has 33 offices on Long Island.
A second ad had a photo of palm trees in front of a building with a Citibank N.A. sign.
To a big city bank, a branch in Nassau isn’t necessarily your Nassau.
Chances are it will turn out to be in the Bahamas. It’s one of the favorite locations of the big city banks. In fact, the multinational institutions have some $75 billion in loans booked in the Bahamas and Cayman Islands.
Nothing wrong with that. Except it doesn’t do much for you if Long Island is your home.
Long Island is not only our favorite location, it’s our only location. We have 18 branches in Nassau (County, that is) and 16 in Queens and Suffolk.
And we’ve been here a long time, over a half century. We’re involved financially to the extent that 95 percent of our loans and services go to Long Islanders and their homes, schools, and businesses.
Other ads in the campaign had similar themes:
“The city is a great place to visit, but would you want to bank there?”
“To a city bank, the only island that really counts is Manhattan.” (A tiny drawing of Long Island is dwarfed by an enormous drawing of Manhattan.)
“If times get tough, will the city banks get going? (Back to the city.)”
Fifteen months later the same research was repeated. Notice how Long Island Trust’s position improved in every attribute.
Many branches
From last to first place in “many branches.” In spite of the fact that Chemical Bank, for example, has more than twice as many branches on Long Island.
Full range of services
In “full range of services” Long Island Trust moved up two spots. From sixth to fourth place.
In “quality of service” Long Island Trust also moved from sixth to fourth place.
Large capital
In “large capital” Long Island Trust moved from last to first place.
Results were seen not only in the research but in the branches too. “With the assistance of the advertising agency which pioneered the widely accepted concept of positioning,” said the bank’s annual report, “our lead bank, Long Island Trust, assumed the mantle of the Long Island Bank for Long Islanders. Acceptance of the campaign was immediate and gratifying.”
You might think that a bank promoting the area that it serves is an obvious idea. And it is.
But the best positioning ideas are so simple and obvious that most people overlook them.