Today, Phillips counts more than 500
community banks among his customers. "We handle more paper than ever," he says.
As for acquisitions? "After mergers, executives are put out on the street,"
Phillips says. "Many start new banks." In the past 18 months, Group Purchase
Plan has gained the business of 12 start-up banks in Alabama.
Certainly, trends affect the financial
industry and distributor relationships with commercial banks, savings and loans,
credit unions, and other industry players. These include paper reduction and
mergers and acquisitions. But they don't spell the end of fruitful relationships
between financial institutions and document management professionals. Phillips
and other distributors have found ways to thrive in the niche.
One of Group Purchase Plan's primary strategies is offering buying power through gang runs. "It's a numbers game," Phillips says. "Everything is mass manufactured, mass distributed and mass marketed." His company targets small to intermediate-sized banks, which typically don't have the pull of larger holding institutions. "We can provide the buying power because we serve so many different institutions," Phillips says.
Recognizing Industry Trends
While the financial industry isn't going paperless, it is undergoing paper reduction. Documents that previously were unit sets are being converted to cut sheets, and, in some cases, being replaced with electronic versions. Dave Puntney, president of distributorship Independent Forms Services, Joliet, Ill., says many internal bank documents now are filled out, stored and printed only as needed from banks' computer systems. For instance, when a prospective depositor previously entered a bank, the depositor would fill out a form and signature card. In many banks today, employees input this information directly into a computer while talking to depositors. Similarly, many wire transfers are handled online, eliminating the need for wire transfer tickets.
But the shift away from paper doesn't always mean a decline in sales for distributors. While Independent Forms Services has witnessed declining check sales, it now sells more plastic debit cards. Consumers use these bank cards to make electronic withdrawals from their accounts to purchase goods or obtain cash advances. According to CardWeb.com Inc. (www.cardweb.com), a group that tracks the plastic card market, Visa and MasterCard issued 157.9 million debit cards in the United States in 2001, almost double the amount from four years earlier. In addition to providing debit cards, Independent Forms Services also sells credit cards and ATM cards.
Another trend in the financial market is an increased emphasis on marketing. "Years ago, [financial institutions] only competed against themselves," Puntney says. "But with investment firms becoming a major player in the financial market and taking consumers' money, banks need to compete." He adds that because of investment firms' savvy marketing, banks no longer can rely on their brick-and-mortar image to succeed. "That façade--the big, white pillars--is gone," Puntney says. "Banks have to present their image in another way." Full-force marketing campaigns, including 4-color pieces, are the answer for many.
John LeCompte agrees. "The financial industry is directing more and more toward marketing these days," says LeCompte, division sales manager of Direct Business Systems, Reno, Nev. One of the distributorship's clients, a credit union in the West, relies on a quarterly newsletter as a marketing tool. Direct Business Systems provides the 4-page, 2-color newsletter to the credit union, which mails the marketing piece with statements to its 3,200 customers. The credit union writes the text, and Direct Business Systems uses a freelance graphic artist to design the newsletter.
Banks and credit unions also recognize the marketing potential in ad specialties. "Financial institutions are involved in the community, so they use small items for Fourth of July and homecoming parades," Puntney says. Bank employees toss pens, key chains, lollipops and other items to parade-goers. Independent Forms Services also sells high-end ad specialties, such as clocks for awards and crystal pieces to commemorate anniversaries.
Banks aren't the only segment of the financial industry ordering ad specialties. LeCompte sells to several financial planners, who help consumers set up investments, retirement plans, insurance and so on. They provide new customers with giveaways such as matchbooks, letter openers and key chains.
Sales Strategies That Work
So how do distributors compete in the ever-changing and competitive financial industry? Here are five strategies:
* Diversify your offerings. "We don't install bank vaults, build the building or pave the parking lot," says Phillips of the products and services Group Purchase Plan provides to commercial banks. "Otherwise, we do it." In addition to paper products, the distributorship has supplied teller machines, microfilm equipment, safes, office furniture, money bags, and coin and currency machines. "If my sales reps are making calls, they might as well sell 200 different items [instead of] 10 items," Phillips says.
Independent Forms Services also has diversified. For instance, when a bank opened a new branch, it asked the distributorship to supply a currency counter and coin machine in addition to documents. "They're not something we sell very often," Puntney admits. But he wants to be a single-source supplier for financial institutions. "Even if we can't create a distributor relationship [for a certain product], if we know of a direct source, we put the bank in touch with them," he says.
* Foster mutual relationships with banks.
One of Direct Business Systems' customers is a local bank that serves small merchants. LeCompte has cultivated a relationship with this bank, which now refers the distributorship to its merchant clientele for accounts payable checks. When the bank gains a merchant customer, it provides the first check order free. (Direct Business Systems supplies the checks.) The distributorship includes reorder notices with the checks.
* Act like a bank department. "We become an arm of the bank's purchasing department," Puntney says. Independent Forms Services offers several services, including warehousing, fulfillment, cost-center accounting and automatic shipments. Its goal is to take over many of the bank's day-to-day purchasing responsibilities. "You can sell to both a small commercial bank or a holding company with hundreds of locations on that aspect," Puntney says. The head of purchasing at a small bank probably handles several other job functions, while the same person at a holding company is buried with requests from its multiple locations, he says. Either way, distributors can ease purchasing burdens.
* Offer education. ConmarSystems Inc., Peachtree City, Ga., holds monthly training for two to three credit unions. The sessions, which typically last three hours, cover several topics. One common session covers new account installations: The distributorship provides credit unions with electronic forms, which they in turn complete and print as needed on laser printers. (For details, see the box on page 59.) Conmar trains employees on how to use electronic forms.
Another session trains loan officers on cross-selling. "They have a world of products to cross-sell," says J. Mark Staley, Conmar's president. For instance, when a loan officer receives a car loan application, he or she pulls the consumer's credit report. The loan officer may notice the person has a credit card with another financial institution, even though his or her bank's rates are better. "We teach the loan officers how to get consumers to leave with two loans or credit lines rather than one," Staley says.
Phillips also offers education--to his employees rather than his customers. "For salespeople to be effective, they have to be knowledgeable in the industry--know the language and recognize what banks use, how they use it and why," he says. Group Purchase Plan runs an in-house orientation program that features an 8-page list of subjects important to financial institutions. Phillips reviews each subject with new sales reps and travels with them on their first few sales calls. "The most important factor for reps is not selling the product, it's selling the wisdom--the application of the product to make the bank more efficient," Phillips says.
* Do the grunt work. "Our claim to fame in the industry is compliance-related forms," Staley says. These include car loan documents, home equity loan documents, truth-in-lending disclosure statements, promissory notes and more. It's tedious and detail-oriented work. When Conmar lands a client, the company reviews all of its documents, recommends changes to provide a credit union with a stronger legal position, and creates and edits documents for compliance.
The distributorship tracks all federal and state regulations and statutes. Its sales service staff drafts the backers for compliance-related forms. Conmar keeps attorneys on retainer who "check and bless" all documents, Staley says. Then the distributorship copyrights documents with the U.S. Patent Office and bonds them, guaranteeing the documents are compliant. Many distributorships steer clear of this laborious work, giving Conmar a competitive advantage, Staley says. "We make money doing what no one else wants to," he says.
Susan Keen Flynn, a freelance writer based in Cleveland, is a frequent contributor to Print Solutions. Email us your comments at editors@printsolutionsmag.com.
Shifting From Paper to Custom E-Solutions
J. Mark Staley has targeted credit unions since 1978. "We started Conmar with the sole intention of focusing on this market," says Staley, president of ConmarSystems Inc., Peachtree City, Ga. The distributorship has credit union clients in 42 states. When Conmar began, 100 percent of the items it sold were traditional forms. Today, Staley says, it sells 40 percent paper and 60 percent laser-based products. But he's not complaining: "Customers still must buy what's on the paper," Staley says.
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ConmarSystems Inc., a
distributorship in Peachtree City, Ga., created this Equityline compact
disc for credit unions to fill out and print lending documents. Conmar
designed the forms included on the CD using several different tools,
including Accelio (formerly JetForm) electronic form design software, part
of the Adobe software family. Also shown is a sample laser form--a
truth-in-lending disclosure statement--that credit unions can print using
the copyrighted CD.
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Conmar, which concentrates on compliance-related documents, creates custom electronic forms for credit unions. The company designs the forms for use with a credit union's software, then sends them electronically to the credit union's data processing department. The credit union prints laser forms as needed. Conmar charges customers an initial fee and an annual fee to use the laser forms, which the distributorship copyrights. Conmar doesn't provide consumables. "You can't make money on a $20 box of paper," Staley says.
The distributorship is modifying its business plan so laser-based applications soon will account for more than 90 percent of its sales. For instance, Conmar previously sold home equity loan forms--a packet of approximately nine documents required for home loans. Conmar stopped offering the paper documents a few months ago. Instead, it created a compact disc so credit unions can print forms themselves. The CD includes necessary documents, a checklist for creating and completing the documents, and a help file.
In addition, Conmar is developing browser-based lending forms so credit unions can download state-required documents from the distributorship's web site. Clients can pay an annual subscription fee and receive a password to access the documents. Conmar will continually update the forms to meet state laws.
"If distributors want to be in this business long-term, they better invest in electronic forms," Staley says. "Customers buy software solutions instead of forms, and the beauty of it is that if you call it 'software,' you can charge annual fees," he says.
