BankMarketingCenter

Federal Reserve Chair Jerome H. Powell warned on Tuesday that “the economic road ahead remains long and uncertain with 20 million jobs lost since February, an unemployment rate at the highest level since the Great Depression, and $6.5 trillion in household wealth gone in the first quarter.” The irony here? While more than one in five workers has filed for unemployment, an historic number of individuals, individuals ranging from millennials to the greatest generation, are shelling out upwards of $500,000 for the opportunity to travel that “long and uncertain economic road” in a luxury motor home.

Evidently, Jerome isn’t experiencing the same wanderlust that seems to be driving millions of Americans – roughly 46 million according to surveys – to hit our nation’s highways, byways, 13,000 private RV parks, and estimated 1.23 million individual trailer campgrounds.  It seems that the “road to recovery” is one that many Americans are looking to travel, quite literally… in style.

According to recent research examining consumer interest in Covid-19 travel conducted by data supplier Ipsos, “RV travel and camping is now providing an exponentially appealing vacation option for American families. 46 million Americans plan to take an RV trip in the next 12 months.” Their first stop of their journey? It should be their community bank, in search of financing.

According to RV Industry Association, RV sales in some areas have sped up 170 percent over the same time period last year. Driving some of the sales gains are:

•   a financial lift from stimulus money
•   the onset of warmer weather
•   the need for some sort of vacation break
•   a move toward early retirement
•   the opportunities presented by virtual employment
•   the belief that a personal vehicle (especially one with heated floors, an entertainment system, and multiple bathrooms) is an extremely appealing way to social distance/quarantine, and
•   a cautious optimism from some that the worst of the pandemic could be over.

Banks are seeing the opportunity to make both secured vehicle loans and unsecured personal loans as this market gathers speed. Do a Google search of the phrase “RV loan” and you’ll see that many banks and non-banks are getting on board the RV bandwagon, spending to stay at the top of an organic search page ranking; USAA, Lightstream/Truist, Lendingtree, and Nerdwallet to name just a few. Many have either added or enhanced existing RV information-dedicated pages to their websites, such as SunTrust’s “RV Trends,” extolling the virtues of RVs, recreational vehicle features, and the benefits of the lifestyle that comes with an RV purchase. Below is a snapshot of rates, terms and minimums from five banks offering RV financing as of May 13.

Most RV loans feature repayment terms that range between 10 and 15 years. However, some lenders offer RV loans that stretch out as long as 20 years. There are affordable RVs available today for under $10,000, but the average price of a motor home is much higher, anywhere from $100,000 to $150,000.

These RV loans can generate a fair bit of interest income for lenders. According to 2017 data gathered by thewanderingrv.com – and remember, these numbers were compiled well before the recent spike in sales – “over 200,000 indirect loans were generated at retail locations offering recreational vehicles. These loans totaled $8.4 billion from households purchasing RVs.” 

Here at BankMarketingCenter.com, our goal is to help you with that vital, topical, and compelling communication with customers, including ads focused on enhancing your loan portfolio through recreational vehicle financing.  Here are just a few samples:

To see more of our work, both print and digital, visit bankmarketingcenter.com.  Or, you can contact me directly by phone at 678-528-6688 or email at nreynolds@bankmarketingcenter.com.  As always, I would love to hear your thoughts on this subject.

In influcencermarketinghub.com’s “Covid-19 Marketing Ad Spend Report,” we read what we thought was some rather disturbing news. The Cliff Notes version?  Many companies are cutting their ad spending to due to the economic downturn.

There was a silver lining to the cloud, however: “While some companies are hunkering down, merely trying to survive at the moment by reducing their spending wherever possible, the survey showed that one in four companies are set to increase their marketing activities, and 41% intend to make use of the momentum to maintain or increase their presence in the media.” 

Now, that’s some good news. And, we think you need to be one of the 41%. But don’t just take our word for it. Consumers agree. Of 35,000 consumers surveyed, 92% thought that brands should continue to advertise during the COVID-19 crisis; with this caveat. “Consumers believe, however, that it shouldn't be business as usual for marketers and advertisers. 78% think that brands should help them in their daily lives. 75% say that brands should inform people of what they’re doing, and 74% think companies should not exploit the situation.”  So, yes, businesses should continue to advertise, but they must be careful about their messaging at the moment. Marketingcharts made this observation on the subject of downturn messaging. “As marketing messages developed earlier can have a markedly different perception during a time of crisis, the majority of marketing executives say they are somewhat concerned (52%) or very concerned (27%) about making missteps that may harm their brand image.” 

After many, many years in this business, we know at least two things to be true. Number one: Come hard times, the first thing most companies do is cut their ad spending. Number two:  The companies that don’t do that are the ones that will build market share and emerge stronger than they went in. Granted, this may seem counterintuitive, but we believe that there is much truth to this old ad agency adage: “When times are good you should advertise. When times are bad, you must.”

In fact, according to Forbes’ “When a recession comes, don’t stop advertising,” there have been numerous studies dating back to the early 20th Century that point out the advantages of maintaining or even increasing ad budgets during a weaker economy. “Over the years, those advertisers that maintained or grew their ad spending increased sales and market share during the recession and afterwards.”  Kellogg’s in the 1920’s. Toyota in the 1970’s. Pizza Hut in the 1990’s. These are just a few examples of brands that grew market share, by double digits, during a downturn.

There are at least four reasons that we can think of, maybe more, to continue to spend on advertising during a downturn:

1. You Own It

As your competitors back off because they feel that “it’s just not worth shooting at ducks that aren’t there,” you’re keeping your brand message out there. With 59% of businesses going dark, there’s less media clutter to cut through, giving you more bang for your advertising buck.

2. You Can Be the Hero

Consumers are worried during a downturn. They’re looking for reassurances, even from the products and services they use.  This is an opportunity for you to be a hero brand, one that’s not just some fair-weather friend, but a reassuring voice, a sign of stability, and a brand that is loyal to its customer base.  In return, they’ll be loyal to you.

3. The Cost of Media Plummets

A downturn is, for smart investors, a buyer’s market. The cost of media – both print and broadcast – can drop precipitously during recessions. According to a WARC article, “Advertiser exodus to bring sharp media deflation in 2020,”  “traditional media is expected to see costs deflate due to COVID-19, with magazine (-17%), newspaper

(-11.8%), radio (-9.0%) and TV (-5.9%) media costs all predicted to decrease.”

4. Increased Share of Mind and Market

With an increased share of voice in the market, you’re also increasing your share of mind… which leads to an increased share of market. What, exactly, is share of mind?  Simply put, it’s what remains with the consumer even after they’ve stopped hearing from you. In a study conducted by the Marketing Sciences Institute and reported in The Journal of Advertising’s “The Earning Effects of Marketing Communication Expenditures during Recessions,” the authors noted that “increased ad spending during a recession not only works, but also contributes to financial performance for up to three years in the future, beyond when a recessionary period has ended.”  Spend during a recession and consumers will be thinking about your business long after the downturn is over.

Questions?  Thoughts?  Here at BankMarketingCenter.com, our goal is to help you with that vital, topical, and compelling communication with customers; to help you increase your share of mind and with it, share of market. For example, just recently we created ads that focus on how banks can help owners rebuild their small businesses. To see this campaign, both print and digital, along with others, visit bankmarketingcenter.com.  Or, you can contact me directly by phone at 678-528-6688 or email at nreynolds@bankmarketingcenter.com.  As always, I would love to hear your thoughts on this subject.

In a May 12 article on cpapracticeadvisor.com, ”Small businesses continue to open and rebuild,” Eric Groves, Alignable’s CEO and Co-Founder, says he appreciates “that wonderful can-do attitude entrepreneurs are known for” and feels that “with the ongoing support of their communities, many small business owners will eventually recover and create their new normal.” That optimism is tempered by a somewhat less optimistic closing: “At this point, it’s difficult to estimate how quickly the recovery will occur and where it will happen first, but a full recovery could take at least a few years.” While it’s true that our small businesses can only recover with the support of their communities, it’s going to take more than community support for businesses to recover. It’s going to take the support of their financial institutions.  Is recovery up to the public?  In part.  But, for the most part, it’s up to you, the banker. 

Small businesses are in a tough spot. They can’t wait “a few years.” According to the National Federation of Independent Business (NFIB), as of March 30, “about half of small employers surveyed said that they can survive for no more than two months, and about one-third believe they can remain operational for 3-6 months.”  That clock continues to tick. So, as a financial institution, how can you help your small business customers begin to fast track their recovery?

First, the obvious, which everyone has been talking about non-stop for the last three months:  Be there for your customers.  The small business owners who bank with you rely on you. Make sure they know that you’re there for them.

Second, be armed with tangible solutions. Banks are creating and offering online resources via their websites and webinars, that can assist small business owners in navigating what will very hopefully soon be a post covid-19 business environment.  Early on, banks and associations such as the Missouri Bankers Association, and Citizens Bank of Edmond with their participation in PPP.Bank, stepped up to offer guidance to small businesses, via websites and conference calls, on how to navigate the Paycheck Protection Program loan application and forgiveness processes. Now that we’re moving beyond PPP, what message should these institutions be putting out to their small business customers?

Financial institutions might take a page out of the Kansas City SourceLink playbook. The organization is dedicated to “connecting entrepreneurs to resources, coaches, funding, and education” and invites small business owners to explore their programs… resources that cover topics such as cash flow, cash management, and disaster relief funds. The site offers links to small business resources, such as the Missouri SBDC, Kansas SBDC, Women’s Business Center,  Small Business Owners’ Guide to the CARES Act, and SCORE. 

SCORE (Service Core of Retired Executives), by many accounts, is a resource that banks should recommend to their small business customers who are in need of guidance. Business News Daily lists the eight factors that lenders consider when making small business loans.  Among credit, business plan, and cash flow, lenders also consider whether or not the applicant has sought expert advice. “When you apply for a business loan, lenders want to see that you've sought guidance from knowledgeable advisors. Accountants can be an important source of advice for small business owners, according to Stephen Sheinbaum, CEO of Circadian Funding ‘but there are many other places to find good people to talk to, such as SCORE, a free mentoring service that is supported by the Small Business Administration.’

 In partnership with the Small Business Administration (SBA), SCORE offers small businesses access to mentors who can offer guidance and resources as you look to build—or rebuild—your business after the crisis. Remote mentoring services are available, along with free webinars that address coronavirus-specific issues.

 So, what can banks be telling their small business owners right now?  Here are some steps your customers should be taking right now with a view toward recovery:

1. Assess the damage by looking hard at P/L and cash flow statements
2. Re-evaluate their business plan
3. Research any and all state and federally mandated lending and assistance programs
4. Research other sources of funding such as SBA 7 (a) loans and lines of credit
5. Plan for what could be a very long recovery and, most importantly,
6. Seek professional guidance

 Of course, that primary source of “professional guidance” is you, their banker. It goes back to what we said earlier: Be there for your customers.  The small business owners who bank with you rely on you. Make sure they know that you’re there for them. The fact is, while we’d all like to believe that the worst is behind us, it may not be and it’s important that your small business customers be prepared – as best they can be – for whatever the future holds.

For more information on how BankMarketingCenter.com can help you with communicating vital information to your customers – for example, with our ads focused on rebuilding small businesses – visit bankmarketingcenter.com.  Or, you can contact me directly by phone at 678-528-6688 or at nreynolds@bankmarketingcenter.com.  As always, I would love to hear your thoughts on this subject.