I chose that blog title because I want CEOs to read this. And I know what most of their objectives are today because I frequent the speaker circuit, read the trades and generally feel the pain. We need to grow!
Well, there’s a case study now, that has ROI and everything. But first I’d like to share (from my own experience) what not to do.
I first met Ray when he opened an Umpqua Branch across the street from a credit union in Eugene, Oregon (where I was working at the time). We had never heard of this bank. What a weird name, right? And get this, their tag line, “Pretty cool for a bank huh?”
Ray’s goal was to get our members. HA! We are a credit union – our members are loyal! They will never ever go the “dark side.” We were wrong.
You see, Ray gets modern marketing. It’s not about trying to be all things to all people. It’s about having a vision and the discipline to stay the course. He was inspired by two Northwest companies (Starbucks and Nordstrom) to create a retail experience second to none.
The Eugene Credit Union (where I was the training coordinator) thought they were in the service business too. The credit union down the street KNEW they were in the lending business. Assets of these two credit unions were neck and neck. Why do I know this? Because it was the only ruler we measured with. So this little bank from Roseburg, Oregon moves in (at the same asset size incidentally) and we summarily dismiss them as competition. Instead, the lean mean lending machine (that was our CU competitor) started offering “loan steal” incentives to their highly trained sales staff. Again, our focus (or so I thought) was service. We sent every employee through a one-week very expensive breakthrough leadership program. Our HR gal had been to the Disney Institute. We had just launched the most expensive campaign in the credit union’s history to tout our service experience. I mean, over-the-top television commercials with the tag line “SELCO (let’s call them that) – Why didn’t you say so?……and the music begins to the play and balloons drop from the ceiling…you get the idea.” But we got impatient and took our eye off the ball. We started competing on price too. I’m here to tell you, you can’t do both.
I left Eugene shortly after that. Started my own business a few years later, moved around for 5 years and finally back to Portland (my hometown) where, guess what? There was Umpqua Bank. Serving their own blend of coffee (the Umpqua Blend), putting out the doggie water dish (Umpqua Brand) selling Umpqua t-shirts and mugs and giving their customers free quarters to plug the parking meters. Customers were surfing the web, watching TV (not your lame ads on the plasma screen) – generally hanging out like you would at a Starbucks.
Ray has just released his story. Leading for Growth: How Umpqua Bank Got Cool and Created a Culture of Greatness. He shares his secrets to success to the world. In the first chapter he spells it out:
“Leading for growth isn’t necessarily about getting bigger just to be bigger. It’s about getting better, stronger, more agile, more customer focused, and becoming a relentless competitor. And companies that do that do get bigger – but it’s a result, not an objective. You cannot grow your business if all you are doing is worrying about your numbers.”
Wow.
Just to review: In 1994 all three institutions in a three block radius in Eugene were around $140 million in assets. Today the Eugene Credit Unions are $730 and $807 million in assets. Umpqua is $7 Billion in assets.
A couple of years after I left Eugene, the credit union hired a new ad agency to come up with a new tag line……..this was it: “Serves you right.”
Enough said.
10 comments
Comments feed for this article
September 6, 2007 at 1:18 am
Gene Blishen
Exactomondo! To paraphrase a great thinker “You cannot be all things to all people all the time.” But there are a lot of ‘experts’ that will tell you that. I mean how many experts does it take to manage a worm farm? Two points
1. Focus, focus, focus
2. Time is not always measured in weeks, quarters, months, or even years.
September 6, 2007 at 10:41 pm
Jeffry Pilcher
How much of Umpqua’s growth was due to mergers and acquistions? I tallied up only six of Umpqua’s acquisitions in recent years, which, in total, cost Umpqua shareholders $1.2 billion:
Western Sierra Bancorp (paid $355 million)
Humbolt Bancorp (paid $340 million)
Centennial Bancorp (paid $215 million)
Linn-Benton Bank (paid $114 million)
Northbay Bancorp (paid $156 million)
Valley of the Rogue Bank (paid $51.5 million)
The Humbolt acquisition alone added over $1.5 billion in assets.
Essentially, every dollar Umpqua spends in acquisitions, they get about $4.4 in assets. So $1.2 billion in six deals should have bought them around $5.3 billion in assets.
One of banking’s dirty little secrets is that you can just “buy growth” when you need to. And banks aren’t subject to the same kind of geographic restrictions and governmental regulations as credit unions are.
While I admire the Umpqua brand immensely, I’d urge caution before drawing a cause-effect relationship between the brand and its asset growth.
What is more likely is that Ray Davis is a super smart guy who knows that having an attractive brand will make acquisition attempts much more appealing to his takeover targets (and perhaps less expensive).
It’s ironic that someone who says “bigger isn’t better” uses asset growth as the key metric.
September 6, 2007 at 11:03 pm
Denise Wymore
Jeffry,
Bigger is not better. If you read the one quote I cited from the book – it was that point. Getting BETTER creates a bigger bank (or CU). And in Umpqua’s case you did the math for us all to see that that is true.
You contradict yourself with these two statements:
“Ray Davis is a super smart guy who knows that having an attractive brand will make acquisition attempts much more appealing”
AND
“I’d urge caution before drawing a cause-effect relationship between the brand and its asset growth.” ????
Aren’t you saying his assets DID grow because he’s built a kick-ass brand???
Walk into the Lovejoy office of Umpqua in Portland, talk to the people that work there, observe the customers…..I have spent many hours “hanging” with them and even conducted a half-day workshop with CU marketing professionals at that branch – I KNOW it’s the brand, not the dirty little secret as you imply.
I caution you to not give credit unions another excuse to avoid the hard work and just pay an agency to change their name and say they are re-branded.
September 7, 2007 at 12:09 am
Jeffry Pilcher
There is a difference between growing organically because your brand kicks ass and growing through mergers by paying for it. Umpqua did not grow to $8 billion dollars because “hoards of people came running to their doors” in response to a killer brand. Those people were bought and sold — plain and simple — something the brand made a little easier and more palatable to customers and sellers alike.
September 7, 2007 at 12:45 am
Denise Wymore
Jeffry,
I think we’ve gotten off track on this coversation. I probably shouldn’t have made my point about asset size (it just seems to be the most popular ruler today).
I love the Umpqua Brand. I love going into their stores – I’m a big fan of their culture. It makes me happy to see someone take something as boring as banking and make it fun.
Thanks, as always, for the lively debate.
September 7, 2007 at 12:57 am
Norm
I for one can appreciate Ray’s goal of being “customer focused” (or member focused for CUs) and a “relentless competitor”. CUs have been high on member service but slow to beef up their competitive nature. But Denise, you are comparing apples and oranges. Banks cater to small to large businesses while Credit Unions serve individuals. Pointing to seven year old failed marketing plans isn’t the reason for the slower but steady growth that Credit Unions usually see. Umpqua grew mostly by merger and acquisition while Credit Unions grow by attracting more people. Ten percent growth each year for each of the Credit Unions mentioned is not only admirable but leading the industry. No body is letting anyone off the hook with industry leading growth / service that helps individuals more than stockholders.
September 7, 2007 at 2:33 pm
Denise Wymore
Norm,
You’re right. Umpqua does cater more to small business owners. Most of the credit unions today are considering, or have already added business lending and business accounts to their mix. Why? Because they feel they need to grow to achieve economies of scale.
Will that work? Time will tell but my guess is, it won’t.
Credit unions need to focus. Trying to be all things to all people is a slow death of a business plan.
The two Eugene Credit Unions knew what business they were in. One was very service focused, the other, competed on price. They were WalMart vs. Nordstrom. Not competitors. They were each carving a nice little niche….then they began to see each other as competitors and lose focus.
Both are good solid financial institutions to be sure, but it’s hard to tell the difference between the two today. They both offer business services as well. Does that make them a competitor of Umpqua?
September 7, 2007 at 6:53 pm
Jeffry Pilcher
I share your love of the Umpqua brand. It is one of the top 2-3 in the country.
I have a relative that works for them as a VP. He tells me about their a “Culture Department” that reviews the brand performance of everyone, everywhere in the company every month.
And Umpqua employees are given an allotment to spend on customers (every month, I believe).
Also, Umpqua employees are given 40 hours PTO every year if they want to engage in some charitable or community activity. This is in addtion to any vacation and sick time.
September 18, 2007 at 5:55 pm
Anonymous
Two separate thoughts here.
As a member/customer, Just because I’m bought and sold doesn’t mean I’m going to stay. What are you going to do to keep me?
In a CU I once worked for, we looked at Umpqua as an example and one of the execs said it was a “west coast thing” and that we’re not there yet with banking in the east. But doesn’t someone have to go first?
September 18, 2007 at 6:12 pm
Denise Wymore
Dear Anonymous,
Your east coast boss was right – Umpqua is a “west coast thing” It wouldn’t play well at all in Jersey.
But that’s the point of brand – find out what WOULD and do it better than anyone else.
And yes – somebody has to show that being truly customer centric leads to growth.