Chapter Review

Case 6.2Looking for a BFF? Umpqua Bank Can Help!

Since 1953, Oregon-based Umpqua Bank has worked hard to earn a regional reputation as a friendly, responsive, and responsible community bank. Headquartered in Portland, the bank serves consumers, small businesses, and corporations in its home state as well as in Washington, Idaho, California, and Nevada. Umpqua prides itself on understanding its customers and its communities. It offers personalized service in more than 300 stores (bank branches), positioning these locations as neighborhood hubs for community events, not just places to make a deposit or apply for a loan. Every store has a hotline available for any customer who wants to personally chat with the CEO, whether to complain, give a compliment, or ask a question.

Umpqua has formulated a separate marketing mix to meet the needs of each customer segment it targets. For small businesses, it provides a variety of checking and savings accounts, credit-card processing, loans, and other products and services to help owners manage their financial resources for ongoing growth. Larger companies can choose from a broad range of banking and financial services, including some especially tailored to five particular industries: retailing, manufacturing, health care, agriculture, and professional services. The bank offers financial products such as checking, savings, and credit and debit cards for consumers, along with a menu of specialized services for more affluent consumers.

Although Umpqua operates more than 300 stores across five states, it has closed 30 stores in recent years and begun redesigning dozens of other stores. This is part of the bank's shift to a "human-digital" strategy aligned with the needs and preferences of targeted customer segments. Leading up to the change, Umpqua researched its customers' banking behavior and reviewed industry studies indicating that 46 percent of consumers do most of their banking without going to a branch.

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Umpqua had been offering online banking and mobile banking for some time, including an app that allowed customers to check balances and handle other bank transactions in automated fashion. The "human-digital" strategy takes this to a more human level, with an app powered by Engage software. Because customers using the app select a particular employee to be their personal banker, Umpqua insiders call this the BFF app, which stands for Best Financial Friend. Participants can either text or video chat with their chosen bank employee via the app, completing all kinds of transactionsexcept, of course, for making a cash withdrawal.

Testing the BFF app in Portland, Umpqua was ready for 1,000 downloads. Instead, demand was so high it had to cap the first part of the pilot at 1,700 customers. Through testing, the bank learned that 99 percent of the participants preferred to text their chosen banker. It also found that the bankers were able to build rapport with customers without in-person conversations.

Behind the scenes, the app allows bankers to access customer account analyses and summaries of previous interactions. This provides the background to deliver "circumstances-based banking" connected to events that occur in a consumer's life or in the course of running a business. Whether a customer is thinking about the financial consequences of a new baby or steering a company through a rocky economy, the Umpqua banker has the data and the knowledge to offer timely and relevant tools, advice, and services.

As a result of implementing its "human-digital" strategy, Umpqua is restructuring its stores to enable employees to serve customers via app and in person. But don't expect Umpqua to become a branchless bank. "We are always going to have stores," the CEO states. "There are always going to be people who want to know there's a human being behind the bank."

Questions for Discussion

1. Is Umpqua Bank using a concentrated, a differentiated, or an undifferentiated targeting strategy? How do you know?
2. Identify the categories of variables used by Umpqua Bank to segment the business and consumer markets. What additional variables might help the bank define suitable segments for marketing attention?
3. Do you agree with Umpqua Bank's decision to use a market test before launching its BFF app in the wider marketplace? Explain your answer.