Farm Credit Canada is the David of the Canadian Banking Industry. But unlike the biblical tale, FCC has more than one Goliath in its path — it has five. And they’re all trying to steal its clients.
Based in Regina, Saskatchewan, FCC provides business and financial solutions to farm families and agribusiness across Canada. And while it boasts a portfolio of $10 billion (CAD), its competitors — companies including the Royal Bank of Canada — weigh in with portfolios nearly 20 times larger.
In addition to the sheer size of its competitors’ operations, FCC is forced to fight on an uneven playing field. Because its primary shareholder is the Government of Canada, it is not allowed to offer services, such as operating lines of credit, deposit accounts, or home loans, due to the fear of unfair advantage.
While that factor threatens immediate growth, the five large Canadian banks are doing their part to raid FCC’s existing client base. By flagging large payments that FCC customers make through competitors’ checking accounts and automated banking systems, the banks are able to identify FCC’s top customers. To entice those clients away from FCC, the banks bundle key banking services with their term debt, offering similar terms and conditions at a slightly lower interest rate than FCC’s.
As the banks zero in on FCC’s large, successful clients, another hand is at work, robbing it of smaller accounts. According to Thakker, the number of farmers in Canada is shrinking, and the size of farms is growing larger. In the next 10 years, 50 percent of Canadian farmers are expected to go out of business, partly due to attrition.
With a vested interest in assuring that its clients survive in the industry, FCC needed a strategy to retain customers, target new lending opportunities, and differentiate itself from the chartered banks.
Become Advocate for your Customers
FCC quickly decided against new product development as a strategy to differentiate itself. The features and financial terms related to loans are easy for competitors to reproduce, without significant cost. Key competitors match product features within weeks of initial launches and promotional campaigns.
Even if FCC could sustain distinct products and services, it would not result in a significant advantage over its competition. Industry research conducted by Waltham, MA,- based Copernicus Marketing Consulting indicates that bank brands, as well as competing banking products and services, have extremely low levels of differentiation in the minds of consumers, measuring just above bottled water.
Instead, FCC capitalized on the biggest weakness of its competitors. Service-dissatisfaction ratings for all five competitors are astonishingly high.
“We aren’t able to be the lowest-cost provider,” Thakker admits, “but we’ve made a very conscious effort to differentiate ourselves through our expert staff and our customer interactions.”
To cement this advantage, FCC went beyond the normal boundaries of customer service — it became a customer advocate.
In 2004, FCC launched the “Very Important Producers’ MarketPlace,” at the Ramada Inn and Conference Centre the evening before the 2004 Pacific Agriculture Show (PAS).
FCC invited food processors and cottage-industry operators to participate as “Taste of Success” vendors at the event — exhibiting their products at tables positioned around the room. Then it provided each of its 300 attendees with an empty paper gift bag, menu, and vendor guide.
Each attendee also received a paper wallet with a special message imprinted on it: “Performance should have its rewards… Is cash okay?” Each wallet contained $20 in VIP MarketPlace bucks, which were redeemable at any of the 22 vendors.
This unique giveaway encouraged guests to network with FCC’s other key clients, visiting all the vendors in order to sample their products and select the gift they’d most like to take home — from wine and chocolate, to jams and gourmet cheeses.
Attendees could see the breadth of successful products produced by FCC customers, and network with potential buyers of their specific products.
In addition to mixing and mingling with other FCC clients, guests were able to meet with FCC employees, including the company’s CEO, John Ryan.
“The participants in the agricultural industry see the large corporate bank executives as largely invisible and completely inaccessible,” Thakker says. “Mr. Ryan, FCC’s CEO, loves going out and meeting with our clients, demonstrating our customer focus and approachability. And if you, as a client, have the CEO’s business card in your Rolodex, you feel like you have a connection upward.”
A Bountiful Harvest
Following the first VIP MarketPlace in 2004, 44 of the customers who attended expanded their portfolios by a total of $40 million (CAD), four times FCC’s initial objective of $10 million (CAD).
These results are especially remarkable because of the low cost of the event. Cost-saving measures, including the low catering costs and in-house printing and design, allowed FCC to produce each event for less than $20,000 (CAD).
Perhaps most importantly, 100 percent of customers who attended the event have stayed with the company, and FCC is poised to exceed its year-end goals for increased lending in British Columbia’s value-added sector after only six months.
The results are powerful. “By acting as the customer’s advocate in a market, a company has a greater chance of earning more trust, sustaining better relationships, creating positive word-of-mouth, reducing marketing costs, increasing brand value — and achieving profit and growth.” – Excerpt from original report: Cultivating Customers.
FCC repeated the event the following years.
Building a community around your business is like having competition immunity. A community protects you and nurtures you.
