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VERTICAL MARKETS
Banking: Interest High Despite Upheaval
BY BRIAN McNICOLLFORM, June 1992
Although Cindi Kirkman's brush with glory came more than two years ago, it is still paying dividends. Maybe more so where banking forms customers are concerned.
Kirkman, CFC, sales service manager for Coleman Printing and Envelope in Greensboro, N.C., was featured in a FORM magazine story in 1990 for saving a customer $5,000 with a heroic Sunday delivery of an order originally placed with a non-independent. Now, Coleman sales reps show the story to prospects to demonstrate how far the company will go for good customers.
With banks becoming fewer and larger, competition for this large, prompt-paying group of customers has become fierce. The winners win by demonstrating service, convenience and reliability, many times with new technology-enhanced twists. 'Our strategy is to show them flexibility, better turnaround times and, most importantly, that we're willing to turn flips for them," Kirkman said.
The banking industry is turning some flips of its own. As big banks gobble smaller ones and medium-size banks merge, community banks are giving way to regional and even national chains. Those not merged or devoured are failing at rates approaching Great Depression levels. Many more banks are teetering near failure, but the federal government has been slow to close them. Federal regulators have spent only $3.5 billion of the $26 billion appropriated to insolvent banks in 1992, according to The Washington Post.
Surviving banks are becoming more self-sufficient in many ways, thanks to technology. Continuous forms are being replaced by cut sheets. Custom forms—everything from cash and utility receipts to loan documents—are now 2-part blank forms generated by computer. The Bank of Hawaii fills its customers' personal check orders with a CheckTronic 4000, which combines Delphax Systems print engines with MICR encoders.
On the other hand, many handle marketing in-house, providing commercial printing and ad specialties sales opportunities. Also, having cut and shuffled staffs because of mergers, acquisitions and economic hard times, many now rely more on services and products from distributors, according to Jack Sandstrom, president and CEO of Viking Business Form in Fort Wayne, Ind.
Distributors must make critical decisions in this market. Do they attempt to grow with their customers and commit the resources and infrastructure necessary to serve these larger accounts? Do they concentrate on keeping present customers who merge or are acquired by stressing responsiveness and service? Or do they focus on credit unions and smaller financial institutions?
Grow With it
Imaginative distributors are making all three strategies work. To distributors such as Jim McWhorter, manager of Gulf Sales Company of Louisiana in Kenner, La., and Charlie Stewart, president of VoluForms in Jeffersonville, Ind., word of mergers and acquisitions affecting customers is good news because they can accommodate customers of any size.Gulf, which sells to Louisiana's three largest banks, began to prepare for the new banking environment in December 1989 when one of its large banking clients announced ambitious expansion plans. The bank began by reducing vendors and relying more on those who stayed, increasing its orders to Gulf by 25 percent. Now Gulf sells this bank everything from bags and brochures to statements and stationery, and the bank has become a regional institution.
But it wasn't easy. Gulf had to find vendors for products it had never sold before—from plexiglas for teller windows to corrugated products and ad specialties. Gulf assembled a 10,000 square-foot warehouse, a complete pick and pack program, an on-line computer ordering system and a regional network of couriers to deliver to its customers' growing family of branches. Today, ad specialties make up 5-10 percent of Gulf's sales. Computer supplies—a growing part of banks' product mix—contribute 20 percent, bank supplies 25 percent and forms 40 percent. And sales are 40 percent ahead of last year, McWhorter aid.
"It costs money to do the research, find the vendors and provide the space, people and infrastructure to service these accounts," McWhorter said. 'You have to make that commitment, and it's a big one."
For another client, a New Orleans-based bank with branches more than 300 miles away, Gulf provides just-in-time inventory management and segregated billings by departments. The system became so efficient that bank officials had to apply the brakes. Orders from outlying branches were faxed to Gulf and filled so rapidly (the next day if the order was placed by noon) that the bank's central processing office couldn't keep track. Gulf now declines faxed requests except for emergencies and picks orders once or twice weekly depending on demand. "It was gratifying to hear our program was working so well we needed to slow down," McWhorter said.
Stewart had to grow even faster. A 38-year veteran of the financial forms market, he worked for 30 years at a check printing company, climbing to its presidency before leaving in 1984. In 1986, he opened VoluForms primarily to serve the banking market. A few months later, his connections began to pay off. The chairman of a Peoria, Ill., holding company that owned 17 banks asked Stewart to organize the banks' form purchasing under one umbrella.
Stewart began by making a list of all the forms used in one of the banks, then broke down the list by type—continuous, unit set or cut sheet—and size. He made a catalog of all forms used—complete with samples and usage history—then repeated the function with the other 16 banks.
When he won approval, he begin grouping orders by form size. He changed 8 x 10 forms to 8 1/2 x 11 where possible to increase savings. By understanding the manufacturing process, by knowing that plate changes were inexpensive when press setup didn't otherwise change, he generated savings of "at least 15 percent" for every customer he served, Stewart said. He's earned the endorsements of the state community bankers associations of Kentucky, Georgia and Ohio, which allow him to approach member banks with similar proposals. By 1991, VoluForms was listed as the nation's 261st fastest growing small company by Inc. Magazine.
Since then, VoluForms has enhanced the program to include full warehouse management using bar codes. When a bank signs on with VoluForms, Stewart dispatches a crew to organize the warehouse, tagging each space with the name of the product to be stored there and a bar code. Periodically, VoluForms employees return and scan each area to record forms usage. The results are sent via modem into VoluForms' computers, which trigger reorder notices three months in advance. This gives the banks—notoriously slow in decision-making—ample opportunity to change the form or order quantity before supplies dwindle.
Becoming Indispensable
Just as McWhorter succeeded by providing services demanded by big banks, other distributors stress the small-town individual service their firms deliver. Sandstrom plans to retain his largest banking form customer in Fort Wayne even after it is bought out by the National Bank of Detroit by stressing the same-day delivery, warehousing and record-keeping services the bank relies on.Victor Alexander, a sales consultant for Rapid Business Systems in Cedar Rapids, Iowa, strives for what he calls "internal referrals." Most smaller banks don't have purchasing agents, which Alexander likes. "It gives me more opportunities to find someone who will listen," he said. To get into banks, Alexander concentrates on one section first—teller forms, for instance—earning the trust of those who use the form. He then has bank employees tell their colleagues in the loan department about him, and so on.
He said many Midwestern banks only recently began to emphasize marketing and welcome help from distributors. He's sold promotional fliers and newsletters to be used as statement stuffers and other promotional mailings.
Many distributors see banks as disloyal. "They bid everything to the fourth digit after the decimal point," said Roy Trevisan, president of J & J Tec Litho, a distributorship in Farmington Hills, Mich. Others see potential to form long-term relationships with these clients. McWhorter signs annual or 2-year contracts with customers, and Kirkman's firm emphasizes becoming clients' one-stop shop for printing needs. "It strengthens your relationship to handle everything for the client," Kirkman said.
Different Needs
Even the smallest banking forms customers and credit unions rely on distributors to steer them through today's technological mazes. John Tomaskovic, president of Simplified Paperwork Systems in Darien, Ill., still handles old-fashioned forms consulting for his clients. He redesigns forms, reorganizes information systems, suggests security features, such as the void pantograph, and helps customers adjust to banking in the 1990s."I see more emphasis on security among my customers," said Tomaskovic. "I can't offer storage and some other features, so I try to offer them something different.
Trevisan said technology affects even his smallest customers. Credit unions he sells to now buy blank paper for statements. They send the blank paper and magnetic tapes to service bureaus which then generate and mail statements. Many other products have become more simple, prompting Trevisan to increase emphasis on newsletters, fliers for monthly statements and other promotional printing.
The Stretch
As clients, banks get distributors to stretch their capabilities. Distributors must master multilevel selling—presenting small forms orders to the tellers and data processing people who use them, marketing products to marketing officials and to the departments being promoted, and forms management packages to top management. Banks use everything from commercial and promotional printing to ad specialties, blank paper for laser printers and complicated multipart mortgage forms. There are teller reports, cash-in/cash-out forms, coin wrappers, money bags, ATM rolls, cards and wrappers, deposit slips, receipts of all kinds, data processing forms, loan documents, stationery and a variety of certificates.Good distributors offer almost as wide a variety of services. They track use, store forms, provide same-day delivery, coordinate ordering for savings and suggest and redesign products. "It's not an easy sell," said Alexander. "It requires a lot of time, a lot of callbacks. But it's a long-term sale. The clients tend to remain loyal."
Brian McNicoll is associate editor of FORM magazine.