Piedmont Federal Savings and Loan Association

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Piedmont Federal Savings and Loan Association

16 W. 3rd Street
Winston-Salem, North Carolina 27101
USA
Telephone: (336) 770-1000
Fax: (336) 770-1055
Web site: www.piedmontfederal.com

IT'S YOUR MORTGAGE. KEEP IT HERE. CAMPAIGN

OVERVIEW

In 2003 Piedmont Federal Savings and Loan Association was composed of 10 branches, making it the third-largest financial institution in North Carolina. Piedmont Federal operated as a "portfolio lender," meaning it lent only its money and kept all mortgages in-house. This time-tested method of financing provided greater security for homebuyers but usually resulted in higher interest rates. In order to unbind their capital, Piedmont Federal's competition usually sold mortgages to third-party institutions. Though the interest rates were cheaper, the competition's customers were usually unaware of who actually carried their mortgages. Between 2000 and 2002, 29 percent of Piedmont Federal's customers left for banks, credit unions, and mortgage brokers offering lower interest rates. To restore Piedmont Federal's customer base and accentuate its safer method of financing, the bank released a campaign titled "It's Your Mortgage. Keep It Here."

Based in Winston-Salem, which was also home to Piedmont Federal's headquarters, the advertising firm the Woodbine Agency launched the "It's Your Mortgage. Keep It Here." campaign in January 2003. Costing less than $500,000, the campaign used television and radio spots as well as print, direct-mail, and online ads. The advertisements never mentioned interest rates, something Piedmont Federal's competition focused on, but instead touted Piedmont Federal's safer mortgaging. One of the print ads featured the copy "Separation anxiety shouldn't apply to your mortgage." Hoping that realtors would recommend Piedmont Federal as a preferred lender to homebuyers, the bank's loan officers distributed house-hunting kits to local realtors. After running for 18 months, the campaign ended in June 2004.

"It's Your Mortgage. Keep It Here." claimed a Silver EFFIE Award in 2005 for the Financial Services/Products category. It also helped Piedmont Federal rebuild its customer base. The bank originated 21 percent more mortgages during the campaign than during the 18 months prior. According to Market Perspectives, a marketing research and consulting firm, 49 percent of those surveyed in the Winston-Salem area said that they were "more likely to use Piedmont Financial Services because of advertising."

HISTORICAL CONTEXT

Ever since Piedmont Federal opened in 1903, it had been relying on quality customer service and mutual trust to attract customers. It was one of the few institutions during the Great Depression that not only retained all of its depositors' cash, but also continued paying interest on depositors' investments. "We have been committed to being a hometown savings and loan throughout our history, and that has been our biggest strength and competitive advantage," Nick Mitchell, Jr., the president and chief executive of Piedmont Federal, told the Winston-Salem Journal. "Our average employee has been here 17 years, which provides a consistent face to the community. We've had a branch presence in most of the communities we've served for three or four decades."

With little advertising Piedmont Federal grew from one branch to ten over the course of a century. By 2000, however, Piedmont Federal's customer base had begun to wane. Many of its older customers were paying off their mortgages. Other home owners were switching to outside lenders that could refinance their homes at lower interest rates. The competition also increased their marketing expenditures 39 percent in 2002, while Piedmont Federal's advertising remained relatively miniscule. Between 2000 and 2002 its customer base dropped 29 percent. Piedmont Federal also financed all of its own mortgages, while the competition was quickly selling mortgages to institutions outside of Winston-Salem's Forsyth County. Jim Lambie, the former cochairman of the Downtown Winston-Salem Partnership, an economic-development organization, stated to the Winston-Salem Journal, "[Piedmont Federal] has always been a source of community admiration because of its commitment to remaining local when there were opportunities to expand in a major way outside Forsyth." Because Piedmont Federal could not compete withthe competition's interest rates, its ad agency, Woodbine, decided to advertise from an emotional platform that boasted of the bank's familiarity and loyalty to the Winston-Salem area.

TARGET MARKET

"It's Your Mortgage. Keep It Here." targeted two separate demographics. Woodbine named the first the "Cul-de-Sac Crowd," which consisted of 25- to 39-year-olds outgrowing their starter homes. The second target, "New Affluents," was composed of 35- to 49-year-old professionals looking to refinance their current home and possibly purchase a second. Although these two groups shared little in common, the campaign catered to the targets' similar hopes for the Winston-Salem area. According to Woodbine, which was also based in Winston-Salem, both groups had gone to school in the area and planned to stay there. Also, both were classified as cautious spenders who preferred to keep their money within the local economy. The "Cul-de-Sac Crowd" and the "New Affluents" also wanted to preserve hometown traditions and improve the area for future Forsyth County generations.

According to the Winston-Salem Journal, Thad Woodard, the president of the North Carolina Bankers Association, remarked early on in the 2003 campaign that Piedmont Federal's customers were "probably a little more gray-haired" than those at commercial banks. To shed its stigma as a bank just for the elderly, Piedmont Federal retrofitted its system to include online banking before the 2003 campaign was released. The "Cul de Sac Crowd" and the "New Affluents" included consumers that fell within Generation X, the generation of Americans born between approximately 1965 and 1976. According to Karen Ritchie, author of Marketing to Generation X, the Generation X banker "goes into branches the least often of any generation, but they actually interact with the bank the most often, either through phone, ATM or online." Ritchie also wrote, "Gen Xers are worrying about their retirement plans at the age when baby boomers were worrying about Bob Dylan going electronic."

CATERING TO THE ELDERLY

In 2002 Michael Sullivan, cofounder of the marketing consulting firm 50-Plus Communications Consulting, offered suggestions for marketing to the elderly in America's Community Banker. First, he recommended that when bankers greeted individuals over 60 years old, they should gently shake their hands. Most senior citizens suffered from arthritis, making a firm handshake uncomfortable. Second, he suggested that bankers display patriotic symbols such as American flag pins, because the older demographic tended to be more patriotic. Third, because 80 percent of Americans over 60 years old had grandchildren, bankers should display pictures of their children around the office. Pictures would suggest to the elderly that the banker shared their values. Finally, Sullivan suggested that bankers not use the term "senior citizen." People over 60 generally admitted to feeling 15 years younger than they actually were and preferred not to be reminded of their actual age.

COMPETITION

Southern Community Financial, another community bank in Winston-Salem, released a newspaper and billboard campaign in 2003 that featured images of a Great Dane looming over a Chihuahua. In an approach that was similar to that of Piedmont Federal, Southern Community boasted that its smaller size afforded the bank more flexibility and friendlier service than larger institutions. Southern Community's campaign was an obvious jab at the Wachovia Corporation, a North Carolina-based bank that was acquired by the much-larger First Union Corporation. Suggesting that larger banks had a one-sided relationship with their customers, one ad's copy read, "They bark. You roll over. Not a very healthy relationship." Another print ad asked, "How much bank is too much bank?" The Bloom Agency created the campaign for Southern Community, which in 2003 had eight branch locations.

Doug Lebda founded LendingTree, LLC, in 1997 after his own attempt to secure a mortgage proved "dis-empowering, hard to sort through and difficult to understand," according to Mortgage Banking magazine. LendingTree, based in Charlotte, North Carolina, allowed future homeowners to visit its website to request mortgage quotes, which were usually available within 10 minutes. The service submitted a customer's loan request to a plethora of lenders, who competed for the lowest interest rate. Between 1997 and 2004 LendingTree facilitated more than $74 billion in loan funding. Lenders used the service because it generated leads cheaper than anyone else. According to Mortgage Banking, home owners enjoyed the service because it turned the mortgage process upside down. No longer were consumers pleading with banks to be approved for mortgages. Lenders had to compete with each other to provide consumers the best possible lending rates. In 2004 the company spent $70 million on advertising, which included television spots and print ads.

MARKETING STRATEGY

Prior to the campaign's January 2003 release, Woodbine interviewed existing and possible Piedmont Federal customers, who said that they would take loans with higher interest rates if it meant keeping their mortgages within Forsyth County. Those interviewed said that not only did they prefer to have their money benefit the local economy, but they were also frustrated with the amount of paperwork that ensued after their mortgage was sold to an outside institution. Based on this feedback, Woodbine developed a campaign with two different phases. The first part would create uneasiness amongst Winston-Salem home owners about their mortgages being sold to outside institutions. The second part would assure the community that Piedmont Federal would never sell their mortgages. The message was summed up in the tagline, "It's Your Mortgage. Keep It Here."

For the campaign's first phase, one radio commercial simulated a call between a frustrated North Carolina resident on the phone with an out-of-state bank. During the commercial an out-of-state customer service representative mocked the North Carolina customer for using the Southern word "y'all." Print ads suggested that large cities such as New York, Chicago, and San Francisco were a "great place to visit, but are they really where you want to send your home mortgage payments?" Billboard ads featured the copy "Separation Anxiety Shouldn't Apply to Your Mortgage." One Winston-Salem billboard read, "You live here in Boone, NC. So why is your mortgage in Boonesville, TX?"

The second phase of the campaign featured print and radio advertisements that used "hometown pride," as a Woodbine representative put it, to attract Winston-Salem customers. "It's your hometown. It's your home mortgage. Keep It Here." was the copy for one newspaper advertisement. Woodbine was aware that Piedmont Federal would fail if it entered the price wars between competing lenders, so none of the advertisements mentioned interest rates. Instead the advertising targeted areas that Woodbine perceived as "points of pride" among the "Cul de Sac Crowd" and the "New Affluents." Promotions during local high school football games included Piedmont Federal posters, ads in program books, and radio spots. In 2003 Piedmont Federal purchased newspaper ads that celebrated the bank's 100-year anniversary in the Winston-Salem community. Radio spots were aired during University of North Carolina and Wake Forest University football and basketball games. Full-page newspaper ads that warned of mortgages being sold to out-of-state institutions were placed adjacent to the competitions' ads.

The campaign hoped to stoke Piedmont Federal's reputation as a supporter of the Winston-Salem community. As suffering tobacco, furniture, and textile businesses were forced to lay off local residents, Piedmont Federal wanted to reinforce its dedication to Winston-Salem's prosperity. "We don't sell off our loans to create extra revenue because we remain prudent and fiscally conservative with our portfolio," Mitchell explained to the Winston-Salem Journal. "Those loans stay at home, and customers who have a question about their loan or want to purchase or move up in housing can talk directly to us."

Understanding that realtors heavily influenced which lender a homebuyer selected, Piedmont Federal created 1,200 house-hunting kits for Winston-Salem realtors in the hopes of being recommended as a lender. The bank inserted maps, a mortgage calculator, a notepad, and a pen into a Piedmont Federal-branded binder. The kits were then used as "handshake pieces" by Piedmont Federal loan officers who met with local realtors. "It's Your Mortgage. Keep It Here." ran for 18 months, ending in June 2004.

OUTCOME

In 2005 "It's Your Mortgage. Keep It Here." earned a Silver EFFIE Award (Financial Services/Products category) from the New York American Marketing Association. The award also made Woodbine one of only two North Carolina advertising agencies ever to place in the EFFIE Awards. During the campaign's 18-month run Piedmont Federal originated 1,688 mortgages, which was 21 percent more than during the 18 months before the campaign. Market Perspectives, a marketing research and consulting firm, also concluded that 36 percent more consumers would choose Piedmont Federal to finance a loan after they viewed the campaign's advertisements than if they had not viewed them. Woodbine asserted that the campaign transformed Piedmont Federal's reluctance to sell mortgages to outside institutions from a weakness into a strength. As "It's Your Mortgage. Keep It Here." drove the message that Piedmont Federal strongly supported the local economy, Winston-Salem's lenders were forced to rethink loans as more than just a commodity sold at the lowest price. Forsyth County residents were beginning to choose lenders based on the lender's commitment to the local economy, which was suffering from recession.