Appearing as a guest on the “For You Leaders” podcast, Kasasa CEO Gabe Krajicek talked with show hosts Kirk Dando and Chip Hanna about the research that Kasasa has used to enhance its challenger status and take on the megabanks.

Miss the first two parts of the podcast? Here's Part One and Part Two.

Click to listen to this portion of the podcast, and follow along with the transcript. If you’d prefer to listen to the full episode, it’s available for download on iTunes and Google Play.

 

How to Beat Goliath…and win  – Part 3
Kirk: Tell me a little bit about what's in the name? Like how did you guys come up with that name?
Gabe:

 

The name Kasasa was not ... I was about to say it was not a thoughtfully chosen name — it was very thoughtfully chosen —but it didn't mean anything. The reason that we chose it is we wanted to be able to apply our own meaning to it. When we were coming up with this idea of a brand, me and the chief marketing officer got into a bit of a disagreement about what we should call it. I wanted to name it something that would be, what I thought, easier to sell to community bankers and credit unions. And with no disrespect to our client base, I don't think it's going on a limb to say they're kind of conservative in the way that they usually do their marketing. My fear was with the kind of the creative, innovative, weird name that some people might say Kasasa is, that it would turn off a lot of our clients. I thought it'd be a lot easier to sell this if it was just like Power Checking, or Epic Checking, or something like that. The CMO said, "There's rules on how you build brands and when you build a challenger brand you don't want to try to ‘-er’ the competition.' You don't want to say like, "Tide is white, but we are white-er."

You don't want to say that, "Ferraris are sexy but we are sexier than a Ferrari." There are certain things that just own their position, and if we went out with a name like Power Checking it would sound a lot like a name that any megabank could have come up with, and then we'd have to try to differentiate ourselves in a clutter where we just look like wallpaper. She said, “The right marketing tactic, if you've got any marketing 101 sense in you, is to zig where the others zag when you're a challenger, and so we need to come up with a name that sounds different that breaks through the clutter.”

We came up with a ton of different names that were kind of just odd-ball names that we thought sounded cool and we went out and tested it with consumers and Kasasa won for likeability and recall. I think the name has been a huge asset for us because it is something that consumers do remember. I think what I learned from that was, whenever you're doing marketing, the right thing to do is to base it on consumer research and not to try to come up with your own ideas and think that you're the expert because the expert on who's going to buy is the consumer when they tell you they're going to buy it.

Now, everything that we do from a marketing point of view everything runs through consumer testing, we do research on every marketing piece that we put out just to make sure that the messages are on target and that it's going to drive the response that our clients need.

Kirk:

 

We'll talk a little bit more about that, but that is one thing is a lot of people give lip service to putting kind of a customer-centric focus and those kinds of things. You guys live that, it really is part of the DNA of the business, it's reflected in your guy's mission and your values and those things. The whole reason Kasasa even exists is to help the consumer. So I’m the president or owner of a community bank or a CEO of a credit union, and just obsessed with providing value to people in my area... give me the pitch. Why should I join on to Kasasa, what value am I going to get from doing that? I've got a marketing team, I think we know our customers better than you do possibly. Tell me why I should do this.
Gabe: The reason is based, it's all in data. If you go back to the mid-90s, community banks and credit unions had north of 70% of the market share in America. Today that's down to well south of 30%, I think it's about 25% as of today. To go from 75% market share to 25% market share over a few decades is a pretty darn big change. What's weird about that is when you go and interview consumers and you do the research, no matter how you ask the question consumers will say, I prefer community banks or credit unions 66% of the time.

You can say, “Do you trust them better?” or “Do you think they'll take better care of you, Will they abuse you with fees?” It's always about a two-thirds to the favor of community banks and credit unions. Why would it be that two-thirds of Americans say that they want to bank locally, but when they vote with their money only 25% actually do? We got obsessed with that question when we did our first big research project to help build the Kasasa brand in 2008. We've been researching it for 8 years since then.

What we found is that 71% of consumers say that products are more important than the institution, 59% of consumers say that they would bank locally if only the local community bank or credit union had the same rates, rewards, and technology as the big banks do. What we're finding is that consumers are voting for products. They're looking for products first.

In the old days when you bought a computer, for example, you would go to a computer store and they would help you find the computer that's right for you. Today consumers want to find the computer that's right for them on the internet and then they decide where they're going to buy it. The same thing is true of checking accounts. It used to be, you'd go to the bank that had a branch near your house and you'd see what checking accounts they had.

Today, 88% of consumers go to the internet to find the product that they want, for a banking product, and then they figure out what institution has the best version of that type of product. And so product has usurped location in terms of being the first decision that consumers make when they decide where they're going to go bank. The perception among consumers is that community banks and credit unions just don't have the R&D budgets and the programmers to keep pace with what they see being advertised by Chase, or Samuel L. Jackson with the Cap One commercials with cash back.

They don't believe the quality of the products is good at community banks. What we do with Kasasa is change the lens through which the consumer sees those products. No longer is the product being offered by the local institution, something that they cobbled together the best they could, it's the result of hundreds of institutions all across the country, the sixth largest banking network pulling their resources and building world-class products that take the consumers best interest to heart.

What we found is when our white label institutions switch to Kasasa, I mentioned earlier that our initial beta institutions got about a 30 to 40% lift in account opening. Today we see, because we've gotten better at marketing, when our white label institutions convert over to Kasasa they're getting about a 60% lift in new account opening. It's the same product, it's the same budget, it's the same market, it's the same consumers. It's just tapping into what the consumer is telling us and that is that they don't believe the products at small FIs are good, and if they had a reason to believe that the products are good they would do what they already want to do and that is bank locally.

The combination of the bank’s brand or the credit union's brand and what it stands for — caring about the community, being a part of the community, actually knowing their customers and members — is just like peanut butter and jelly with the Kasasa brand because the Kasasa brand compliments the FIs brand by saying, "By the way,  the products are great too."

Kirk: One more question, you've got me hooked. I think you answered it but if I'm sitting there and saying, "Hey yeah, but I've been competing with Charlie across the street for years. If he's got Kasasa and I get Kasasa, how am I going to differentiate?"
 

Gabe:

What we do is we look at the market share of a saturate ... We will not over-saturate a market with Kasasa financial institutions because obviously, if we're in a small community of 10,000 people served by three community banks and we sign up all three community banks, absent the chamber of commerce creating a reason for more people to move to that town, we can't do anything with market share. We're careful not to over saturate.

When you look at it from a nationwide perspective, which is reflective of most of the markets in a country, 75% of the share is at the megabanks. Why would the 25% fight over the scraps from the table when they could unite and be able to take actual market share away from the big guys in a way that they have proven incapable of doing for the last few decades, and that's exactly what we're seeing with our clients when they go into market.

If the idea of winning to you is beating the local CEO who plays golf with you on the weekends at the country club that's also a community banker. If you have to beat him to feel like a winner, Kasasa is not for you. Kasasa is about the guy that you play golf with having the best month of his year because of Kasasa, and you also having the best month of your year because of Kasasa.

Kirk: That's brilliant, and also I like the fact that you guys don't try to saturate a market because then what it also does is it creates a uniqueness. I mean, the people that have enough vision, and we'll talk a little bit about that as a leader, to predict the future get in early, or you might be standing on the outside really fighting for the table scraps.
Gabe: Yeah because once we saturate a market we're not going to sell in that market anymore so the credit unions or community banks that are on our team, with no disrespect to them and we care about this industry, but you are the enemy at that point, because we'd have to go steal share from you and we're going to do it with all the marketing and sophistication skill of a megabank and the marketing budgets of every institution that's in that market combined, not just all of them disparately and individual.

There is a big threat not being on the team but that's why we encourage people to join now and I think it's been a big part of the reason — is people are seeing Kasasa grow —that our sales have just kept increasing every year because people realize they can't just ignore us anymore. They have to make a decision to compete or to join.

Kirk: If you tethered all your Kasasa clients together, where would you guys be in the world of megabanks, where would you guys rank? Would you be number 20, number 10 number-
Gabe: We're sixth in terms of branch reach. We have about 2,550 branches right now.
Kirk: What did you pull from the podcast, one of the things that we talked about is the road to heaven does go through hell, and it's your choice if it's a day trip or a daily trip. Meaning how you approach difficult situations, tough times, and if you're in business for any amount of time, those times will come. It seems like there is always a test right before there is a big triumph and unfortunately, it seems like too many of us get stuck in that test but you heard about how Gabe got put into the test and made it through.

How does that make you think about your business and the test that you are faced with on a regular basis? The other key point that I wanted you to pull out of today is: not only does the road to heaven go through hell but it's worth it. It's absolutely worth it. Another key point that we talked about today is if you have scattered focus, you are going to end up with scattered results. You heard Gabe talk about when he kept on focusing on white label as well as trying to get Kasasa off the ground and until he went all in and got uniquely focused on the Kasasa he didn't have the big breakthroughs that they're seeing today.

What did you think about this episode of For You Leaders podcast? We would love it if you would leave a review for us, good or bad, Chip and I truly do care about making this better. We've got some fantastic guests coming up on future podcasts and when you give us a review and give us feedback, it helps us only get better, so please leave your thoughts we would appreciate it, and thank you and have a great day.

 

Check out Part One where Gabe sets the stage for Kasasa’s battle with the Goliaths of the banking industry, and also Part Two where reveals how the company almost closed its doors due to an illegal product.