When a good cause is also good for business.

When A Good Cause Is Also Good Business

Everybody is for protecting the environment the way everybody is for apple pie and motherhood. Many banks routinely make donations to various environmental causes, and project themselves as "the good guys" in their communities by doing so. But aiding

Indeed it has. Puget Sound Bank was the winner of BMA's Golden CoinAward for 1990, on the basis of successfully linking its environmental commitment with its marketing. The bank has also won numerous other environmental awards.

However, it took more than just lip service to good citizenship to make it happen and to bring it off effectively. The story goes back a little over three years to a time when the bank was searching for two things simultaneously - a new competitive strategy and a stronger identity in the market.

The Tacoma, WA-based bank ($4.1 billion in assets; $4.5 billion at parent Puget Sound Bancorp) has a history going back a century in its hometown and surrounding Pierce County, where it had enjoyed dominant (35%) market share. But by the late 1980s, competitive conditions were changing rapidly, and in ways unsettling for the future of Puget Sound Bank. Although hardly small, Puget was greatly outranked in size by several other banks in the state, and its branches were largely concentrated in Tacoma and Pierce County. What's more, five of the largest Washington State banking institutions had been acquired by out-of-state bank holding companies based in California, Oregon and New York, respectively, and all were adopting new and aggressive competitive tactics, including expansion in Tacoma and Pierce County.

PSB had not been standing still, either. It had already acquired some non-bank subsidiaries as well as some medium-sized banks, including institutions in the state's biggest, most dynamic market, neighboring King County, where Seattle is located. The most pressing problem in late 1987 and early 1988, when PSB's branches in King County grew through acquisitions from eight to 33, was how to go up against much larger, well-entrenched competitors in their own strong home market.

Gordon C. "Don" Piercy, senior vice president and director of marketing at PSB, recalled the situation back then: "We didn't have a bad image or a good image in King County - we had no image at all. And banking is a business in which the perception is often the reality. So we had a big decision to make - how to improve our market position in Seattle and King County without spending a fortune on advertising, trying to differentiate the bank in some positive way," he said.

"Remember the zany beer commercials of a few years ago? The research showed the people loved the commercials but didn't remember the product," Piercy continued. "It's expensive and difficult to differentiate products and services in something as basic as banking, especially when it's so easy to be either copied or outspent by a competitor with more advertising dollars. We saw our problem as finding a way to build awareness of our bank and then favorably dispose people toward the bank.

"As a rule, people don't normally leave a bank to go to another bank unless they are pushed out. They get pushed out in several ways: bad service, inattention or high fees. And when they leave, they have a shopping list in their heads. We wanted to be on that shopping list, at the top of the mind."

Piercy recalled something from his marketing days at another bank in the late 1970s - the bank offered a modest environmentally related incentive to customers. "Two or three years after that campaign," Piercy said, "the research showed that people still remembered it and identified the bank correctly. People like the idea of doing what's right and being rewarded for it. I never forgot that, and wanted to take that germ of a concept and put it to work on a much bigger scale."

What the idea led to at the end of 1987 was the resolve that the bank would go all out to support the local environment, not just through moral support and occasional cash donations, but also by assuming a proactive role that greatly emphasized the linkage of the bank with the environmental cause. In short, instead of giving away toasters and similar premiums to attract business, the bank would give people a chance to support the environment by supporting the bank. And in the process, PSB would position itself as the environmental champion among banks in the region.

At the end of 1987, PSB brought The Puget Sound Fund into being to spearhead its environmentally related activities. The bank hired David Parent, a former program manager with non-profit agencies who had a strong environmental interest, to be fund administrator. The Fund would identify causes for the bank to support and work with those causes; but it would also launch initiatives of its own, and work with Piercy's marketing division to find ways to get the public directly involved in those initiatives.

The choice of the Puget Sound Fund's name was shrewd. Both Pierce County (Tacoma) and King County (Seattle) face Puget Sound, and the quality of the Sound's once pristine waters and 2,500 miles of shoreline had been under severe attack from rising pollution. To anyone with environmental concerns - and the bank would soon confirm how many they were - cleaning up and protecting the quality of Puget Sound was noble work. Moreover, the name Puget Sound Fund almost exactly duplicated the name Puget Sound Bank, helping to cement the identification. If the strategy worked right, supporting the bank would also look to the public like supporting the environmental cause.

The bank began advertising that every time a customer made a transaction through one of its QuickbankATMs, the bank would make a donation to the Puget Sound Fund to support the local environment, including cleanups and other protection of Puget Sound. At later dates, the bank added further incentives, including opening BanClub checking accounts (a package of services) and purchase of scenic checks with scenes of Puget Sound an inducement to trigger donations to the Puget Sound Fund.

In King County, the ads also mentioned that competing banks' holding companies were based in such places as Los Angeles, San Francisco, Portland, OR, and Albany, NY, and the bank's customers' money might well be put to work in those places. By contrast, PSB was locally owned and managed, and its customers' money was put to work locally, going to jobs such as the clean-up and protection of Puget Sound through donations to the fund.

This point obviously touched a powerful chord, because the response was immediate and substantial. In 1988 the Fund raised $96,000 from the public through these incentives. In 1989, the sum came to $118,000, and by 1990 the sum went to $300,000. The number of groups supported went to 32 (up from 17 in 1989), and donations ranged from $500 to $25,000.

Support went to such groups as The Nature Conservancy, for its Washington Wetlands Campaign, The Puget Sound Alliance, the Washington Environmental Council, Adopt a Beach, the Puget Sound Water Quality Authority, the Pure Sound Society, zoos, aquariums and other organizations. As Parent put it, "We were in the right place at the right time, riding on the leading edge."

Clearly, the bank was catching the public's attention with this strategy. But besides the benefits to the local environment, what business benefits did the bank derive? Between 1988 and 1990, cash withdrawals through ATMs (always the principal ATM transaction anywhere) increased 56%, obviously helped by customers wanting to see the bank make donations to the Fund. In Pierce County, the bank retained its all-important market share, despite aggressive tactics by competitors, and of all checking account customers in the county, one in four is now a BanClub customer.

In neighboring King County, going up as a relative newcomer against bigger banks with larger ad budgets, the bank's market share almost quadrupled, from 2% to nearly 8%.

Research showed name awareness of Puget Sound Bank had soared in King County to an astonishing 86%, while awareness of its advertising was above 55%. Piercy said, "We were getting to the top of mind - |I know that bank, they sponsor the Fund.' We were playing to geographic pride, local identity and environmental concern, and it worked."

One of the beauties of using the environmental theme was that it could be put to work in different ways: in Pierce County, emphasizing the bank's tradition and long history there, and in King County, as part of an aggressive strategy to gain awareness and win new customers. It could, and did, accommodate both kinds of appeal successfully.

The bank's advertising of donations to the Fund, vital as it was to this overall strategy, was not the whole story, because Fund initiatives that generated excellent public relations also helped enormously. As one example, in 1988 the Fund began to sponsor an annual Puget Sound Bank Employee Beach Cleanup Day at points along the Sound, using bank employees and their families as volunteers. Once a year, on a given day, volunteers would go out and pick up trash strewn on the beaches for disposal elsewhere. In 1988, around 700 volunteers showed up; in 1989 1,500 showed up, and in 1990 the number came to 2,300 (including 200 from supportive local groups), who collected and disposed of almost 15 tons of trash and marine debris from 55 beaches up and down the Sound.

The resulting favorable publicity was enormous. The major TV stations and newspapers covered the cleanups, and numerous editorials appeared, in both metropolitan and community newspapers, praising the bank for its environmental conscience. As one editorial in a major newspaper put it, "Let a thousand imitators bloom."

Another Fund initiative which drew wide praise was the creation of a half-hour video, "Turning the Tide," with accompanying teacher's guide, which was distributed free to schools, libraries and elected officials. It discussed the problems of the Puget Sound environment, and what could be done about them. The video and guide won praise from the Institute for Environmental Studies at the University of Washington, and the State Office of Environmental Education included them in the state's environmental curriculum.

Still another Fund initiative is distribution, through the branch system and at a nominal fee, of containers for used motor oil. The eight-quart recycled plastic tubs, with the bank's name and logo, can be brought to 34 pickup centers, keeping used motor oil out of storm drains that empty into streams and, eventually, the Sound. This program addresses the fact that some two million tons of used motor oil wind up in the Sound each year, and as a brand new effort it promises to keep the bank and the Fund positioned as the champions of the environment.

Laundatory articles on the bank's environmental efforts have appeared in the national press, including The Atlantic Monthly and Tom Peters' (of In Search of Excellence) newsletter Achieving Excellence. Parent observed, "It's free advertising and of the best type. That's press you can't buy."

Piercy noted that, while the Fund was not carved out of the bank's advertising budget, the favorable TV and print coverage of the bank's environmental efforts displaced three to five times what would have been spent on advertising and PR to get the same amount of attention. "The leverage of marketing dollars is substantial," he said.

An additional benefit is that the bank's environmental stance has proven to be an excellent morale-builder internally. Each year, the number of bank employees and their families who want to join in the beach cleanups has grown, and the event has taken on the character of a bank outing. Employees and their families spend hours doing the cleanup, then break out picnic baskets and hampers and socialize with one another (cleaning up after themselves, of course). Bank employees take pride in being part of an institution that stands out from the pack in helping the environment. Besides differentiating the bank, being the environmentally concerned bank differentiates the bank staff.

Piercy noted that managers in other parts of the bank come to him with offers of help; they like being involved. And he's had reports of new companies moving to the area, hearing or seeing the ads and deciding to bank with PSB on that basis.

The bank and the Fund have gone on to win numerous environmental awards, including the Certificate of Merit from the Take Pride in America Campaign 1990, signed by First Lady Barbara Bush and Secretary of the Interior Manuel Lujan.

But maybe the best achievement of all was this: Puget Sound Bank proved that "green marketing" works - a bank can do well and do right at one and the same time.

PHOTO : Many people in the Puget Sound area were glad to help the bank protect the quality of the water and shoreline.

PHOTO : Fund tie-ins include branch collateral materials and incentives such as the BanClub checking account.

PHOTO : Bank employees and their families clean up tons of trash at the annual Puget Sound Bank Beach Cleanup Day.