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Tightwad Bank: A Lesson in Branding
Entrepreneur.com
10/13/08 - 12:29 PM EDT
Elizabeth Wilson
of
Entrepreneur.com

Sometimes it's all in a name. Six-month-old Tightwad Bank in Tightwad,
Mo., uses the double-take factor to drum up business without even
trying. It hasn't spent a cent on advertising, yet it can rattle off
personal and business accounts from California, New York and even
Carrot River, Saskatchewan, Canada.
It's a bank without a Web site (although it plans to offer online banking
by the end of 2008), and its 112 accounts already exceed the town's
population of 63. Passing the town's name on to the bank was the draw
for Don Higdon, the entrepreneur and chairman of the bank, when he
purchased the then-shuttered building last year.
Indeed, the
unusual name has acted as a media magnet and marketing engine,
resulting in a flurry of new accounts. However, the last thing Higdon
intends to do is open Tightwad Bank branches cheek by jowl across
America.
Instead, he'll consider a few additional Tightwad branches
while maintaining his current focus on leveraging the power of the name
to encourage tightwads across the country to open accounts at the two
branches he presently chairs.
"It's a difficult name to forget," Higdon says. "You typically have two
reactions: One is 'What? What is your name?' You're not going to get
that customer. And the other [is] there's a smile on their face and
they're just dying to open an account. I think that's the kind of
excitement from a name that a lot of companies want to have."
He says any reaction to a name, good or bad, can help a business.
"When you can get a measurable reaction simply from a name, your
challenge of converting them to a customer is diminished substantially;
then all you have to do is talk about price or size or location, and
location just isn't an issue anymore."
Higdon, a career banker, his wife, and his business
partner Jeff McCalmon decided to pour all of their collective personal
assets into purchasing Reading State Bank in Kansas in 2000. They
purchased Tightwad Bank as a second branch in 2007, and opened it six
months ago. At the same time, they changed the name of Reading State
Bank in Kansas to Tightwad Bank. Since Tightwad Bank opened, the bank's
deposits have grown from $11 million to $13 million at both branches
Higdon chairs. The newer Tightwad assets are worth $1.7 million.
"This bank in 2000 was in a lot of ways a start-up. It was a little
country bank; the town had shrunk because of technological and societal
changes and demographic changes. It was only $4 million in total assets
in the beginning, prior to doing the Tightwad branch conversion,"
Higdon says, referring to the Reading, Kansas branch when they first
opened it in 2000.
Name Recognition
He's well aware of the pros and cons of using an uncommon name in business.
"People
see the name and a number of them say, "Is that a real bank, and you're
FDIC insured?' We go 'yes, yes, yes' . . . so the unique name gives us
opportunity that other banks don't have; the flip side of that is the
credibility issue," Higdon says.
With a name like Tightwad, which has negative connotations like
stinginess, Higdon says they're pushing positive interpretations of the
word, letting consumers know this is a bank that's "going to deliver
real goods and services in a cost-efficient manner that would be
consistent with someone who's prudent and responsible with their finances."
"We're going to appeal to a fairly narrow scope of potential
customers," Higdon says. "Some people just won't get it and will have
no interest doing business with a bank of that name, and I would
suggest to you that they're probably the more high-brow or snobby
types. The others totally embrace it."
Rita McGrath is a professor at Columbia University's Business School,
where she teaches MBA and executive MBA courses in strategy and
innovation. She says using a different kind of name is a "strategy
that's used by many firms to add an empathic or emotional appeal to
their products that enhances the basic functionality of what they have
to sell."
"A quirky name like this can often provide valuable differentiation for
a company, particularly in a relatively commoditized (and, to be frank,
boring) industry like banking," McGrath says.
She thinks it will be interesting to see whether the name becomes even
more salient during these tough economic times, "when being a tightwad
may well be seen as more honorable and intelligent than being a silly,
credit-consuming spendthrift."
"I bet there are a lot of banks who wished more of their customers were proud to be tightwads today, for sure," McGrath says.
Tightwad isn't the only bank with a strange, name-brand appeal. There's also the Fifth Third Bank (FITB Quote - Cramer on FITB - Stock Picks),
a Midwestern bank headquartered in Ohio. Higdon's heard of the bank.
"It's kind of a weird name, but it sets them apart," he says. "You
remember that name, unlike so many that are called first national bank
or community bank and on down the list."
And there are plenty of strange town names to come by in the U.S. Many
of them are geographically close to Tightwad: Wisdom and Peculiar in
Missouri, and Fairplay, Colo. There are also Rough and Ready in
California and Happyland, Okla.
One of Tightwad's customers is Henry Leonard, who was a career banker
before deciding to take over Marthabelle's Printing and Mailing, the
printing business his mother started in Kansas City, Mo. Leonard enjoys
a bank with a lively name, and that sends a clear message about his
"tightwadness" to his business's vendors.
"Too many [banks] are so dry anyway . . . and there is a bit of levity
in sending someone a check that says 'Tightwad.' I think that part of
it is fun. I tell people when they get ready to charge me, 'be easy on
me 'cause I'm a poor kid,' so I hand them a check that says 'Tightwad,'
and they hand it back like, 'riiight.'"
He uses the checks with vendors and for repair
services to send a message that he's serious about not being
overcharged. "Those are the guys who can really run you a lot of cost."
The checks are also a conversation starter. They get a reaction
from his vendors and customers. "You send them a check and they're
like, 'What is this doggarn thing?' and they're liable to call you up."
He even muses about incorporating the 'tightwad' theme into his
business a bit more. For example, he's thought about creating a
penny-pinching logo for his business. "Like a Monopoly guy running
around with a bag of money. Guess I couldn't do that, though."
Tightwad Bank has great success with its own money bag logo. It sells
items in the lobby after drawing anywhere from two to more than a dozen
carloads of people who pull off the highway each day to snap pictures
next to the large, white Tightwad sign. Available for purchase are $25
to $500 gift cards to "give to that stingy uncle," Higdon says, or a
$14 ball cap, $30 polo shirt, $11 T-shirt, $9 mug or $7 cozy.
In the end, if business success isn't in the stars for Tightwad Bank,
Higdon has a backup plan. Before he bought it, the building was a
branch of UMB Bank, which closed in January 2007. Already equipped with
the old signage, they'll call it United Missouri Beverage "and make it
a drive-through liquor store," Higdon says.
While "Tightwad" on a check might not appeal to everybody, for those it
does appeal to, it probably does so strongly, Columbia University's
McGrath says.
"That will have second-order effects, such as making them more likely
to be loyal, less willing to consider competing offers and more likely
to spread word-of-mouth around about their bank."