Stick to your strategy
Fulton has also learned that it’s critical to have a strategy when moving forward.
For instance, when the Comerica team decided to enter the California market nearly two decades ago, it didn’t simply rush in.
“It’s really understanding the market, market size, market growth, the needs of the market, how the market’s being served today,” he says.
He logged nearly 200,000 frequent flier miles flying between Detroit and California to investigate the market. Fulton asked how well potential customers were being served, what customers’ perceptions of their banks were, what they valued in a relationship with a bank and how they evaluated their current service. By doing this and asking these questions, Fulton and his team saw that the small and midsized businesses weren’t that happy with the large banks, which had most of the market share and were all trying to do 500 different things. So they saw a real opportunity to simply focus on relationship banking with small and midsized businesses.
“We had to ask ourselves, first and foremost, is that market, or what the market’s looking for, something we truly believe we can be good at?” he says. “If it is, then we’re going to look for a way to get started here.”
Sometimes it can be hard to know if you can be successful at something, but that’s when you look at your track record.
“Some of it, in our case, has been, ‘Have we done it before elsewhere?’ and to critique how well it was working and was it consistent with our competencies,” Fulton says.
In this case, the way to move into the market was by acquiring a bank based in that region. After doing that, Fulton and his team focused just on one area — relationship banking — because they wanted to differentiate themselves from the competition. Over the years, he’s used that same strategy when choosing new areas to enter, so he says it’s also important that you know your strategy and don’t try to sway from it.
“There are two kinds of strategies,” he says. “One is low-cost — ‘We’re going to beat the competition because we’re going to be cheaper.’ … The other strategy is, ‘We’re going to differentiate ourselves. We’re going to truly charge a premium because we’re providing a service that we think exceeds the competition.’”
Fulton wouldn’t even entertain anything that gravitated more toward the low-cost strategy, because he wanted to truly provide top-notch service and differentiate Comerica in the market. Over the years, Comerica added just 14 other businesses using this approach.
“They all started with the vision that there was existing and future opportunity always, then validated with research,” he says.
And each time someone floated an opportunity out there, he made sure to evaluate it for its long-term viability. For example, during the dot-com bubble, Comerica stuck to its principles and required that companies be backed by well-known venture capital firms, and that saved the company from being affected by the bubble burst. When many of its competitors were making nonrecourse loans for developers just to get deals during the real estate boom, Comerica didn’t do that.
He says, “It gets back to that consistency thing that you just have to make sure that you’re really sticking to what you know well and how you prosecute the market and don’t get caught up in the hour and the quarter and the month and the year because things are getting too frothy.”
