Tightwad Bank: A Lesson in Branding One community bank is leveraging the levity of a name to send a message to consumers: This is an FDIC-insured bank with a sense of humor <i>and</i> it's a safe place for your money.

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 website (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. Tightwad's assets are worth $1.7 million.

"This bank in 2000 was in a lot of ways a startup. 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.

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, 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."