Ray Davis gets two or three bankers a month visiting Umpqua Bank, based in Portland, OR, with branches in Washington and northern California too. They come to see the bank that takes retailing seriously. And acts like a retailer.

“I don’t think we are doing anything that is rocket science,” said Davis, the company’s CEO. “This is marketing management 101 – I’m sure at Microsoft they sit in a room everyday to ask how to sell.”

Bank products are pretty much commodities, said Davis, so the question for his organization is how do you get a customer to drive past three of his competitors to do business with Umpqua.

“How do you take those products and deliver them in such a way as to create a customer experience that boggles the minds of our clients, prospects, and our competitors?” In fact, said Davis, people talk about Umpqua as a brand rather than a bank.

“I consider that a compliment.”

When Microsoft was looking for a setting to use for a video on the future of banking, it chose Umpqua.

“The objective of the experience Banking Initiative is to help customers and partners understand Microsoft's vision of how technology can help banks transform customer, employee and operations experiences,” said Ian Sands, director of the Industry Innovations Group at Microsoft. “We looked at banks around the world, and Umpqua Bank provided the perfect setting to illustrate our concepts.”

The latest branches, which Davis always calls stores, feature striking design and an open look. Customers can plop onto big easy chairs and use the WiFi network, have some Umpqua coffee, and read the papers.

What happens when a non-customer wants to use the network?

“Oh, they’ll be a customer by the time they leave,” Davis predicted.

The new stores might look sharp, the coffee smells good, and the concept is inviting, but the entire purpose is to sell.

“Bankers historically have been order takers,” explained Davis. “In our organization we made a decision many years ago that if we were going to grow this business into something of significance, we had to continue to sell our products. This is not unlike Microsoft or the guy who sells cars down the street; if they want to remain in business they have to be good at selling their products.”

The usual bank branch’s idea of marketing is a rack of two-color brochures that you only notice if the line for tellers is really long. When Umpqua thinks about store marketing, it looks to leading department stores that saturate sight lines with dresses, sweaters, coats and shoes.

“You see products everywhere, and they do that for a reason – they want to sell those products to you. In an Umpqua store, the only thing you see is products.”

Umpqua works to make abstract products into tactile experiences – home equity loans were promoted with a display of paint cans.

Umpqua stores also have books and CDs. In league with local book power Powell’s, Umpqua sponsors a book group, the Umpqua Read Club. Powell’s selects a title each month and offers a 20 percent discount on it. Members read the book, which they don’t have to buy, and discuss it in an online forum. July’s selection was The Family Tree by Carole Cadwalladr.

Umpqua stores also sell CDs by local musicians – Portland has a thriving music community. The program, called Discover Local Music, works with Rumblefish, a Portland-based music identity and licensing company, to choose local talent. At one Umpqua store, clients opening new accounts can browse the Discover Local Music catalog and create a free CD with 10 songs by top local artists. This isn’t just social service or a cute hobby horse of the CEO’s – it’s part of a move to bring in young customers.

Davis figures the younger generation doesn’t see a need to go inside a branch; they can do all their banking by computer from home.

“I see a disconnect. Bankers are building branches all the time, and yet the younger generation is saying that with technology they don’t need the bank’s branch. What do you do if you don’t have people coming to shop? We do things in our stores to give them a reason to come shop. For 99.9 percent of people, if they are going to a bank it is to cash a check or make a deposit. We want our customers to come in to browse and maybe cash a check or make a deposit.”

Umpqua, of course, has customers who just want to conduct a transaction and be on their way. But it caters to customers who want to stop in, have some coffee, sit in the WiFi lounge, read a paper, and perhaps talk to an investment advisor.

“We have some who come in with their dogs and spend half the day.”

This probably sounds like a horrible waste of pricey commercial real estate to most bankers, but Davis doesn’t think so.

“Retailers will tell you that two-thirds of our purchases as consumers are impulse buys. There’s no difference in banking.” The banks which began charging customers to conduct transactions with tellers a few years ago were missing an opportunity, he said.

“The longer you are in our stores, the more likely you are to buy a product.” Not necessarily during a single visit for coffee and a paper, but eventually.

Although the bank was featured in a Microsoft video about the experience of banking, Davis first mentioned his regard for Microsoft as a marketing company. He spoke about technology only after being prompted.

“Technology is absolutely vital. Technology doesn’t run my company, but without technology I would have a helluva time running my company. It is changing the world, and we see that happening all the time. If you turn your back on technology it is pretty shortsighted.”

But, he added, most bankers are using technology to do the same things they did 20, 30, or 40 years ago.

“Our organization charge is unlike most banks, which have an IT division. Our technology is called Technology Advancement, because we want them to advance our technology all the time. The thing I am most excited about is how technology, which people think of as a cold machine, is enhancing the overall customer experience, and Microsoft is right in the middle of the street. They have this figured out.”

Any bank can probably find a snazzy design firm, and Umpqua doesn’t have any great technology edge, but Davis isn’t worried about competitors cutting into his business, even though he is up against both some of the largest, and some of the sharpest, banks in the country.

What makes Umpqua work is the culture, he said.

“Our culture is our greatest asset, and it is our greatest area of risk. If we don’t pay attention we could become just like everyone else.”

Everyone else got to be the way they are today because they have become bureaucratic, and lost any sense of urgency. Culture requires more than a speech from the guy at the top; it requires he practice what he preaches.

“Anybody can build a fancy looking store, but what you need to evaluate is what goes on inside the store and the discipline to create the culture.”

Behind the discipline and the culture is incentive-based pay for everyone in the organization. It is automated through software, otherwise employees wouldn’t trust it.

But there’s more, of course. Employees can give away coffee, chocolates, or send a customer a bouquet of flowers when the bank makes a mistake, or just to thank the customer for being chronically cheerful. And the gift comes signed by the employee, not the CEO.

“We empower our people to make every customer decision they want to make. If one of them wants to send you flowers or send you home with coffee, they can. We had three employees who went and split a cord of wood for an elderly man. That’s the stuff people remember. And I don’t take it for granted. Having a culture is like having a teenager – you better know at all times where they are, what they are doing, and who their friends are.”

So isn’t he afraid the competitors will take this away and do it themselves?

“We talk about the culture and they say, ‘God, we could never do that.’ They don’t have the commitment at the top, and they don’t want to work that hard.”

www.umpquabank.com