Dick Lee, High-Yield Methods, has some good advice for banks that are interested in retaining customers.
From his point of view, achieving short-term financial goals makes it progressively more expensive to retain customers and expand relationships—if expanding relationships is even an option after subjecting customers to endless cross-selling, endless fees and endless rules and regs, all designed to whack customers upside the head every time they slip up.
He writes: Unfortunately, things will remain the same until one major bank starts suffering so much from the commoditization and hyper-competition in consumer banking that it decides to break ranks. And when that happens, this risk-taking bank will have only one option: to achieve differentiation by meeting customer preferences for how a bank should operate.
It's already happened at the mid-level with Commerce Bank of New Jersey for one. But now we need to see a major take the plunge.
What would this look like? Let's start with adopting a customer-centric culture that permeates the organization (rather than sales quotas that drive employees to do anything to customers to ring up numbers); well-designed, appropriate products (not zero-down mortgages that are now costing customers their homes); empowered, customer-facing employees (rather than human rule books); honesty and transparency (no backdoor fees); and of course, consistently competitive rates (but not necessarily highest or lowest).
Customer Experience Management focused on adding value to customers in ways that add value back to the bank, rather than technology-centric CRM designed to automate away jobs. What remains to be proven is whether large and larger banks can actually make the transition to a more customer-centric state.
Here's a potential scenario:
First, the bank that's breaking ranks, which we'll call Customerbank needs to research its markets to learn—and accept—how customers want it to behave toward them. Based on this input, Customerbank should engage in serious planning to identify how to deliver new value to customers.
Next, Customerbank whould assemble a cross-functional team of its key managers and customer-contact staff to design the new work policies, workflow and information flow required to meet customer expectations and deliver new value to customers—of course, deliver new value in ways that would deliver value back to Customerbank.
Then, Customerbank should select two or three pilot branches—rather than the entire system—to test whether and how increased customer-centricity leads to increased profitability. Managers and employees of these branches would not only have their positions and incomes guaranteed, but also they'd receive a substantial bonus for participating in the test.
Within these branches, Customerbank would train all customer-facing employees, including customer service center staff, in a relationship-building sales/service approach with heavy emphasis on customer needs identification. An essential component of this training is communicating and reinforcing the concept that without a legitimate customer need, there is no sales opportunity. And Customerbank would also redesign employee compensation plans to further motivate staff to do it the customer's way.
Further, Customerbank should empower test branch employees to flex on policies and even interest rates when mitigating circumstances occur (without taking undue risks or violating regulatory standards). Customers desperately want to interact with people who can help them, rather than puppets who recite rules.
And finally, Customerbank would establish clear metrics—both leading and lagging indicators—to gauge the outcomes of new customer interactions with the bank.
Properly implemented, a customer-centric approach to customers should increase, not decrease, profitability. Oh yes, a seemingly minor but important point, Customerbank would reconfigure the branch interiors to improve the customer experience (and eliminate the we-them environment).
Hard work for Customerbank? You betcha. But easier on the bottom line than slipping into an unprofitable, commodity consumer banking market. The time is ripe for a Customerbank to emerge from an undifferentiated, commoditized retail banking market.
Comments