BID Daily Newsletter
February 11, 2014

BID Daily Newsletter

February 11, 2014

Say Goodbye To Hollywood

In Hollywood, there's a lot of buzz when famous couples tie the knot and even more so perhaps when they decide to go their separate ways. People took notice, for example, when immensely popular celebrity couples like Katie Holmes and Tom Cruise, Brad Pitt and Jennifer Aniston, Courtney Cox and David Arquette, and Demi Moore and Ashton Kutcher announced plans to call it quits. The really nasty divorces tend to get even more media attention. You might recall, for instance, the super ugly breakup between Denise Richards and Charlie Sheen a few years back, which included allegations of unfaithfulness, abuse and addiction. You might also remember the public mudslinging that peppered the divorce proceedings of ex-Beatle Paul McCartney and Heather Mills.
Some would say Hollywood is in a world of its own, but we see a strong parallel to the banking industry with respect to customer attrition. Sometimes a split is unavoidable, but in many cases there's something that might have been done to prevent a breakup so it is worth watching for signs.
When it comes to banks and customer attrition there's a lot of research to draw from and a recent MoneyRates.com survey gives additional insight as to what makes customers most likely to defect. The #1 reason cited by 48% is a new or raised fee; the next most cited reason, by 21%, is a bad customer service experience. Finding a way to handle just these two key areas properly can avoid many potential issues.
The findings of this study should give banks added impetus to consider whether you are doing enough to prevent customer relationships from slipping through the cracks. Whenever a bank changes its fees, for example, there are a certain percentage of customers who might be expected to leave. These might even be some customers you are happy to see go--but it is risky. When tinkering with fee structures, be very careful not to alienate the customers you want to keep over the long-term.
Customers do best with change when they understand fees and what purpose they serve, which means disclosure and explanation are critical. There's a big difference between charging fees for services customers deem valuable and charges that are perceived as arbitrary, capricious or downright sneaky.
You have to be at the top of your game when it comes to the customer service experience, because there will always be difficult customers and you certainly can't satisfy everyone all of the time. However, when it concerns finances, people tend to be even more emotional--so, tread lightly. When there's a problem, make sure your employees empathize with customers, apologize sincerely for the issue, find a remedy and execute a solution promptly and directly.
Proper training here is crucial. When faced with a difficult situation, an employee's gut response might be to argue back, so train, train and train. Practice makes perfect, so be sure employees are trained to deal with a host of difficult situations and teach them how to improvise when faced with new challenges, as these skills aren't intuitive for most people.
In Hollywood, it may seem that couples are more likely to part ways than they are to stay together. However, unlike the show business world where relationships are often fleeting, healthy bank relationships can go on indefinitely. Set a goal to strengthen customer relationships so they remain bright as a star.