Customer Perceptions

In the early 1990s the long distance telephone companies (then AT&T and Sprint, oh still AT&T and Sprint, but not exactly…) started competing viciously for customers in the U.S. The recognition that long distance phone service was a commodity–and with the market at saturation–the telcos realized that the only way to grow was to launch predatory offers to “steal” other companies best customers. You will recall those now infamous ’switch’ mailings that contained a $100 check, payable to you if you switched your long-distance service to one company or the other.

Many savvy consumers, mostly fund-starved college students, began to take the telcos up on their game. Consumers actively switched back-and-forth every few months, collecting $100 from the winning company with each switch. Though the outcome was not what the telecos expected, they did manage to get one thing right: they made it EASY for customers to switch. A simple phone call, validated by that ever-presenet third party (who are those people anyway?) and you’re done! You didn’t even need to contact your former provider and deal with the guilt associated with closing your account… for the fourth time in the same year.

So, could this happen in retail banking? It has already started.  Just this week I received a letter from a bank in New York City to incent me to swtich with the lore of a $100 deposit into my new checking account if I completed the transaction. And some quick web searching turns up similar offers prominently displayed on the biggest bank’s web sites:

Wachovia

Citibank

The big question that remains is not can the big banks execute a ‘teleco-like’ switching war, but can they do what the telecos did so well and make it easy for me to switch. [Whether the new bank provides any incremental value will be the subject of another post.] The overwhelming answer to the question of esay is: not yet.  Not one of these banks provides an easy ‘do it for me’ process.  And, altough everyone’s tolerance is different, $50 or $100 to switch my primary bank account seems quite a small reward for such a hastling experience.

Some quick web-based–not statitstically sound–research shows, however, that there are a few institutions that are getting it right. As recent studies have demonstrated, it is the smaller banking institutions, the community banks, who get it right when exceeding customer expectations and developing winning value propositions.

Founded in 1892, with 17 branches in Indiana, Monroe Bank is truly a community bank. The bank focuses exclusively on customer service as the primary differentiator. You can even look up phone numbers to all company emloyees on the web site and call the CEO directly or send him an e-mail!  But the real kicker is that little Monroe Bank promotes a ‘switch’ process that not only tells you how to swtich, they provide a form to fill out and switch your accounts (including direct deposit, online billpay, etc.) for you.  They don’t even offer an incentive to switch, other than getting to deal directly with Mildred down at the local branch and the ability to call the CEO directly!

The big banks could learn something from Monroe bank.  Imagine the power of being able to offer an online process for switching your bank without having to deal with the guilt of contacting your old bank?  And I know how everyone loves their bank to begin with… so the switch, assuming you can find something better, is all the better… maybe little Monroe could serve your needs?

Scott Lieberman :: Feb.15.2007 :: Uncategorized :: No Comments »

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