Customer Perceptions

Bank of Montreal announced a new service for its private banking customers (enCircle) that provides “lifestyle services” such as laundry pickup, grocery shopping, and entertainment planning.  Here is a great example of how BMO is extending the banking value proposition in a crowded and commoditized market.  Although the account is for the higher end customer (you need $500,000 in investable assets to qualify) the concept is a terrific example of how to drive loyalty to the brand:

1. It creates frequency – by offering services that consumers use frequently, the service allows the bank to dramatically increase its touches with customers in aspects of their lives that are not directly related to their finances, but rather how consumers live.  More frequent interactions provide the bank with the ability to influence how the consumer views the bank much more often than if they only deal with consumers when they are ready to buy a financial services product.
2. Data, data, data – presumably the bank is keeping track of the services they use – what a great source of data to create new insight on the customer that the bank could never get before.  BMO will now be able to know when its best customers are either in the market for a mortgage, or when they are looking for a new car; before they call for a loan.  Brilliant!
3. This is value – as I wrote in a previous post it won’t take long for a retail bank to create a ‘killer app’ for switching.  This new service from BMO begins to address the issue of what may compel customers to switch.  Both capabilities could be extremely powerful.

Kudos to BMO for innovating.  Let’s see how quickly their competition responds.

Scott Lieberman :: Mar.08.2007 :: Uncategorized :: No Comments »

Spirit Airlines announced today that it would begin charging $10 for each of the first two bags checked and $100 for the third. What a dumb idea. The first impact will be passengers who typically check their bag, but could carry it on if they wanted to, will now carry on. This will increase the time it takes to load the plane, making flight attendants more irritable than they currently may be, and cause more delays. The airline cites the fact that they made the move to “keep their fares low”. Huh? Do you think passengers would even realize a $10 increase in the fare? And if you check the bag, you’ll incur the increase anyway, just in an annoying nominal fee you will need to pay at the airport. Anyone think this makes sense?

Scott Lieberman :: Mar.07.2007 :: Uncategorized :: No Comments »

Commentary on how the net narrows your perspective:  People aren’t stupid, they are just too busy–or too distracted–to care, as much as your do, about the stuff you care about. – Seth Godin… Brilliant!

Scott Lieberman :: Mar.04.2007 :: Uncategorized :: No Comments »

‘Service recovery’, or making amends with customers after failing to deliver the goods, has gotten some attention lately. JetBlue’s now infamous mis-steps on Valentines Day offered a sneak peak into the damage service failure can cause on a well respected brand. The move outed the firm from attaining a top 4 ranking in BusinessWeek’s debut of its service excellence awards, and has sparked the resurgence of the ‘passenger bill of rights.’

So, can a brand use service recovery as a means to not only bolster its tarnished image, but as the foundation of its difference in the market? There are so many service related horror stories across all markets, that being known as the company that fixes its mistakes better and faster than competitors could offer competitive advantage. Here are some principles to think about:

• Admit you’ve failed! - Why do most companies–or more specifically their employees–never admit they’ve made a mistake? The majority of customers will cut you some slack if you simply acknowledge you’ve made a mistake.
• Empathize with your customers – The majority of customer service inquiries (my non scientific speculation on the data) are handled person to person, vs. through self service channels or computer to computer interactions. Companies should teach their employees to relate to the customer’s problem and how it impacted their lives. For example, if a flower delivery did not arrive in time for Valentines Day, a simple empathetic statement of “I’m so sorry, I can understand how embarrassed you must feel, we’ll send a new arrangement with an apology letter from the company that will get you off the hook with your significant other.” Simple, caring, and focused on the customer
• React quickly and decisively – If you can’t get it right the first time, establish specific actions to remedy failures quickly. Develop the means to respond to failures with a specific response as immediately as possible. The first cable provider to get this one right will break away from the pack.
• Deliver on the service ‘re-promise’ – If you’re going to commit to make amends after a failure, please, please, please do not break the promise. After a customer service failure, the customer is paying close attention to your actions. If you can’t keep the ‘re-promise’ than don’t make it, you will damage your brand more than the damage of the initial service failure.
  
• Don’t give up on getting it right the first time – The most obvious, but perhaps overlooked, consideration is to design the customer experience and the supporting company policies to reduce service failures before they occur.

JetBlue followed most of these principles in its recent debacle. Lets see if it–and others–can use service failure to build differentiation…

Scott Lieberman :: Mar.04.2007 :: Uncategorized :: No Comments »

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? Continue Reading »

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