Asset Based Lending
Chief Investment Officer
Commercial Loan Automation
a personal view of the definition of service
Wishing you a happy and delicious Thanksgiving (it could get even more delicious with my fool-proof cranberry ginger sauce recipe on www.anatbird.com),
A Personal View Of The Definition Of Service
SuperCommunity Banks used to compete on service. They still do. The problem is, they have been joined by countless other banks, including the largest in the country, that claim service as their competitive advantage. While community banks continue to state that their service is indeed superior to all others, and support that by stellar customer satisfaction scores, the definition of Service itself has remained elusive.
We are all clear that Service goes well beyond the mechanical elements of the mystery shops we conduct. The problem is, it is so easy to measure the elements we survey...but the relevance of the information is questionable.
As is often the case in such situation, I look outside our industry for clues. Here are my observations.
When I moved to New York 25 years ago, I was looking for a good place to have business breakfasts. As a foodie and a business developer, having a good breakfast at the right place was of great importance to me. Hence, selecting the appropriate venue was key. I sampled several hotel restaurants by my office at 47th and Park, and ended up selecting the Waldorf Astoria. The hotel wasn't the closest to my office, nor was it very chic or "the right place to be". The sole reason for my selection was a waiter named Ray.
On my first visit to any of the restaurants, I had to ask for oh so many things that are idiosyncratic to me. The tea had to be weak, the fruit not mushy, etc. etc. etc. In all restaurants but one I had to ask for the same things at the second and third visits. At the Waldorf, Ray welcomed me with a large pot of weak tea, and a pile of the cheese Danish that I liked to boot. He welcomed my guests as if they were royalty, and made both them and me feel very special and welcome. He out-serviced the eating clubs that surrounded us and the restaurants alike. He became addictive. Mornings without Ray weren't the same. I needed my tea, fruit, Danish, muffins and all the hospitality that only Ray could offer. He really gave me no choice but to return to the Waldorf day in and day out. He even shared with two other waiters my likings, just in case I came in his absence. He went well beyond my expectations.
Twenty five years later I don't do breakfast at the Waldorf anymore, having moved to the West Coast. But whenever I'm in town, I stay at the hotel and only recently started considering other choices. Ray made the Waldorf over $250,000 over the years through me alone.
A similar story is Tommy, now the General Manager and then a reception clerk at Smith & Wollensky, the famed steakhouse. Tommy welcomed me the first time I came to the place and has been welcoming me ever since, no matter how long is my absence. I show up and a huge bowl of limes arrives at the table almost immediately, often accompanied by a complimentary bottle of wine. How can I resist? Tommy, like Ray, created a zero-friction environment for me, an ideal haven in the middle of the day, and I gladly succumb to that every time I'm in the City.
What is it about the service of these two icons that made such a huge difference? Consider the following:
Continuous learning of the customer idiosyncrasies. We are all unique people, and we have special needs and expectations. Our unique needs evolve over time, but they are often very clear to us, and obscure to others. What Ray and Tommy have done is focus on those upfront, learn quickly what my special requirements were and cater to them immediately. As I changed, they changed with me. They captured me as a loyal customer early on, though, because they were especially attentive to me as a person, rather than one among so many customers.
The same can be done in banks, perhaps not for all customers but for the high value repeat buyers. Learning who they are and how they prefer to be communicated to, putting the notes in the file to recognize the unique aspects of each high-value customer, creates retention that is extremely difficult to break. The knowledge is resident within the branch staff, the commercial lenders, the trust officers, but it is not acted upon consistently and uniformly as it should.
Exceed expectations from day 1. Customer have expectations from their vendors that fall into two categories: The basics (such as accuracy, timely statements, interest payments from a bank) and the beyond-and-over (such as getting a call when a check is about to bounce, keeping the branch open five extra minutes when they are late). Those expectations can be exceeded early on, and thereby cement the relationship before thoughts of defection come to the customer's mind. Anchoring the customer with a "mass-customized" approach to exceeding expectations is a great opportunity for banks. The process of on-boarding is an example of the beginning of such an approach.
Banks have an opportunity to prescribe beyond-and-over behaviors for both new and existing high-value customers that will clearly distinguish their service from others. I'm talking about elements that go beyond the anecdotal "special treatment" some customers get when they are in need. We have all heard stories of the kind banker driving through a snow storm to bring cash to an ailing customer. These are wonderful acts that should be encouraged, but they are not systematic. They depend entirely on the individual, and do not permeate the organization in a methodical fashion. Some banks open their doors 15 minutes early and close 15 minutes late. This is one such example of institutionalized behavior that goes beyond customer expectations (since they expect you to be open only when you say you will).
Make me feel like I matter. Customers detest feeling expendable. We all do. Yet our behavior often shows them that we don't care. Consider how upset you get when you're at the airline counter and two attendants are chatting with each other while keeping you waiting. They convey to you two things:
- They don't care.
- You don't matter. Banks are guilty of doing that on occasion as well.
They can and should transition to demonstrating care and the customer's importance by building a culture of customer care that is supported by some specific guidelines and behavior expectations. The question is: What can I do to humanize our customers and avoid making them feel like they are just a number to me? A friendly teller is most helpful, and other aspects can support this as well. Learning more about the personal likings of our customers (i.e. are they chocolate fans? Wine mavens? Sports fans?) can help you personalize your attention to them and demonstrate to them that you care about them individually. Again, this is not a mass market approach, but a process that can be executed by all employees that touch your best customers across business lines. It is common practice among brokers, but there is no reason why you can't institutionalize this beyond a small group of employees and customers.
Get personal. Ray brought me cream puffs that his wife made from time to time. I brought my home made jam in return. This became more than a waiter-client relationship. It transformed into a superficial friendship. There is power and risk in such transformation.
The power of this approach is in recognizing that people bank with other people. The risk is that when those people leave the institution becomes vulnerable. Building programs that combine institutional and personal service can yield the kind of institutional loyalty we're all looking for. Different customer groups look for specific personal activities and services that can be brought to them by the company vs. the individual banker. Remember the old travel club for seniors you used to have? Some banks still have it, and enjoy huge deposits from the senior marketplace without the typical large rate premiums they expect. Another example is mass-customizing branch openings to their communities, which transform the event into a personal contact. When Commerce Bank opened a branch in Chinatown in New York, they offered rice cookers to the customers. They reached $30 million of deposits in one month. They realized that George Forman grills won't fly in that community. Instead, they showed their community and personal connection by the gift they offered.
This sounds very simple. Indeed it is. It only requires forethought and community and personal understanding, which aren't always available.
The benefits of this approach are numerous. Let me mention a few:
Business consolidation. I ate at the Waldorf almost every day because I got there everything I could possibly ask for from breakfast. This kind of loyalty is what we're all looking for.
Word of mouth. I sang Ray's and Tommy's praise countless times. This type of advertising is truly priceless, since a customer referred is much more inclined to buy than a customer coming off the street or due to an ad.
Putting up with minor disappointments. Things weren't always perfect at the Waldorf or at Smith & Wollensky, but I was willing to put up with minor glitches due to the on-going benefits I found in the relationship. Our own customers often give us the benefit of almost 25 basis points of rate before they consider defection. This is of enormous value.
On-going income stream. These two businesses could count on my income with great regularity. This is an asset we would all appreciate, and so would the analysts that watch our companies.
Taking a stab at defining quality service is easier when you project from your own experience outside our industry. Tracing back stellar experiences we've had and crystallizing the main elements that made the experience so special is one way to define more precisely what you mean when you say "our service is the best in our market". It's a concept that is difficult to operationalize, but without crisp definition remains elusive.