Reinforcing some of the statements in my piece on customer retention in the current issue of Banking Technology, is this amusing comment from Stan Demarest, SVP of segment management at Hibernia National Bank:
“There was an article that came out probably 15 years ago in one of the banking trade journals, saying banks were so product-focused they’d build Cinderella’s slipper first, then go find someone it fits. CRM may be on the cutting edge for the banking section of the financial industry; the retail industry has had several years’ head start. But it’s not rocket science.”
Demarest said the bank got serious about customers after realising it knew some were profitable, but it didn’t understand why. After making some calls, they realised profitability could result from high account balances, but it could also come from late fees, interest, and insufficient fund fees.
Once the bank determined profitability, it segmented customers into Retention, High Growth, Limited Growth and Cost Management.
Cost Management is presumably a euphemism for a negative retention campaign, or “Just go away!” Bankers and CRM vendors will say, although never for attribution, that getting rid of unprofitable customers is a common goal – probably in retailing as well as retail banking.
Forget those clichés about the customer always being right – that’s too expensive, as Larry Selden and Geoffrey Colvin point out in their book, Angel Customers and Demon Customers. The goal is to lavish attention on the former and transform or dump the latter.
I was pleased to learn in my conversations that banks are increasing their focus on their Internet channels for customer interaction. When I see a toll-free number but no email or web site contact, I figure a company is a technology laggard which is best avoided. Of course, one also sees the web sites with no contact information at all. That’s just rude.
Or maybe a cookie on my computer has identified me as a demon customer and the web site is trying to send me away. Hmm, hadn’t thought of that before …