PNC Bank Corp. is telephoning all of its 1.8 million deposit customers in the last stages of a profitability improvement effort.
The Pittsburgh banking company has designed and introduced seven deposit products over the past year that take customer profitability into account. The analysis included customers' choices of delivery channels, and PNC fretted about the public's reaction because some could be penalized for using tellers.
That led to the unusual idea of conversing with customers one-on-one about their banking habits and the effects of the new regime.
"It's incredible," said Thomas K. Brown, a longtime banking analyst and expert on delivery technologies who is now managing director at the hedge fund Tiger Management. "I have to think about whether it makes sense."
"We felt comfortable that the packages were fair," said Joseph C. Guyaux, chief executive officer of PNC's regional consumer bank. But for about three months, "we were just not feeling good" about rolling them out. "We had trouble pulling the trigger."
Since last October, in a campaign expected to last until June or July, PNC has been contacting customers in waves. It is mailing tens of thousands of letters at a time and following up with phone calls from representatives in each of its 750 branches.
PNC is not the only banking company creating new accounts that incorporate the cost of executing transactions. But it clearly stands alone in its communications strategy, which extends even to the 80% of its deposit customers who were not affected by new price schedules.
Mr. Brown's ambivalence was prompted by the fact that it may not be worth putting time and energy into calling all customers; some unprofitable ones might not be worth the effort.
Ben Levitan, president and chief executive officer of the consulting firm James Martin & Co. and an expert on customer relationship strategies, said PNC is breaking a mold and perhaps distinguishing itself positively.
"It gives them a chance to ask people how banking relates to the rest of their lives," he said. "PNC may find this pays off for them in spades."
Interviewed last week during American Banker's retail best practices symposium, Mr. Guyaux said PNC expected it would benefit more by helping people qualify for certain packages than by presenting them with the option of paying up or taking their business elsewhere.
The company was mindful of the public relations debacle suffered by the former First Chicago NBD Corp. a few years ago when a change in pricing strategy included a $3 fee on some teller transactions.
"Our concern was that our best customers would worry about the changes if we hadn't had conversations with them by the time the story hit" the news media, Mr. Guyaux said.
Of the less than 20% of PNC customers potentially affected, 35% to 40% can avoid fees through minor adjustments in the way they do their banking, Mr. Guyaux said.
PNC installed a computer program that helps service representatives recommend the best options.
The scripts that guide these conversations are regularly reworked. One surprise was that customers unaffected by the change worried about customers who were. So PNC added a script that helps employees explain the entire program, not just its impact on a single customer.
As a side benefit, employees are becoming more adept at consultative selling, Mr. Guyaux said.
Training has not proved burdensome, he said, because employees are enthusiastic about being able to help their clients.
"They've got their hearts and minds in it, so their learning really goes up," the banker said.
To justify the cost of the calling campaign, which Mr. Guyaux did not specify, PNC took into account several intangible benefits, including customer satisfaction and retention. It also figured that representatives could cross-sell products while on the phone and encourage customers to switch accounts from other institutions to PNC.
"When you put it all together against the cost, it was a positive number," Mr. Guyaux said. "If we can't execute this type of program, we don't have a future."
Revenue gains from the effort are expected to be far more significant in the long run.
New accounts would "not even be 5%" of the $350 million to $400 million that PNC's regional consumer banking business is expected to earn this year, Mr. Guyaux said.
