What should your credit union make of the "dilemma" presented by a study that found most consumers have no interest in a "relationship" with a financial institution?
That a credit union would only be compounding it's challenge by cutting the budget for training and not recognizing some of the pressures front-line staff feel, according to one of the analysts closely involved in the study.
As reported by The Credit Union Journal Nov. 28, the driving force behind many financial institutions' retail strategy is building relationships, but the "Frontline Experience Study" from the Bank Administration Institute found that of the 3,700 consumers surveyed, 69% described themselves as either uninterested or even "skeptical" of any "relationship" with their financial services provider. Among those consumers were 500 who said they were also credit union members.
Viewing Relationships
BAI's analysis found that while financial institutions view relationships as the number of accounts a person has with a bank, consumers viewed relationships in terms of trust and confidence and acting in the consumer's best interest.
"The results skew toward the consumer feeling they are being oversold and bombarded with sales pitches," said Kevin Blair, president of Newground, Inc. "People are just tired of being chased all the time. In order to have relationships, an institution must have some of the building blocks in place."
According to Blair, the study's findings make clear that there is room for more education of front-line staff beyond just a constant state of selling.
"Consumers really want someone to listen and solve their problems, and then build relationships," he explained. "The retail experience is so critical."
It's that finding, said Blair, that is perhaps the biggest surprise to financial institutions from the study. Most believe they spend more than adequate dollars on training and preparation of staff.
"But turnover is a huge issue," he observed. "There's a 20% and 30% churn rate at most institutions (in front line staff). There's a constant need to train, and it just complicates their lives."
Where that training must be concentrated, Blair said citing the study's findings, is in "needs-based selling."
"We are evolving into a relationship-service society, and those that do that well are really excelling," he said. "What's so interesting is that this has been a strength of the credit union movement and is why credit unions grow two to three times as fast as banks. Because of the nature of the traditional credit union focus, whether it's through a SEG or a narrower field of membership, it's easier to deliver services to members. Credit unions know the members' profile and where they live and work. But as credit unions swing toward community charters, it becomes much harder to be all things to all people. Comerica Bank and Wachovia are having success today by not trying to be all things to all people."
Blair noted that segmentation of membership and potential members clearly demonstrates that market niches are more profitable and that by narrowing niches even more a financial institution just becomes more successful.
"You can split groups up even more and build your relationship around that," he said.
Blair said he's concerned that the Frontline Experience Study's topline findings will be misinterpreted as meaning financial services are a commodity product and the majority of consumer simply want price, and will move to get it. "People often use one piece of information to justify their position, but what this really reinforces is the need to do more, not less. If you are a commodity, then you do that through your brand and through training."
BAI's chief researcher said there was some good news to be taken from the study, chiefly that 31% of consumers are receptive, meaning they will respond to overtures for advice and counsel and more likely to have a multi-product relationship.
Pressure To Cross-Sell
The BAI study, of which Newground was a sponsor, went beyond examining consumer attitudes and also probed 16,000 front-line staff regarding their perceptions. A key finding was that many feel overly pressured to cross-sell products, especially to people who don't need them. Overall, 25% of those branch staff feel dissatisfied with key support mechanisms related to cross selling.
Other findings: 35% of employees feel pressure to go beyond needs-based selling; 34% believe sales goals established by management are not fair; 32% say "I do not receive adequate competitive information"; 30% say the company does not prepare its employees to sell; 29% said the "procedures and systems available to me do not assist my sales efforts;" and 27% feel staffing levels are not appropriate for the volume of work.
"What was important in the study was the disconnect in the message from management to front-line staff," said Blair. "Clearly, there is a huge gap. Employees don't feel they are adequately trained. It should be a wake-up call that not enough is being done in employee education. The training budget is always the first thing to be cut."
That's a problem for credit unions on the retail side for another reason, he said, because there is good reason for members to come into branches. "Branch merchandising is two to three times more effective in getting members' attention than is mass marketing," said Blair. "We need to spend more on the in-store experience. You get a bigger bang for the buck inside the branch."
