Bank of San Clemente Goes All Out to Keep |A' Customers
A community bank vying against such giants as BankAmerica and First Interstate simply cannot afford to lose any of its best customers.
That is the guiding philosophy at Bank of San Clemente, a $65 million-asset institution in a seaside community south of Los Angeles.
"We just can't stand the idea of somebody leaving the bank," said Michael H. Dunahee, president and chief executive of the bank, which considers customer retention a pinnacle of success.
High-Balance Customers Coddled
Over the past five years, the Bank of San Clemente has implemented a comprehensive program aimed at pleasing its 400 customers with the highest balances.
Bank employees pamper these cream-of-the-crop customers with quick, deferential attention. If anything out of the ordinary happens to an account, the bank tracks the customers down by telephone. And it gives private banking customers a number they can call 24 hours a day, seven days a week, to reach a senior bank officer.
If all these efforts fail to satisfy and someone wants to close an account, Mr. Dunahee will take the client out to dinner and try to change his or her mind.
Mr. Dunahee boasts: "We have cut our attrition rate to zero except for people dying or moving away."
Across the country, banks of all sizes are devoting an increasing portion of their marketing resources to customer retention, marketing experts say.
For larger banks, it costs much more to win a new customer than to keep an old one because of diminishing returns from direct mail and other advertising. Smaller banks, which lack the marketing muscle of larger rivals, also find existing customers hold the key to earnings growth.
"Large banks try to retain customers by leveraging the advantages of being big, setting up massive automated teller networks and 24-hour customer service numbers," said K. Shelly Porges, a San Francisco marketing consultant. "But small banks are clearly attacking the retention issue though customer service."
The trend is apparent among small and midsize California banks. San Diego Trust and Savings Bank is trying to cut teller turnover to keep service levels high. Orange National Bank has developed a customer "bill of rights." Westamerica Bank, San Rafael, guarantees it will resolve errors within 24 hours.
At Bank of San Clemente, "we're willing to do anything," provided it is not illegal or immoral, to keep good customers, Mr. Dunahee said. As an example, the bank chief recalled that he personally guaranteed a $4,000 check for a customer who was buying a car on a Sunday.
Service Based on Profitability
Mr. Dunahee emphasizes that only customers who are profitable get the royal treatment. The bank imposes stiff service charges to turn away business from those whose balances are under $1,500.
"The first step to retaining customers is to get rid of low-balance customers," he said.
Bank of San Clemente's customers pay for special treatment in the form of lower rates on deposits than are available elsewhere.
Customers "have to make a basic choice: high quality or low price," bank literature states. "We would rather serve that small segment of the market that wants quality service than the masses that want a cheap deal."