A consulting firm recently button-holed U.S. bank customers as they were leaving branches of major institutions on both coasts and the Midwest. The results of the poll are enough to make a marketing executive weep openly.
Nearly half the customers, average age 42, said it wouldn't take much of an incentive to persuade them to move their business elsewhere. This despite the fact that they'd been with their banks an average of 10 years. And nearly two-thirds said they expected to purchase their next financial service from a company other than their bank.
Chicago-based strategic marketing firm NewGround Resources Inc., which also consults on facility (architecture and construction) and employee development for financial services and technology companies, polled 160 customers as they were leaving branches of super-regional and national banks in New York, St. Louis and San Francisco.
The results, a NewGround executive says, reflect a profound gap between banks' investment in technology to connect with customers and "this clear evidence that CRM has not achieved the extraordinary potential these systems promise."
NewGround Resources' consulting practice includes education programs designed to change "corporate cultures," and the firm wastes no time attributing the poll results to inadequate investment by financial institutions in their human resources. Those investments are imperative, NewGround analysts believe, if banks are to exploit fully the CRM technology in which they continue to invest steadily.
Again, while a majority of the customers surveyed had been with their banks a decade or more, the poll showed that well over half didn't know their banks offered investment services, such as mutual funds. And when asked to run down their banks' main products and services, only two of 10 mentioned certificates of deposit and less than a quarter cited loans.
NewGround Resources directed a similar study in 1997. This year's results are better in one instance and worse in several, including a 22% increase in the number of customers who say their banks' service standards need improvement. The good news: The percentage of customers who complained about fees and minimum balance requirements dropped to 12% in the latest poll from 28% in 1997.
"This survey is a call to action for the industry," says Charlene Stern, senior vice president of strategy, branding and retail design with NewGround Resources. Stern works out of the firm's Berkeley, CA, office; NewGround also has offices in St. Louis, Toronto, and Portsmouth, NH. "What CRM does do is give you a snapshot of your relationship (with your customer) today, including profitability, and at its most advanced level can give you some predictability about the next purchase.
"What it cannot do," Stern cautions, "is create the kind of culture that focuses on customers, discovers their real needs and helps them meet their real needs."
Banks are making serious efforts to accomplish this, Stern agrees, as their IT investments demonstrate. When it comes to wallet share, she adds, bankers recognize the stakes are high. Fully 70% of branch customers in the most recent poll told NewGround they would prefer having all of their money in a single place. The likelihood that banks will capture market share as a result of this demand for aggregation is suspect, however, as 25% say their banks appear to make no attempt to understand their individual needs.
"From a strategic point of view, when you look at these results, you realize there's a significant loss of (customer) awareness of existing services and a significant loss of connection to the bank," Stern says. "The new players banks face are customer savvy and brand smart, and they are placing bets that they can attract more and more of those customers' financial purchases."
Her argument that it's the "culture component" that is missing in banks' efforts to manage customer relationships is bolstered, she says, by the disappointing results of technology-driven CRM efforts thus far. "Enlarging the meaning of the bank in the minds of customers as a resource for all of their financial needs-well, it hasn't happened yet. CRM is seen by banks as a powerful tool for selling, while the human side of delivery is not being addressed."
The best connection to retail customers, says Stern, whose consulting work involves both real and virtual delivery channels, remains the staff in the branch.
"They are the ones who have to build the bridges."