When Merging, Act Quickly to Reassure Customers

Bank customers across the country - already nervous about the well-publicized troubles many banks have faced recently - have another thing to be anxious about: How will they be affected by the expected wave of mergers?

Banks may well ask how they can effectively address the confusion many customers feel as a result of these mergers.

From interviews conducted with a wide variety of institutional, corporate, and individual bank customers over the past several months, it is apparent that many customers are optimistic about how the expected mergers will enhance service.

A Fear of Surprises

However, it is also obvious that bank customers are becoming increasingly apprehensive about the nightmares that could occur - from operational surprises to a lack of relationship continuity.

Especially nervous are those in local markets where only a few major banks exist. Recently, I spoke with the chief executive of a Midwest manufacturing company with yearly revenues of about $200 million: "I've got relationship commitments with the two major banks in the region, for diversification reasons," the CEO said. "If they should merge, do I only have one relationship with half the commitments?"

Many other customers are wondering whether bank mergers will mean one plus one equals three, or two, or merely one.

Customers of banks in major cities across the country that have not announced merger and/or acquisition intentions are being affected. The "ripple effect" is impacting those customers whether they realize it or not.

Waking the Competition

Once a merger plan has been announced, many banks will attempt to take away customers while the merging banks are still getting their act together.

Ways that banks can effectively address customer confusion include the following:

* Keep customers up-to-date on the status of the merger.

* Be proactive. Don't allow your calls on customers to decline in quality and frequency. Unfortunately, relationship managers and product specialists often lose sight of the customer when overcome by their own anxieties - about the bank, the security of their jobs, and so forth.

Any letup in calling increases customers' confusion and nervousness - and potentially decreases loyalty to an institution. A significant challenge for bank managers is to get their bankers out of the dugout and into the game, namely calling on customers.

* Conduct key-customer relationship calls. Relationship managers and senior bank executives should call jointly on the bank's key customers. These calls should include a brief overview of the merger process, with timetables; discussion of customer concerns and/or areas of confusion, and a review of the bank's plan to enhance the relationship.

* Be explicit. Banks need to maintain open lines of communication with their customers with regard to what benefits the merger will have for customers. And banks need to let customers know whom to call if they have any questions or problems.

Merging banks need to view the merger as a marketing window through which to proactively communicate with their customers and to set the tone for enhanced customer service.

Mr. Erickson is vice president of Corporate Performance Systems, a Boston-based firm providing tactical consulting to the banking industry.

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