Working on Your Relationships
I got a postcard from the local Oldsmobile dealer last month telling me my car had been recalled for emission problems.
The dealer is only a mile or so from my home, but this was the first communication I had received from him in the six years since I bought the car.
Actually, I had replaced the car earlier this year. I never thought of entering his showroom to look around.
Let this be a lesson to bankers wondering what "relationship banking" means.
Winners and Sinners
The postcard started me thinking about other cases in which service companies and manufacturers had done good jobs or a bad ones of fostering customer relationships:
Good job. I had been in Continental Airlines' super-frequent-flier gold card group, getting free upgrades when the plane I booked on had an empty first-class seat. Since I don't fly 46,000 miles a year on that airline anymore, I was downgraded to silver, and then to nothing.
Yet last month, along came a new silver card. The airline gave me back the upgrades for six months in the hope I would fly enough to keep the card.
I'll try, simply because Continental cared enough to remember that I was once one of its top customers.
Bad job. My wife's first husband died about a decade ago. Her bank certainly knew this, as account names were changed. But no one from the trust department or the bank ever called to see if she needed help with finance or investments.
Bad job, by the same New Jersey bank. My neighbor, starting with nothing, built a shipping terminal that includes 10 or more cranes worth several million apiece. He complained several years back that no one from his bank had ever been out to see his operation at Port Newark, though it is only 10 miles away.
Bad job. A local bank took over a dead thrift that had aggressively sold annuities. In the bank's lobby I overheard a man put a question about his annuity to the platform officer.
"Oh, we sold that," she said. "We have nothing to do with it anymore. Here's an 800 number to call."
The man left the office. His full relationship with the bank will soon follow him out the door. The bank was not even willing to help him get his question answered.
Good job. My phone rings one day. "Mr. Nadler, this is the bank. You didn't sign your check to N.J. Bell. Did you intend to?"
"Yes, I like having a phone that works. Would you sign it for me?"
Relationship banking. For the individual customer, it is that simple.
Doing Business with Businesses
Corporate relationships are more difficult and less interesting to talk about. But they can have equal impact on the bank.
Kenneth L. Parkinson, head of Treasury Communications of Wayne, N.J., and publisher of the monthly Journal of Cash Management, has just published an excellent book, "Managing Bank Relations."
In addition to providing the basics, he attacks sticky problems in relationship banking.
Among his conclusions:
* Lowballing to get business and raising prices once the customer is on board is no way to build a solid relationship.
* A bank chosen because of board-of-director ties or other political forces, not quality of service, cannot develop a relationship useful to both sides.
* A corporation that uses a bank's loss leaders but provides no profitable business is not a good relationship partner.
* You shouldn't do business with a company that takes your free cash-management suggestions and then shops them around.
* A bank whose financial weakness prevents it from giving credit support cannot be useful to a corporate customer.
These issues can make or break a relationship. And a strong relationship is about the best asset a bank can have.