All hail customer inertia!

You could almost hear this collective cheer at Bank of America and several of its peers as the furor over new debit fees began to die down without an avalanche of customer attrition (so far). This will not become the banking industry’s Netflix Moment.

Despite higher fees and an outpouring of principled public sentiment – from customers, impassioned columnists, and even President Obama – most people concede that the administrative burden of changing banks is just too high. Who wants to enter all that bill payment information again?  

The Occupy Wall Street movement is promoting a national “Bank Transfer Day” on Nov. 5, hoping that group momentum might help overcome the usual inertia. A similar effort was started in late 2009, but that Move Your Money campaign has not yielded material results to date. Apparently, hassle even trumps righteous indignation.

Bankers have come to depend on this hassle avoidance. They can raise fees, comfortable in the knowledge that online bill payers – 44 million households and counting – are 76% less likely to change banks than other customers. Only 12% of customers switched their primary accounts last year, a number that is estimated to drop to 7% for 2011, according to Javelin Strategy and Research.  

But banks will soon realize that inconvenience is not a sustainable retention strategy.

Customer relationships that are built around positive attributes – such as loyalty, value, or rewards – are much more resilient than those based on negative attributes, such as inertia, misperception, or lack of better options. Consumers are also more forgiving of a company’s occasional missteps when engaged in a positive relationship.

True “stickiness” delivers a benefit the consumer does not want to lose – whether it is a customized product or just a cache of credit card frequent flier miles. If the only thing preventing a customer exodus is the sheer hassle of leaving, there is a real danger that one day an enterprising company or competitor will come along and solve that pain point. 

In fact, it’s already happening. 

Enter SwitchAgent, unveiled this month by Deluxe Corp., whose main business is printing checks. It is part proprietary technology, part concierge service and is available to banks and credit unions that want to assist new customers with the administrative side of changing accounts. With a 2010 J.D. Power survey reporting that 66% of customers would consider switching accounts, this could be a huge market.  Additional innovators will not be far behind.   

A savvy bank would start advertising “pain-free switching” as a competitive advantage today. It’s interesting how banks recognize the inconvenience as a retention play, but have never thought to capitalize on it as an acquisition strategy. Instead of offering me $100 to open a new account, offer to switch over all my payment information. Make it quick and painless. Solve my problem. That would certainly be the start of a positive relationship. 

For the longer term, banks need to focus less on trapping their customers into staying and more on providing a level of value and trust that customers would never dream of giving up. Remember the old adage about catching more flies with honey?  That is the kind of stickiness banks should be after.

Susan Ochs, a consultant in New York, served as a senior advisor at the Department of the Treasury in the Obama Administration. With Interest is a new column offering constructive criticism of the banking industry.