Community Banks Are Giving Away Their Competitive Advantage
As dumb as it sounds, many community banks are voluntarily giving their primary competitive advantages over to their larger bank competitors. The big banks have the big money behind them and with that they can out advertise you, out tech you, out staff you, and out spend you in every way imaginable. So what do you have left? This isn’t rocket science, we all know the answer. It’s the relationship. It’s great service. It’s the customer experience whether in the branch, the drive-thru, or on the phone. A community bank, can and should easily outperform the big banks in customer service and flexibility to the customer’s needs. Two thirds of your customers prefer great service, but if it’s truly not great, they will always opt for price and convenience. If you offer poor service or even good service at your community bank, then you’re doing nothing more than letting go of the main advantage you have over the big banks. Here are five simple ways to know if you’re giving away your advantage.
1. Ignoring the phones
Sure, your employees answer the phones in a friendly way and they give the requested information to callers. Here’s the problem. How are you setting your bank apart from any other bank in town that does the same thing? Are employees engaging callers with real conversations, not just talking points? Are they discussing additional opportunities or helping callers to find solutions for their needs? Would you even know if they were? If you’re not tracking your phone service through customized phone shops, then there is no doubt you are ignoring the phones. Our data shows that over half of all community banks perform at a lower customer service standard on the phones than the average big bank. That’s pure insanity.
2. Not Giving Life
Bank officers love having that attorney or CPA customer that sends a steady stream of business their way, but very few bankers have a process or plan in which they refer business to their best customers. Even fewer track their successes, or lack of it, in this endeavor. If you haven’t set up a systematic process of referring business to your best customers then you are giving away yet another competitive advantage. Set a goal and track it. It’s really that simple but we find very few that actually want to track this.
3. Creating New Barriers
The personal connection with your customers is a key advantage in competing with the big banks. What’s interesting is to see how many community banks are now opting for a call center approach with their phones instead of having calls go directly to the branch. Trust us, the branches are not that busy! We’ve even seen some banks cover the windows of the drive-thru and go to video cams. It looks kind of cool but is devoid of any personal contact and service. On the other side of the coin, if you can’t find enough employees to put at your drive-thru that actually smile and are friendly, then maybe video is the best option, but that’s another blog and another problem entirely.
4. Buying the Lies
“We’re too busy”
“We’re too slow”
“Our customers already have everything they need”
“I don’t want to be pushy”
“I don’t have time to track it”
These are just a few of the lies and excuses we’ve heard over the past 20 years from employees that don’t want to cross-sell their bank’s products and services. What’s crazy is the number of bank leaders who actually believe these lies. We get it, sometimes it’s just easier not to fight it. Our response is… Exactly who’s running your bank? The typical community bank has less than two products/services (we don’t include things like debit cards, mobile banking, etc.) per household. The average household has six banking services. There are literally thousands of opportunities to help your current customers with more of your products/services. Stop giving your current customers’ business away to competitors while your trying to buy new customers. Your current customers are your best source for new business.
5. Losing the Relationship
Community banking is relationship banking. They go hand in hand. Ask your employees to write down the names of their top ten customers in less than two minutes. Most can’t do it. Then ask them to tell you what they know about each of those customers. At the least they should be able to tell you the following about their top ten customers…
- Spouse’s name (and kids names if they’re really good)
- What they do for a living (if retired, what they did prior to retirement)
- The family situation (married, divorced, elderly parent living with them, etc.)
- Hobbies and interests
If a banker can’t give this information off the top of her head when asked, then she doesn’t have a relationship with the customer. Any banker not taking the time to know the customer on a personal level is doing nothing more than handing the keys of the relationship to the competition.
Bring Your Community Back To Your Bank
Forget the latest repackaged sales gimmick to gain new checking and loan customers. The old standards are still the Gold Standard in bringing your community back to your bank. It’s the kind of personal relationships you banked your career on 20 and 30 years ago. It’s common courtesy. It’s taking the extra step, not just saying you do. It’s giving real value to your best customers, not just creating a cool logo or slogan. It’s giving opportunity to an entrepreneur with an innovative idea. It’s treating customers like they matter instead of an inconvenience or extra work. If your bank has an ROA under 1.0 it’s a certainty that your bank suffers from one of these five things. The good news is that you can reverse course on any of these five things at little or no cost and take back your advantage as a community bank. What’s stopping you?
