Jeff Judy

Jeff's Thoughts -October 9, 2013

Is "Relationship Management Code" for "Selling" at Your Bank?

I admit it, I am something of a dinosaur. When I teach a class on relationship development and management, I spend an awful lot of time talking about the customer.

As I travel the country, training bank staff and consulting with bank management, relationship management comes up a lot. I have become well aware of many "Relationship Development" courses that are taught at various institutions and associations. And it is clear that the instructors of many of those courses have a different notion of "relationship" than I do.

At your bank, is there any difference between "a relationship" and "an account"? Is there any difference between "relationship development" and "increased sales"?

How do you define "customer loyalty"? Does it mean that they value their relationship with your bank, so that they will refer friends and colleagues to you? Or does it simply mean they are so entangled with you, through multiple products and services, that it is hard for them to leave?

Is a good relationship one in which you have a substantial "wallet share", that is, one in which you have captured several streams of business from a customer? Or is it one in which you enjoy significant "mind share", in the sense that the customer would gladly think of you first for their next financial need?

Is growing your business within each account getting in the way of expanding your business across your community? Does the constant cross-selling, and the resentment some customers develop when they do try to leave, hurt your reputation? If a customer doesn't appreciate you as a financial services provider, but merely tolerates you because they are trapped by all those entanglements, what are the chances they will provide the incredibly powerful word-of-mouth marketing you desire?

You have probably encountered a doctor, at one time or another, who saw you as a "case" or a "condition" or a "disease", rather than as a "patient" and a "person". How did you feel about that? Was that a "relationship" you wanted to extend, and that you would recommend to others?

When customers know that they are just "products" and "accounts", they are as likely to look for ways to escape as they are to look for ways to use more of your services. A customer who has multiple products and services with you, as a result of diligent selling practices, may have nothing bad to say about you.

But if you don't have a true relationship with them, they may have nothing good to say about you, either. If you have been focused on selling them the most products rather than the right products, don't count on those customers to stay with you when a cheaper or better option comes along from another bank.

And certainly do not count on them to bring their friends, family, and colleagues to your door.

Results of FASB Update Poll

As many of you know, I occasionally run a one-question poll on my web site. About a month ago, I asked about what is happening in response to the coming FASB Standards Update that will focus on "expected loss" in place of "incurred loss." Have you heard discussion of the standards update? Is action being taken to prepare to respond to the standards?
Here are the original question and the results to date:
How much attention is directed toward the FASB "expected loss" update at your bank?

It seems like there are very few banks in the middle, based on this admittedly unscientific poll. In a significant portion, there has been no discussion of FASB, but it is clearly on the radar of more than half the respondents in this survey. But only a relatively small portion are looking at actions in response to the coming Standards Update, and my personal view is that many institutions are going to need to start planning their responses in the very near future, or they will find themselves scrambling to cope with a regulatory world that has shifted quite a bit.
Thanks to everyone who shared their experiences!