Jeff Judy

Jeff's Thoughts - July 30, 2014

Fee and Value, Cart and Horse

While I spend a lot of time dealing with credit, I also provide training around non-interest sources of revenue. In fact, I help institutions integrate these two sides of revenue, and my presentation on leveraging credit analysis to build relationships and uncover other product activities is always popular.

So I certainly understand that everyone is looking for additional sources of revenue, including fees associated with both credit and non-credit products.

But fees have enormous potential to tick off customers. There have been a few very public flops as some large banks tried to apply new fees (think of the backlash against ATM card fees), and no customer likes feeling that they are being nickeled and dimed to death.

At the same time, customers are willing to pay for value received. It isn't that you can't collect a wide range of fees. The real question is how you manage the customer experience, how you communicate around fees.

I believe that the secret to managing that customer experience is getting the horse in front of the cart from the git go. By that, I mean I believe there is a huge difference between the following two ways of thinking about, say, a new business customer relationship:

You may think that both of these approaches end up in the same place. But even though that may be technically true, I believe that there will always be a difference between the experiences customers receive through these two fee philosophies.

After all, consider your own customer experiences, not at banks, but at all the other retail and service organizations you deal with. Don't' you quickly get a feel for whether your interests are paramount, for whether the business you're dealing with always thinks dollars first, seeing the customer as nothing more than a means of getting those dollars? You can tell if they want to be compensated for serving you well, or if they really think of you, the customer, as someone who merely serves their ends.

Your customers can tell whether you are just looking for additional fees to charge, or whether you are looking for additional ways to add value to the services you provide ... for which you'll collect a reasonable fee.

If you are searching for ways to get more out of your customer relationships, start with the right questions, and put them in the right order.