| The Execution
Factor
 By
Thomas P. Johnson Jr.
Mastering relationship excellence
requires a higher level of front-line execution.
The retail financial services industry
has elevated its strategic approach in recent years, going
beyond the basics of operational and product excellence
to tackle the ultimate challenge — relationship
excellence. Providers more clearly understand that multi-product
relationships not only are the most profitable and durable,
but also do the best job of retaining customer funds when
market conditions change.
Institutions still will be disadvantaged
if they can't execute on this priority, however, and that's
a big problem. Along with figuring out where organizational
energies are best focused, leaders must successfully manage
all of the complex activities that support major initiatives.
The significance of follow-through
is underscored by recent findings from BAI Research and
MarketTech Systems International. A study of eight major
banks revealed that nearly three-quarters of all cross-sales
from new retail checking accounts take place within the
first three months of the relationship. Combined with
evidence that customer attrition rates also are high in
the early going, this strongly suggests that organizations
should place far greater emphasis on cementing and expanding
new relationships, as opposed to established accounts.
The catch, however, is that executing
on this insight is a formidable undertaking. As detailed
by BAI Research, the requirements include tailored product
packages sold within an advisory context; an orchestrated
series of customer interactions designed to anchor relationships;
robust problem resolution mechanisms; and the proper blend
of staff capabilities and performance incentives.
To be sure, a number of major players
are stepping up to this challenge. As shown in this issue's
cover story on James "Jamie" Dimon, Bank One
Corp. has made relationship management the cornerstone
of its branch revival campaign. Along with needs-based
cross-selling, the company has placed a high priority
on anchoring new accounts. The first six months "are
going to make or break the relationship," says retail
head Charles W. Scharf.
Likewise, First Tennessee National
Corp. is working hard to tap deep into the financial needs
of customers by cross-selling investment, mortgage, insurance
and trust products. Retail head Charles G. Burkett even
says he "sees more growth potential in non-bank type
products" than in traditional banking products.
Many executives, however, candidly
admit that their institutions still have a long way to
go in fulfilling their visions of relationship excellence.
This is quite understandable, given the complexity of
the undertaking and the huge scale of the multi-regional
franchises in which these institutions operate.
That is why successful execution in
relationship management is the new frontier of retail
banking. Progress won't necessarily be visible day-to-day,
but the long-term winners surely will be the ones who
master this task.
Mr. Johnson
is publisher of Banking Strategies
and president and chief executive officer of BAI.
Copyright © 2003 by Banking
Strategies, published by BAI.
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