BAI Online | Banking Strategies | November/December 2005 | 5 Who Fight to Win On the Front Lines

“WHEN ONLY 30% OF CLIENTS SAY THEY WANT AN EXTENSIVE, MULTI-PRODUCT RELATIONSHIP, I THINK THAT’S BECAUSE THERE ARE A LOT OF PROVIDERS AND CUSTOMERS WHO DON’T SEE A PARTICULAR VALUE IN BUYING FROM ONE SOURCE. THEY WANT TO BUY BEST-IN-CLASS PRODUCTS FROM BEST-IN-CLASS PROVIDERS.”

WHAT’S YOUR MAJOR STRATEGY FOR ATTRACTING RETAIL CUSTOMERS? SERVICE? PRICE? LEADERSHIP? CONVENIENCE?

HARTNACK: I don’t think you can be successful in this business if you just have one element in your strategy. But clearly, we are trying to live and breathe a superior client experience. We have a five-star service guarantee, which is part of the bank’s logo and DNA of the company. Day in and day out, we’re focused on service quality. That’s the first element in our strategy.

But having said that, we’re also aggressive on price and we have 2,400 branches in 24 states, so we’re trying to compete on convenience as well.

Being a little self-critical, we’re probably less focused than some banks on deepening customer relationships. Improving our cross-selling skills and sales protocols is a very current effort as we move to bring better tools to our line bankers to assist them in serving our clients more completely. We have one of the most complete product lines in the industry so our challenge is more in selling than manufacturing.

HOW DO YOU DEFINE “CUSTOMER RELATIONSHIP” AT U.S. BANK?

HARTNACK: In the retail and small business categories, there are two definitions.

First, it’s any client who has anything with us. If a client got a car lease through a car dealer in a state outside our footprint, it’s still a client relationship to us.

The second definition of a relationship is the one that we try to build the franchise on: the client with a payments relationship, usually a checking account. We want to be sure we’re gaining a basic payments relationship with every small business and consumer in our footprint that we possibly can.

IN A NEW RESEARCH REPORT ENTITLED “THE FRONTLINE EXPERIENCE,” BAI HAS FOUND THAT ONLY 31% OF RETAIL BANKING CUSTOMERS ARE HIGHLY RECEPTIVE TO DEVELOPING A RELATIONSHIP WITH THEIR BANK. WHAT ARE THE IMPLICATIONS FOR THE INDUSTRY AND YOUR COMPANY IN PARTICULAR?

HARTNACK: We need to get the semantics straight. If a customer has a checking account with us, that’s a relationship. They are trusting us with their money and we are trusting them to handle their account in a responsible and profitable manner. So there’s a relationship there for sure.

If you’re talking about a multi-product relationship regardless of price or quality, that’s a different matter. It would be pretty myopic of our industry to think customers will buy products regardless of price, quality, ease of use, etc.

So when only 30% of clients say they want an extensive, multi-product relationship, I think that’s because there are a lot of providers and customers who don’t see a particular value in buying from one source. They want to buy best-in-class products from best-in-class providers. The basic payments relationship is where we think we can demonstrate best-in-class products, convenience, pricing and service.

The notion of the one-stop shop is difficult to achieve, but it’s definitely not impossible and it can add to shareholder value if you can accomplish it.

ANOTHER FINDING OF THE RESEARCH IS THAT BRANCH INTERACTIONS HEAVILY IMPACT HOW CUSTOMERS VIEW THEIR FINANCIAL INSTITUTION. WHAT IS YOUR BANK DOING TO IMPROVE THAT FRONTLINE EXPERIENCE?

HARTNACK: It starts with communication. The whole process here is trying to be sure, from the top of the shop to the very newest teller hired, that people get the fact that we are all about trying to give our clients a superior customer experience. This covers everything from the cleanliness and attractiveness of the grounds and building to the way the staff greets customers and solve their problems.

Then we measure it like crazy. We’re doing client interviews constantly to get rated on how we’re doing. Then we provide feedback to the line people to improve the system.

WHEN IT COMES TO FRONTLINE INCENTIVES TO EMPLOYEES, WHERE DOES U.S. BANK PUT ITS EMPHASIS?

HARTNACK: There’s incentive pay for selling, but how much you get is to some extent dependent on service quality. There’s a team incentive for service. We don’t want sales without service quality and vice versa.

We’ve got to continue to grow the franchise and the revenue and build shareholder value. That’s done by selling more products to more people. Service assures that having sold the product to customers, they stay with us. If they’re happy, they may buy the next thing.

We really try to keep the sales and service in balance and our incentives try to get at that. With an existing client, you earn the right to sell the next product, or at least earn the right to get consideration of the sale of the next product, based on good service. If you don’t have good service, you don’t get considered for the next product.

But for prospects, of course, service is not an issue. When dealing with prospects, the key is “service reputation” and that’s one of the reasons we have our service guarantee built right into our company logo.

WHAT ARE YOUR MAJOR GOALS IN TERMS OF THE FRONTLINE EXPERIENCE IN THE NEXT YEAR OR SO?

HARTNACK: It’s probably more of the same, in this sense: we’re on a long journey of improving customer service. We have improved it dramatically over the last five years. But we’re not yet satisfied with where we are, so clearly, job one here is to continue to improve service and client satisfaction. It’s been a long journey, but I think we are at the point where we are easing into the “fast lane” on this trip.

The second most important thing is building the franchise, by bringing new clients in, selling existing clients additional products, and opening up new territories that give us access to more clients.

BAI Retail Delivery Conference & Expo:
Hartnack will speak on putting the customer at the center of business planning, Tuesday, Nov. 15, at 3:30 p.m.

INTERVIEWS: 5 WHO FIGHT TO WIN 'ON THE FRONT LINES'

5 WHO FIGHT TO WIN INTRO
RICHARD C. HARTNACK
BENJAMIN P. JENKINS III
DOUGLAS K. FREEMAN
RICHARD L. CARRION
M. MEHDI GHOMESHI

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Mr. Cline is senior editor of Banking Strategies.