Satisfying Customers

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Credit freeze or not, banks have to do a far better job of satisfying small-business customers, industry executives say. “Our research shows that small-business bankers and branch staff in banks of all sizes, from twenty branches to two thousand, can’t articulate compelling or consistent answers to the question, why should I bank with you?” says Nick Miller, president of Clarity Advantage Corp., a Salisbury, Mass., firm that helps banks better market themselves to small and medium-sized companies.

Additional research from First Manhattan Consulting Group suggests that banks whose management teams and employees can answer the question, why should I bank with you? consistently with the same message perform better financially, says Miller, who was chairman of the American Banker and Risk Management Association’s 13th Annual Small Business Banking Conference, held last October in San Diego, Calif. This year’s conference is scheduled for Oct. 18 – 20 in Chicago.

Small-business customers are suffering from bank overload, Miller adds. “We’ve multiplied the problem by carpet-branching neighborhoods to achieve the network effect. Townspeople and small-business owners in hamlets small to large have discovered the traffic-deadening effect bank branches create in town centers and retail districts,” he says. “While bank branches fall lower on NIMBY (not in my back yard) scales than cement plants and car washes, our customers and prospects are telling us, ‘enough is enough.’ They see little value to having yet another bank branch or another small-business banker added to those already there,” Miller says.

At last year’s conference in San Diego, the agenda included topics aimed at “communicating the value, positioning our message and delivering the promise for the banking industry, as a whole, and for individual banks,” according to the conference Web site. It covered such areas as crafting and communicating value propositions; channels and new products; leveraging the Web to create communities; and small-business marketing; and included a pre-conference workshop titled “Satisfying the Small Business Customer.”

Conference organizers contend that small businesses are a challenge for banks because varied products, expectations and relationship requirements make it difficult to streamline the delivery of services to those enterprises. They stress that the small-business banking customer relationship is more complex and intense than that of retail banking customers.

The pre-conference workshop focused on J.D. Power and Associates’ “2008 Small Business Banking Satisfaction Study,” which examined the factors that matter the most to small-business banking customers. Surprisingly, the report shows that despite economic uncertainty and tightened credit availability, small-business owners’ satisfaction with banking institutions increased since 2007, reaching 720 on a 1,000-point scale in 2008, up 23 points from the 2007 study. Survey par-ticipants noted that banks exhibited improvement in providing shorter wait times and fewer problems for customers.

“The factors relating to the customer relationship and in-person branch experience are most important to small-business customers, as these areas account for forty percent of the overall experience,” says Rockwell Clancy, executive director of financial services at J.D. Power and Associates. “This underscores how critical it is to proficiently execute simple relationship fundamentals, including welcoming customers to the branch, assigning dedicated bankers to their accounts and establishing proactive quality outreach practices. Simply meeting with small-business customers at their place of business significantly improves satisfaction, yet it is amazing how rarely this happens.”

To a large degree, Clancy says, banks can mitigate the negative effects that the tumultuous lending environment has on satisfaction by proactively giving status updates on accounts or spending adequate time discussing loan options with customers. “Small-business customers want to be reassured that their banks are supporting their business endeavors,” he says.