Don’t bank on it

Brand experience is, by default, a loyalty strategy. It is not an acquisition strategy - unless you are talking about referrals from happy customers.

Brand experience is, by default, a loyalty strategy. It is not an acquisition strategy – unless you are talking about referrals from happy customers.

It’s a loyalty strategy because your goal is to build a relationship. A long, mutually valuable one. One that will ultimately generate referrals. Brand experience, relationships, loyalty. They are inextricably linked.

Put that in a banking context. About two years after Paul Martin’s rebuttal of mergers among the Big 5, I was asked what I thought of Canadian banking brands. At the time they looked bipolar and undifferentiated to me.

The very notion that a TD Canada Trust could merge with a CIBC, or a BMO with an RBC shows these brands had little differentiation. Clearly they believed the customer would not protest. More to the point, they probably didn’t even bother to ask the customer for an opinion before floating the idea by Ottawa.

Ottawa’s response was that Canadian citizens and businesses wanted no truck with banks that were more interested in competing for investors on Wall Street than for customers on Main Street. That was borne out by subsequent surveys. Customers thought these were bipolar interests.

Once the doors closed on mergers, at least two of the Big 5 decided they had to refocus on retail banking to redress the balance. They would do it by acquiring regional retail banks in other markets (mostly the U.S.) and by continuing to compete aggressively in traditional domestic product areas like loans.

The RBC’s Gordon Nixon has made it clear he wants his bank to be ‘First for You,’ Scotiabank talks about putting the customer first. TD wants to make banking ‘comfortable’ for you. And BMO’s head of retail banking, Frank Techar, is targeting ‘higher customer loyalty and higher individual store sales.’

Loyalty, as Bain & Company’s Fred Reichheld wrote in his 2006 publication, The Ultimate Question, is won through high-quality customer relationships. And we know relationships are the result of positive experiences. But getting the experience right is where some of the banks are challenged.

I’ve had my chequing account at the same bank for 30 years, same branch for 20. Recently I requested that holds of any kind be removed from my account. A junior associate told me it couldn’t be done, so I spoke to the manager. He was a little more co-operative, but all he could do was suggest I fill out an application for a much larger overdraft than I already had.

The first thought that came into my head was, I have been a customer here for 30 years, and I have to apply for an overdraft? Shouldn’t they just give it to me as a reward? Imagine the word of mouth that would generate!

I filled out the form anyway. Three weeks later (?!?) my application was approved and I went in to sign it. No sooner was it signed, than the manager asked for more of my business. My application had shown I was worth a lot more than what was sitting in my chequing and savings accounts, and he was eager to get a bigger chunk. Hardly the beginning of a beautiful customer relationship.

There are other obstacles in the way of that relationship. One is the delicate balance between operational efficiency and customer experience. While ATMs and Internet banking are convenient, it’s tough to build a relationship without actual human contact. The fees on these things have also disturbed a lot of people, including the federal minister of finance.

BMO’s Techar is aware of the challenges and still wants to ‘put customers at the top in everything we do.’ But he is also instituting a plan that gives more points for bringing in new clients and cross-selling products to existing clients. All that will do is motivate employees to focus on volume not quality. That is an acquisition strategy, not a loyalty strategy.

It is certainly not an experience strategy either. To build a positive customer experience, your first concern must be how you make your customer feel. If your first concern is how many points you get for opening more accounts or selling more loans, is the customer really at the top in everything you do?

Will Novosedlik is partner at Toronto-based Chemistry, a brand collaborative which links strategy to communication, organizational performance and customer experience. He can be reached at