“I ain’t saying that the service in my bank is bad, but when I went in the other day and asked the teller to check my balance she leaned over and pushed me.” –Rodney Dangerfield
The very first boss I had in banking, Frank Goni, had a saying he’d repeat at every opportunity – “It’s easier and cheaper to put a lock on the back door than widen the front door.” Simply, it was his way of reinforcing one of the things we all know – keeping a relationship involves a much smaller investment of time and money than getting a new one.
I was thinking about Frank’s saying this week when I was reviewing the data we gathered for this year’s Cornerstone Report. Some of it was pretty sobering. Based on the responses from our participants:
This means that the 64 accounts opened at each of those branches were offset by the closing of 55. That’s a net growth in deposit accounts of nine per branch per month.
Hmmmmm. I suspect Mr. Goni would not be enthralled.
Now, some of you will point out that certain things may be causing these numbers to be artificially bad:
Fair enough. Maybe there is some noise in the numbers and ratios we discussed. But even with that noise factored in, the truth remains that banks are closing over two accounts for every three opened. And honestly, that’s too much work for the end result.
That’s not to say banks haven’t taken several good steps to retain key accounts and relationships. For example, many now have focused calling efforts in branches and call centers for renewing CD customers, and many have reported some good results.
Others have ongoing “touch programs,” an example being the 2-2-2 program in which new customers are contacted after 2 days, 2 weeks, and 2 months in an attempt to ensure satisfaction and loyalty.
In addition, most banks have a personal banker program of some sort that identifies the employee who will birddog high net worth relationships and retain them.
These and other programs certainly have merit, but I believe it’s time to add some new thinking, spin and focus to account retention. Here are some ideas and strategies I have come across lately:
c. The goal is that the percentage of accounts retained plus the percentage of dollars retained must add up to 150% – e.g. 60% of accounts plus 90% of dollars, or vice versa.
The added appeal of this idea is that the best way to make the goal is to get existing customers to add money to their accounts. Is there anything better than that?
There is a need to better understand when and why customers close accounts. Are there certain points in the relationship where closings are more likely? Do certain products have a worse open/close ratio? In other words, are there any trends that can be discerned?
The bottom line is this – we have to do better than netting nine new accounts a month per branch. Let’s check the back door lock.