Switching is a neglected strategy

Currently the banking landscape (in Australia at least) is at an interesting point, where banks remain reasonably sound as businesses despite offshore lending losses and writedowns, shareholder returns remain attractive in the long term, the regulatory framework is allowing both industry growth and some level of consumer protection, but consumer sentiment is low, the global economic situation looks volatile, and the Australian economy is buffered only by its natural resources offering - we indeed live in the lucky country, but have an industry run by talented people who have to mix short term gain, long term sustainability and keeping customers happy ... not an easy task.

Add to this the obvious competitive nature of our market here - 20 million people, 16 million customers when you remove those under 12 or so, with 5 major banks, a large group of medium size players, and dozens of international, local and smaller banks vying for the same market. Its long been held that market growth is pretty much a distant dream, and now its about market share.

I’ve always been of the view that in challenging times like these, you should treat your existing customers so well and focus on them while you ‘batten down the hatches’ and ride through the storm – your current customers are critical to your survival during hard times. But – the business needs growth, and whilst we can ask our current customers to add more to their commitment to the bank, new customers may be interested in coming to the organisation – recent research from CallCentres.net revealed that 95% of contact centre revenue for call centres across Australia came from inbound calls, up from 80& last year.

So the notion of switching becomes important. Switching banks (recently given much focus by the Treasurer as a way for customers to vote with their wallets and feet and move to providers who move rates with the RBA rather than above an beyond when the rate goes up, and not at all when the rate comes down) is a realistic ploy, albeit difficult, for many customers who find themselves on the cusp of real impact.

How do you define a switcher - do we say its someone who changes their Main Financial Institution as Roy Morgan defines it (what does MFI mean anyway?)? Does it mean where the biggest amount of debt is? Of savings is? Does it mean a person who switches ALL their banking, or just some?

Some of the big banks – NAB and Westpac for example, should be poised for switchers, given their recent commitments and action to lower rates in response to RBA movements. CommBank and ANZ did not make this promise, a fiscal decision that has impacted their brands. Of course the reverse is true when the next move comes, and NAB and Westpac make no change, as is definitely possible.

So how well does your bank help customers switch? There are 3 things to remember when enabling switching customers into your business:

The message you project about switching meets their concerns about the process, matches their needs that their current provider cant give them (rates permitting of course – as I’ve said before, our chief economists who move rates should have customer sat on their scorecards if they don’t already).

Our people should be armed and ready to go with all the information (on your own business, and other banks and how they treat customers) and tools they need (technology, forms, etc) to transition customers with the greatest of ease. They also need to be part of the campaign, involved in the movement of customers. Apple do it well by transferring your files from your PC to your new Mac for free, in store.

The process of switching should be so simple and facilitated that it makes it worthwhile for the customer to go through the inevitable pain. How about we wave most of the 100 pt check ID process, given they’ve already done that with another bank before? How about we pre-approve customers more? How about we return emails and phone calls as a matter of huge priority? I bet you’re thinking “If only he knew the challenges our bank faces against change – multiple systems, end to end experience analysis takes time to find the simplest outcome, massive comms efforts to employees, convincing risk and legal, etc.” This is a journey we’ll need to go on to make our customer experience more attractive (products are predominantly the same, so it’s the quality of the service, the experience that’s critical).

Of course it goes without saying, with any signup of a customer new or old, the post sales support must reflect the positive aspects of the brand, or the hard work would have been wasted. This in itself is a challenge.

A quick bit of desktop research - Lets see how all the major banks promote this online at least: ANZ - easy to understand page, outlining simple steps - perhaps too simple!; NAB - full complex page that presents more info than message; Westpac - fairly bland, no real incentive to move, and minimal info or message; Commbank - no switch page found; St George - good amount of information, but I'd still like to see clear step by step process to indicate complexity involved for customer.

All of these pages were difficult to find - most of them I guessed the URL (put /switch at the end - even that didnt work most times) or used the search engine. Given recent press, the opportunity for new customers (as I've written before, not always catered to in banking channels) to easily make the transition is not really obvious.

Check where you stand against these three criteria, and understand how hard it is as a non-bank customer to join your business. Dont confuse new customers with true switchers - they need different treatment.