Customer Service... blah, blah, blah

My family recently shopped around our homeowners and auto insurance to ensure we were getting a fair shake. We used to use an insurance agent for life, auto, and homeowners. I place value in having an agent because they have access to a number of insurance companies (if an independent agent) and should have our best interests in mind. The owner of the agency is a director at a bank, which is a bonus.

But a past "shop" for auto after a dramatic rate increase led me to go to a "direct" insurer. And now, after our most recent shop, we are leaving to a direct insurer for homeowners. When I notified my agent, he asks me if he could have a chance to look around for me, and to try to win back our homeowners and auto.

My e-mail back to him: "I would have appreciated that service prior to me searching on my own." I was irritated. I expect three things from our insurance agent:

1. An analysis of our needs and recommendations to fit those needs;

2. Periodic reviews of our policies versus what is offered by similarly rated insurance companies in the agent's markets; and

3. Good service when I call with questions and problems.

I received one and three from the agent. But I was pretty disappointed when my shopping resulted in a 20% reduction in my homeowners insurance. I am willing to pay a slight premium above discount insurance companies for the service of an agent. But not 20%. This happened with our auto insurance too.

Our agent clearly dropped the ball on two, and scrambled to make up for it after I notified him I had done it on my own. As Donald Trump would say, "you're fired". When I sounded off to my wife about it, she said "I think you have a blog post." Boom!

I suspect financial institutions think they have great customer service too. But in my experience, what FIs mean by great service is "3" above. After my wife planted the seed of this post in my mind, I asked the marketing director of a multi billion FI if they had "service level agreements" (SLAs). She said that they are required to respond to customer inquiries within a certain amount of time, etc. In other words, "3".

But what of one and two? I know it is an insurance list, but don't we have similar demands from our FI? Don't FIs want to be considered for more than a deposit counter or a money machine? Based on my experience, I think they do. In fact, a competitor of my firm did a survey of FI customers that concluded that both businesses and individuals wanted advice from their FI.

Are we giving them what they want? Are we really good at customer service?

What do you think customer service is?

~ Jeff

Brand Leadership: What does it mean? What should it mean?

I am a student of my industry: consulting and banking. If bankers tell me their institution has a superior brand, I want to know what that means. Too often I am told that the FI has a superior brand because customers come up to senior executives and board members on the street and tell them so.

I am no statistician or expert on human behavior, but I have to believe that people willing to approach senior executives or board members of the local financial institution are probably going to say something positive by an overwhelming majority. A polite neighbor does not make for a statistically significant study.

What I do find in many FIs that claim the throne of brand leadership is higher cost deposits, and lower yielding loans. I hear how the FI keeps deposit prices high so customers don't leave, or runs deposit pricing specials to bring new deposits in the door. I find lenders loosening covenants, waiving fees, and lowering rates to "get the deal done".

Is this our perception of brand leadership? I say no.

Mike Schultz and John Doerr, in their 2009 book Professional Services Marketing, identified traits of brand leaders in the consulting industry. Here is what they found:

"Brand leaders:

• Priced their services at a higher level than their competitors in the market; and
• Realized higher actual hourly rates compared to the lesser-known firms in all categories of professionals."

In other words, according to Schultz and Doerr, brand leadership translates to real money as buyers of consulting services are willing to pay more. See the chart below:

I frequently cite such studies, plus life experiences we see everyday of how brand equates to either 1) getting more customers faster than competitors; 2) keeping customers longer than competitors; and/or 3) charging more than competitors. Take Mac users versus PC users. Mac has clearly created a brand that evokes loyalty, even at higher price points. How about Marriott customers, citing Marriott Rewards and the superior quality of the hotels? Remember the old axiom, "you will never be fired for hiring IBM" when it comes to hiring a technology solutions firm? Brand, brand, and brand.

My firm recently lost a small strategic planning engagement because of our price. The price was not particularly high, but it wasn't Wal-Mart low either. We work hard to build an environment for robust dialogue that results in a well thought-out strategy. Background work to bring together the data and prepare to create that environment takes time. This FI was not willing to pay for that time and shame on me for not building a brand that this CEO was willing to pay for. I will work harder to do so in the future.

But my colleagues and I should not be alone in building brand. If community FIs believe they bring greater talent, faster responsiveness, and tailored solutions to their customers, then customers should be willing to pay for it. If not, we run the risk of building Four Seasons expenses that we give away at Econo Lodge prices.

Your brand should mean more than that. What do you think brand leadership should result in?

~ Jeff

Link to the Fees and Pricing Benchmarking Report: Consulting Industry 2008

http://www.raintoday.com/product/52_fees_and_pricing_benchmark_report_consulting_industry_2008.cfm

Note: I have no relationship with the authors of the report or the firm(s) that conducted the study. I cite it hear because it demonstrates, in clear terms, the value of brand.