What a week for soundbites!
Our tax dollars at work:
President George W. Bush: “These measures will require us to put a significant amount of America’s taxpayer dollars on the line. This action does entail risk. But we expect that this money will eventually be paid back.”
Treasury Secretary Henry Paulson: “The ultimate taxpayer protection will be the stability this troubled asset relief program provides to our financial system even as it will involve a significant investment of taxpayer dollars… We’re talking hundreds of billions. This needs to be big enough to make a real difference.”
U.S. Sen. Christopher J. Dodd (D-Conn.): “We’re anxious to hear the specifics. None of us have any idea what the details are. We understand the gravity of the moment.”
Sen. Chris Dodd, who said we’re “hours away from financial meltdown,” also said we need more government regulation for the housing mortgage business. Guess which senator received the MOST money from Fannie Mae and Freddie Mac for campaign contributions? Of course, Sen. Dodd’s not the only politician who enjoyed GSE contributions.
“When the going gets weird, the weird turn pro.” –Hunter S. Thompson
Customers with 401(k) accounts and other investments are watching their balances shrink and are seriously, genuinely rattled. Borrowers are wondering what the impact will be to the availability and cost of loans. Making this worse is the fact that they don’t really understand why this happened and they don’t know when the next piece of bad news will arrive (hey, do we?).
GonzoBankers, we’re in difficult times, perhaps as difficult and confusing as we’ve seen. OK. But at the same time, we need to stop for a moment and recognize that even if we do have the biggest challenge since the Depression, it has also presented us with possibly the biggest opportunity to build relationships with our customers that we’ll ever see.
There is a truth about banking that doesn’t show up in the database reports we write, the CRM systems we run, or the customer profiles we fill out. It doesn’t get discussed in the sales training we conduct. It is something that good bankers know is true. It’s this: Your best customers, those that really want to have long-term relationships with you, will remember one thing more than anything else – how they were treated in hard and uncertain times.
Said another way, has there ever been a better time to cement relationships with key customers? Anybody can talk about how important their customers are to them when growth is easy and everybody’s profits are rockin’ and rollin’. Now, in uncertain times, is when we can really show them. Now is when it counts with customers.
It’s time for bankers to take some focused, serious action to reach out to customers and confirm their commitment. Here are some suggested steps:
1. Make the next MCIF or CRM campaign a “customer touch” initiative that communicates with your key customers and lets them know that you’re there if they need credit. Nothing more than that – just a message that they are valuable to you and you’re willing to help them through any short-term borrowing needs they have at a fair rate and with minimal red tape. Follow that up with a call or a personal conversation when they visit a branch. Many of them probably won’t need it, but you can bet they’ll remember you offered (oh, and you need to mean it).
2. Have your commercial relationship managers do the same outreach program with their business customers. An early conversation where the RM can listen to businesses discuss any concerns they have or to let the bank know of any impact to them, combined with a promise to work with them to help them through any short-term difficulties may lead to nothing more than the customer remembering that you did it – and that’s plenty. A note to CEOs – some lunches with those key customers wouldn’t hurt, either. It’s time to be visible.
3. Be open and transparent about the impact of recent events on your credit quality and your earnings, and be proactive in communicating this to customers. They already know that there’s going to be some negative impact to your earnings, so that news isn’t going to send them running for the doors. They will be more suspicious if you deny or are dismissive of the impact. What they need is honesty. For most of you, the message will be that from what you can see now, there will be a downturn in earnings, but you’ll survive that downturn, barring circumstances you cannot control, by following solid lending practices and carefully managing your capital and your expenses. They can handle that, and they’ll appreciate and remember the honesty and openness.
4. Communicate the differences between reckless, arrogant behavior at investment banks and prudent, ethical behavior at community banks. This does not mean that you bash Wall Street (the news shows and talking heads have done enough of that already). It means you remind them what you have been doing all along – getting deposits from and making loans to individuals and businesses in your communities, with not a single investment banker to be found securitizing anything in your offices. Let them know, factually and professionally, what you were not involved in even if you’re going to get hit with some of the effects from it.
5. Talk about deposit insurance with customers. I have heard repeatedly from bankers in recent weeks that customers are more concerned with deposit insurance than they have been in many years. It’s time for branch employees to get in front of this issue and a) specifically show customers that they are insured or b) show them where they are not and what they can do about it.
6. Talk to your front-line employees about what is happening and how it is impacting your bank. Have them ready to talk to customers about this, and even more ready to track and follow up on customer concerns. You know that contact management system you paid lots of money for that employees are supposed to be using to record their customer encounters and the opportunities for sales they might have presented? Well, I can think of no better use of a contact management system right now than to record customer questions and concerns about the financial markets or their accounts and then pursue these queries until you are sure they have been addressed. Go as far up the bank corporate ladder as is necessary to do it. That’s relationship management at its best.
Long story short – it’s time to be committed to your customers and to let them know you are – plain and simple. One side benefit might just result in the longer term – it could be one of the best long-term sales strategies you ever had.
When I was a very young banker in the 1970s, I spent some time trying to sell small family businesses on the idea of moving from Bank of America to the community bank for which I was working. I heard more than once that they wouldn’t do that because during the 1930s depression, A.P. Giannini loaned them, or their parents, money that helped them stay in business. They still remembered it 40 years later. Most of you that have been on the front line have heard a similar story about a “Greatest generation” banker and customer in your town.
Now it’s your chance and your opportunity. Helping customers when they really need it – isn’t that why you got into banking to begin with?
“Call on God, but row away from the rocks.”