Sunday, 6 December 2009

The Costs of Poor Customer Service

I’ve often wondered how much money I could make if I had the capital to open a truly customer-focussed bank in Greece. To put this question differently: how much money is my prime bank losing because it is not concentrating on my needs?

We’ve been at the same bank since 1997, when the small Credit Lyonnaise chain was bought out by Eurobank. Every year, our corporate account in Greece brings in a 6-digit figure in billings from foreign clients. It’s all legitimate income: consultancy fees from development banks, chambers of commerce, manufacturers, business schools and other clients, and it’s all declared.

We have no uncovered banking debts, not delayed payments, no credit problems. We do not use cheques, so cannot bounce them. We are not on any black lists or credit watch lists. We declare our income, corporate and personal, in Greece.

In all this time, our bank has never once called me to ask me if I would like another product: a corporate credit card, a corporate overdraft; a higher credit limit on our personal visa cards; a life insurance policy. Nothing: not a single attempt at analysing our corporate and personal financial needs, and taking the initiative to offer something we could actually use.

The idea of personal contact is a joke: our enterprise account managers at the bank last an average of 18 months in our branch before they are rotated out somewhere else: Melissia, Elefsina, maybe Timbuktoo. Yet whenever I call the bank to ask a question, I get the standard response: “Who do you speak with in this branch?” I inevitably tell them the name of one of the lowest staff on the food chain–the nice, quiet fellow responsible for international bank transfers—because he’s the only one who hasn’t changed in all the time we’ve been banking at this branch.

This deliberate policy of ignoring customer needs carries a major financial price. I’ve become so fed up with the lack of basic courtesy and professionalism at Eurobank, that when it came time to take out a mortgage, I did a careful survey of all the other banks in Greece, and decided on Ethniki, the National Bank of Greece.

Now, think carefully about this. Ethniki will earn interest income of about EUR 275,000 on a 25-year mortgage of EUR 300,000, plus a further EUR 36,000 in mandatory homeowner insurance. That’s more than Eurobank will make off all our financial products—credit cards, corporate account, personal accounts, etc.—in about 550 years.

Does Ethniki have better customer service? Of course not. It happened to have a better mortgage product. I estimated the difference on interest costs over the life of the loan at about EUR 23,000 when compared with Eurobank. I would have been willing to negotiate with Eurobank to give them the chance of meeting this offer, if only I had the confidence that Eurobank gave damn about me. Since it does not, I did not, and we are now banking elsewhere.

None of this is rocket science. I'm sure Eurobank has a Customer Relationship Management (CRM) module on its banking network. I'm sure that if they wanted to, they could rank their customers by product, and do a quick cross-sale or up-sale analysis. They can even do it without software: it's simple. The failure is one of management: management cares about the bank; it does not care about its customers.

As long as we focus on individual transactions or gaining individual sales at the expense of the customer relationship and the customer’s needs, we will lose. Today’s world calls for careful planning, analysis and the reassurance that decisions made today will have a beneficial impact one, five or twenty-five years from now. Few companies in Greece seem to understand this; fewer still do something about it.

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