I just got bribed and I don't feel good about it.
Lately I feel awash with banking and credit card options. Each offer is so similar to the next it makes me rethink my existing relationships. I've been a regular customer with a specific bank for 14 years and for some reason, I decided to cancel my fee based credit card a few weeks before next years fee is due.
I reached an agent who was professional and interested in saving me. He thanked me for 14 years of patronage. He clarified the fee amount and the benefits that come with that fee. He suggested changing cards was bad for my credit score and there were alternative paths to keep the same account number should I need to. He did everything right in a concerned yet supportive manner. None of this really mattered to me.
On a purely right-side brain decision, I compared the value proposition between a number of alternatives (here is one of many web sites to help you do this). The card didn't meet my needs and I was ready to move. Further, there is no longer any need to hold a credit card with the same bank as my deposits . Since I recently redeemed all but a few thousand points, there was nothing to keep me loyal.
In a last ditch effort, the bank agent offered to waive a portion of the fee and a bonus of points if I spend a certain amount in the next few months. With these changes, I took the offer. I don't have to cancel my card and get something for not leaving. They saved a customer today, but only until the next fee is due.
Ask any fashion designer and they will tell you that pricing is a funny thing. Regardless of the product, as long as the pricing is consistent, people get a sense of value that they can benchmark and rely on. But as soon as they see it for 70% off at the outlet store, they will never again conceive of the full retail price as a benchmark, ultimately eroding the price point the product can sell for.
Instead of bribing me with a fee waiver that reduces the perceived value of the current product, the bank agent should have stopped and asked what kind of card makes sense for me as an individual customer;
Protecting not Greasing the Brand:
Lately I feel awash with banking and credit card options. Each offer is so similar to the next it makes me rethink my existing relationships. I've been a regular customer with a specific bank for 14 years and for some reason, I decided to cancel my fee based credit card a few weeks before next years fee is due.
I reached an agent who was professional and interested in saving me. He thanked me for 14 years of patronage. He clarified the fee amount and the benefits that come with that fee. He suggested changing cards was bad for my credit score and there were alternative paths to keep the same account number should I need to. He did everything right in a concerned yet supportive manner. None of this really mattered to me.
On a purely right-side brain decision, I compared the value proposition between a number of alternatives (here is one of many web sites to help you do this). The card didn't meet my needs and I was ready to move. Further, there is no longer any need to hold a credit card with the same bank as my deposits . Since I recently redeemed all but a few thousand points, there was nothing to keep me loyal.
In a last ditch effort, the bank agent offered to waive a portion of the fee and a bonus of points if I spend a certain amount in the next few months. With these changes, I took the offer. I don't have to cancel my card and get something for not leaving. They saved a customer today, but only until the next fee is due.
Ask any fashion designer and they will tell you that pricing is a funny thing. Regardless of the product, as long as the pricing is consistent, people get a sense of value that they can benchmark and rely on. But as soon as they see it for 70% off at the outlet store, they will never again conceive of the full retail price as a benchmark, ultimately eroding the price point the product can sell for.
Instead of bribing me with a fee waiver that reduces the perceived value of the current product, the bank agent should have stopped and asked what kind of card makes sense for me as an individual customer;
- Do they carry a balance?
- Are they premium or value concisous?
- Rewards or cashback?
- Do they travel?
Protecting not Greasing the Brand:
- Acknowledge and recognize them for their patronage
- Stop to understand why your customers are attriting is it emotional, logical or both
- Determine whats important and what is not important
- Determine if they are right for the product
- Identify additional sources of value and calculate the value in real terms
- Ask for their business
The problem is, the issuer probably did a test in the past, offering 50% another product (probably with no fee), and the other 50% a fee discount. And the discount group probably won on an ROI basis...so that's what they did! I expect enough people forget to call for a discount the following year, to make it worthwhile. Do you think something like this is happening?
ReplyDeleteThanks for your comment Stepehen. You are right that many card companies offer points and freefor deals that make it hard not to switch from product to product.
ReplyDeleteIts amazing how much companies are willing to invest into new customer aquisition. This gives some insight into how profitable a loyal customer is for a lending product. It also highlights the need to look closely at the quality of that aquisition in terms of the companies ability to retain profitable customers long enough to exceed the investmnt to acquire them.