First 90 Days Make or Break New Deposit Relationship

The following coverage is from the Bank Administration Institute's Retail Delivery Conference & Expo in New Orleans

The first 90 days of a new depositor relationship can make or break financial institutions' cross-sell and retention objectives, according to research from the Bank Administration Institute (BAI) in Chicago.

Most banks focus cross-sales and retention efforts on long-term customers, which is warranted, says Paul McAdam, BAI's managing director of research. But financial institutions can boost retention and cross-selling by creating new-customer orientation programs. "New customers are No. 1 in attrition," McAdam said. "The attrition rate for new customers is 200% to 300% higher than for long-term customers."

New-customer orientation is vital because relationship longevity is a key driver of profitability, adds James Moore, Ph.D., BAI senior research fellow. A sophisticated customer orientation program involves a four-step process:

• Set expectations. Simplify products, clarify pricing, and develop customer-focused products.
• Open the account. Conduct needs-based sales and customer profiling, and offer the right products to the right customers.
• Follow-up. Send thank-you letters and make follow-up calls to new customers. Conduct additional needs analyses on new customers.
• Quality assurance. Resolve problems promptly, evaluate account activity, and consider how to accommodate customers' additional needs.

Best-of-class customer orientation programs, BAI reports, deploy a simple segmentation solution that align customer targeting and needs-based selling. They also enable expensive front-line resources to be deployed effectively and provide the opportunity to target high-potential customers.

"Use recognition for high-value customers," McAdams says. "People like to be seen as 'platinum.'"