Creating customer loyalty through stellar customer experience is challenging enough without taking a first step in the wrong direction. All things being equal, improving on an acceptable but bland or unexciting customer experience should yield positive results. Improving on a negative experience in stores or on web sites may take longer to show results. The worst case scenario is to move from a neutral situation to a negative one, creating immediate need for damage control.
That is exactly what we have just witnessed in the retail banking business over the past several months.
Over the course of 2011, virtually all of the major retail banks in the US instituted fees for use of Debit cards, sparking consumer outrage over checking account fees. As an activist-created “Bank Transfer Day” approached on November 5, most had dropped the previously announced fees.
The need for change is not a big surprise, but the progression of events provides a cautionary tale for any brand striving to build loyalty through customer experience.
Research was in market pointing out that 30% of US consumers would consider switching banks if a debit card fee was imposed. And, in an economy that is still moving through the lower gears hoping to hit full speed, it stood to reason that consumers would object to additional retail banking fees – especially for using a product which has been pushed heavily over the past 5 years.
Interestingly, the credit card associations (Visa, MasterCard) and the banks have been eager to shift consumer payments by cash and checks to debit cards to reduce processing costs and to build new revenue streams. Their efforts have met with success, as debit cards are the fastest growing payment vehicle in the market.
After most consumers became comfortable paying with Debit, a merchant outcry over processing costs became the genesis for “consumer facing” legislation known as the Durbin Amendment. With the legislation coming into effect, most banks sought to counter lost revenue streams by instituting a variety of retail banking fees including a monthly charge for using a Debit card.
Should the banks have known better? Probably. There was enough “customer voice” in evidence to cause someone to hit the pause button before going forward with new fees. On the other hand, airlines have steadily added fees and reduced services, moving in formation and forcing customers to accept changes whether they like them or not. Maybe that temptation was too hard to resist.
On occasion, consumers become fed-up and revolt. It’s happening today on Wall Street and, in the case of debit card fees, it happened on Main Street as well. Will a revolt against the airlines be next?