by Sherri May
As if the Summer of 2010 didn’t deliver enough to worry about, bankers across the country are holding their collective breath to see what these dog days will bring in light of the federally-imposed Regulation E changes. However, all is not doom and gloom. Communicated effectively, these changes can open the door for banks to actually increase satisfaction.
As a result of initial communication strategies, banks have already captured most of the low-hanging opt-ins. But what’s next? Continuing a relentless focus on customer-centric education and communication, implementing a clear resolution plan and arming contact staff with a consistent message around key satisfaction drivers will help banks transition a perfect storm to an opportunity. It’s now time to implement the next chapter of your Reg E Communication Strategy.
Education & Communication
The 2009 Retail Banking Study from J.D. Power and Associates reveals ten key drivers of customer satisfaction at banks. One of these key drivers is to keep consumers in the loop when change is inevitable. The changes we’re facing now certainly fall into this category.
For those who have opted-out, Reg E opens a Pandora’s box of relationship risk. If declined, they’ll likely reach for another card. How do you explain a decline when a pre-authorization has reduced their available balance? What about consumers who typically buy now and transfer money when they get home? If the communication we developed for the initial debit card introduction taught us anything, it taught us that we must look long-term, pack our communication with repetition and reinforcement, and target both consumers and employees.
To achieve your goals of preserving NII while maximizing retention, it’s essential to generate understanding through education and communication across multiple channels:
• For consumers (and merchants), rely on a recurring and consistent message through Internet and statement communication, in-branch messaging, direct marketing and in-person communication.
• In concert, rely on recurring training, Intranet messaging, email blasts, conference calls and in-person meetings to integrate a consistent message across multiple channels of employee communication. Your goal is to ensure everyone understands the operational details, can communicate them effectively and that everyone communicates a consistent message focused on the benefits of opting-in.
Clear Resolution Plan
“You declined my card and embarrassed me in front of my boss when I tried to pay for lunch!” Veteran bankers have learned to not take this personally, but it may become a more frequent reality in our “Post Reg-E” world. Do your employees know exactly what your process is to assess, resolve and turn these situations into positive ones? Do you have consistent accommodation parameters in place, do all contact staff know what they are? Is there a specific hierarchy in place for problem resolution?
Another key driver to satisfaction in the J.D. Power & Associates study was that problem incidence directly impacts overall satisfaction, and the faster a problem is resolved, the higher the satisfaction level stays. The powder-keg nature of point-of-sale declines means it’s more important than ever to develop a focused resolution plan to deal with Reg E issues. It should be simple, consistent and customer-centric. Consider the following:
• Establish specific parameters around a consumer accommodation process. For example, if the average balance is $X or higher, account tenure more than X years, etc. define what accommodations can be made.
• Think outside the box when it comes to consumer accommodations. For example, in what situations will you allow phone authorization for opt-in and/or funds transfer so the merchant can re-run a declined transaction? If systems allow, in what situations will you override a decline?
• For after-the-fact complaints, be sure to have consistent scripting available and rehearsed so front-line contact teams are clear, confident and can deliver a message that resonates from the consumer’s point of view.
Ensure service staff is clear on the escalation process and to whom they should refer consumers if unable to handle issues.
• Assign a specially trained team (or individual) to field escalated issues. The J.D. Power & Associates study revealed that the faster a problem is resolved, the higher the satisfaction level stays and that keeping contacts to one time improves satisfaction and the inclination to switch banks. To maximize satisfaction, your resolution team must have the decision authority to solve issues on the spot.
• Be sure merchants also know your resolution process and provide easy to reach representatives should they need assistance. Provide indexed, easy to navigate information (printed and/or online), and a list of frequently asked questions. Although you can’t guarantee all merchants will train their clerks, but providing merchants with resources demonstrates you know they’re on the firing line and arming them with resources and information will you apart.
Consistent Message
Another satisfaction driver cited in the 2009 J.D. Power & Associates study was how focusing on consistent and high levels of in-person interaction is key to satisfying all consumers. This is most key at opposite ends of the consumer spectrum; capturing opt-ins for any remaining high-users of overdraft services and also capturing opt-ins for low-user, high value consumers.
Knowing your high-users are most likely to encounter a POS decline suggests the wisdom of a high-touch effort to reach out to those who have yet to opt-in. You’ll increase satisfaction with both the service call and by avoiding a potential decline situation. A “divide and conquer” strategy works well here. Certainly leverage your phone center, but if you also assign contact staff up to 5 calls per day, the impact to work load is minimal and you’ll get through your list quickly. Add an employee promotion that rewards results and you’ll come out even further ahead.
Most of the initial Reg E communication strategies correlated overdraft usage with contact volume. In other words, consumers with high-use were invited to opt-in more frequently and across more touch points than those with low-use. This was a solid strategy that ensured high-users were opted in fast and first. However, because low-users are often high-value consumers, being declined at point-of-sale presents a much greater risk to high-profitability attrition.
Consider as well that high-value, low-users should be offered access to a convenient overdraft protection vehicle to enable authorization of underfunded debit card transactions. Offering a pre-approved credit line is a great opportunity, since these folks are likely your most credit worthy consumers.
The key to effective interaction is to anticipate questions and objections, then provide realistic scripting so contact staff deliver a consistent message. Consider these subject areas:
• Explain pre-authorization
• Explain OD fees in opt-out situations (non ATM or debit transactions)
• Share opt-in benefits (and/or overdraft protection) in a way that naturally leads to a positive opt-in decision
• Transitioning the interaction into a successful opt-in and overdraft protection sale
The New Normal
Much has been publicized about the causes and effects of financial reform. Although there are valid reasons behind much of it, consumers have painted our entire industry … the bad players as well as the good … with the same broad brush. However, these same consumers have forgotten that not too long ago, a basic checking account cost upwards of $100 per year. Even in light of the impacts that Regulation E will bring, relationship pricing still enables us to offer that same checking account for free, and with the added benefits of online banking, bill pay, debit cards and more.
Our industry remains an honorable one. We provide the tools that help people manage their money and reach the financial goals that help them enjoy their lives. It’s essential that we seize the opportunity to write a good news story around the changes that Regulation E brings to the table.
Let’s Talk … about how Sherri May & Company can help you transform Regulation E changes into improved satisfaction and new revenue opportunities:
Kristina Klopp | 602-547-7020, ext 107 | kristina@sherrimayco.com
