Three months ago, a fixed-interest subsidiary loan we had taken out for renovations to our first home had clicked over and become a variable rate loan. We now had two loans with the one bank against the same property. So, in an attempt to clean up and amalgamate our accounts before we went onto the next stage of our financial plan, we called the bank.
We explained the situation, gave them our details and stated that we would like to merge the two loans into a single account. The response was, whilst typical, plainly stupid.
B: “We can do that for you, but we do need to inform you that there will be some charges and fees involved”
M: ”Ok, so what are we looking at?”
B: ”There is a $250 administration fee, a $2500 discharge fee to close down the second loan and a $500 fee to increase the primary loan”
M: ”So, you are telling me that you want to charge me $3250 to merge the funds I currently have with you and that will remain with you into a single account that also makes it simpler for you to manage?”
B: ”That’s not how we would put it, they simply are the fees as they stand”
M: ”Right. Is there any room to negotiate? Can I speak to someone about having the fees waived or reduced?”
B: ”No, that is the fees as they stand”
M: ”Well, what if I was to say that this could be a deal breaker and that we would be willing to take our business elsewhere?”
B: ”That is always an option open to you of course, but the fact remains the fees will still stand.”
M: ”OK, thank you. Could I ask you to record the fact this call occured and the responses you provided?”
B: ”of course, if you want to continue simply call again and the notes will be on your account”
M: ”Thank you.”
So, we went out, spoke to our other bank, and being promised a great package deal which involved wiping of fees, reduced interest rates and a personal account manager – we put in the required paperwork to transfer the loan from the previous bank.
No sooner had the paperwork been submitted, and I receive a call from a chirpy “customer retention officer” from the first bank.
B: “We received the transfer authorisation form and thought before we action it if we could understand why after having you as customers for 8 years why you are leaving and if there was anything we could do to entice you to stay?”
M: “By all means, let us tackle one thing at a time – why are we leaving? Well if you can bring up the notes on our account you can see that I requested the two accounts be merged not too long ago?”
B: “Yes, but you decided not to go ahead?”
M: “No, I requested the fees be waived and i was told that would not happen”
B: “Well, we can certainly do that for you”
M: “Well, you see, it’s a sad state of affairs when I am going to receive good customer service upon actually walking out the door and not while still a customer. The [other] Bank offered us a great interest rate with a fixed reduction for three years, they waived all fees and they provided us with an account manager in exchange for bringing them the additional business.”
B: “Well, we would be willing to see if we could offer you the same”
M: “So, you are asking me to cancel the arrangement with [other] bank in exchange for you being ‘willing’ to see if ‘you can’ offer me the same deal? Really?”
B: “Well, I’m sure we can better it”
M: ‘I really do think it is too little too late now, don’t you?”
While my business with them was for a single average sized home loan, we also had another loan with [other] bank and part of our long term plan was to consolidate and leverage the equity in the two properties to gain a third loan – almost quadrupling the total value of the services I held with them.
The first mistake they made was to be under the false impression that a quiet customer is a happy one – not once in the term of my eight years with them did they check that assumption by talking to me. Sure, surveys came and went, and they would have seen “blue squares” but they never called. They never checked to see what my goals were and whether they could assist me with them. That customer service mistake of not addressing issues raised by a customer indicated in that first conversation was the second mistake that had cost them my current and future business.
This “on the way out” customer service is not new to me when it comes to financial service providers. In fact, it’s a not-so-secret-trade-practice that the best way to negotiate credit card interest rates is to be ready to close down the account to ensure a “retention officer’ will try and give you a “deal” for staying.
Is it just financial institutions that make this mistake though?
How many other service industries make similar mistakes?
Are they listening, are they reacting, indeed are they pro-actively seeking to find out what customers are looking for before they have to meet them at the exit table?