Banking is a brutal business.
Northeast Ohio is crowded with local, regional and national players, all vying for a slice of your wallet. Competition is fierce, margins are thin and regulatory costs are increasing.
But through all of this, FirstMerit has managed to reach the top in many of the markets it competes in.
John Cochran, chairman and CEO of FirstMerit, says the bank uses a “super community” concept to offer the services the bigger banks have while also providing the familiar faces and personal service touches of a smaller community bank.
The strategy has worked. FirstMerit is No. 1 in marketshare in Summit, Stark, Medina and Lorain counties, and is ranked ninth overall in the state. The bank has $10.3 billion in deposits and 161 offices in 24 Ohio and Pennsylvania counties.
Smart Business talked to Cochran about how he plans on growing FirstMerit in a crowded banking marketplace and the importance of satisfied customers.
How important is measuring customer satisfaction to growth and how do you do it?
In the commercial segment, we use a service called Greenwich. Greenwich (Associates) really specializes in commercial surveys. What they would do is go into the marketplace and survey the small to medium-sized business entrepreneur.
They get sense of their perception of the quality of the relationship with the bank and then provide information on FirstMerit’s customers and their perception of our service versus the perception of our competitors’ customer service. It gives us a benchmark in perception.
We use Gallup in the retail side, and what they do there is telephone shop the customers after they use the branches to get a perception of the service quality. They also do that for competing institutions’ customers to give us a benchmark there.
The other thing that is important to us is the growth and retention of the customer base. On a historical basis, we keep track of the retention of our customers as well as the growth of total households. You can have individual services growing in numbers and in dollar volumes, but what is really important to us is what is happening to the base or number of customers doing business with us.
We set a goal of 4 percent commercial growth and 2 percent growth in our retail book, which we achieve. When we look at retention, we look for high numbers, 89 (percent) to 92 percent customer base, both in commercial and the consumer side. That’s an important indicator to us for service quality.
The third factor is growth of services customers have subscribed to. To us, an important factor in service quality is you are growing the number of services households subscribe to. We look at being a relationship manager and building deep relationships.
Our goal is to have over 50 percent of households in both consumer and retail to have three or more services, and to date, 55 percent have three or more. Our goal is 20 percent moving to 35 percent of households having five or more. That’s an important indicator to us of service quality.
How do you plan on continuing FirstMerit’s growth, and what role do acquisitions play?
From our perspective, it’s absolutely essential that we are growing what retailers call same-store sales. You’ve got to, in a proactive and organic way, be creating a franchise that is earning marketshare on a very organic same-store basis.
That’s why I talk about 4 percent household growth (commercial) and 2 percent growth (retail). That’s same-store growth in the number of households we are doing business with. The profitably of growth is multiplied off of that by selling multiple products into those households.
Our strategy needs to be a strategy to reach and improve marketshare on an organic basis. Then the next thing focuses on, are there customers we should be doing business with that we are not currently focusing on? Are there markets we should be addressing?
That is another important piece — addressing new markets that are contiguous to us in Northeast Ohio. Our company has doubled in size over the last decade. A big part has been organic growth. Another big part of that is acquisitions. We look at new opportunities and continue to look at opportunities.
How does your Customer Touch Plan help build relationships that fuel growth?
We were discovering when a consumer opens a checking account, they test you for awhile. They don’t close out the old account. It’s so important, beyond the first impression, that you make an opening with the customer, where you find out whether they are getting the service that they expected.
Do they have issues or questions with the product? We have a proactive touch plan. Within 24 hours of a customer opening an account, we send out a personalized thank-you note to them that identifies to them their relationship banker. They know they have this person they can build a relationship with (more) than just opening an account.
A week later, we give them a phone call. Again, we are asking around those issues: Do you have any questions about services purchased from us? Are they responding the way you want it? Then, within a six-week period, we call again.
It’s the same thing, but also then gives us a chance to reflect on needs that are more long-term. Here, we begin to pick up on whether those events are transpiring, and should we be talking about them.
Following up the six-week call is another call on 90 days to address things we talked about in the six-week phone call. We then go to a six-month, nine-month and 12-month phone call. We are always building on a discovery and following up and making sure the service is meeting expectations and meeting financial needs. That’s been an important part of keeping our retention rate and improving our retention rate.
It makes sure customer satisfaction is met from initial contact and reinforces our desire to build a relationship.
How do you get employees to buy into your vision of the company?
It’s who you hire. Fundamentally, we hire people that have a strong service ethic. We have a selection instrument that gives us a way of screening people that have the service ethic. That’s where it starts. Then you reinforce it with service principles.
We have what we call service basics; we re-emphasize and train them on them. There is a tremendous amount of training, statements on service and how to provide it. One of the key factors in any product developed or any measurement of performance is service.
Service is always a major piece of the measurement process and design process of products and processes. People are rewarded for high-quality service. When we talk about (measuring satisfaction) — people are rewarded for (achieving satisfaction). It is part of their performance appraisal.
Important to that is the underlying basic protocol everyone undergoes. There are behaviors we say are standard, so a customer experience is similar from each branch or each bank at FirstMerit. There is a way of relating to the customer that is very specific. We measure against that and train against that. It’s really a very critical feature of our company.
How to reach: FirstMerit, (330) 996-6025
