Make sure the pluses exceed the pain

I can remember being a little kid and going with my mom as she changed from one bank to another.  There was a display table in the lobby covered with stadium blankets, an AM/FM radio/alarm clock, an umbrella, a camping flashlight and a bunch of other cool stuff.

Free gifts or incentives for changing banks.

Back in the early 70's, banking was pretty simple.  Conveniences like payroll direct deposits, ACH auto payments, recurring payments and online banking hadn't even been conceived.

So, it was pretty easy to lure a customer to your bank.  Offer to deposit $5 to a new account or toss in a free stadium blanket.  But times have changed. 

The pain of changing bank accounts is significantly higher today.  You have to call the phone company, the utilities, switch your direct deposit, re-create your entire online bill pay set-up, and cancel all your auto payments.  Ugh.  We often stay with a bank we don't even like, rather than go through the hassle of making a change.

Today, I received a postcard offering me a personal coffee maker if I'd change banks.  Are you kidding me?  Go through all that pain for a $10 coffee maker?   No thanks.

The moral of this story? Make sure the incentive you are offering is commiserate with the pain of becoming your customer.  Otherwise, the message you are sending is that you're out of touch and don't understand where your potential customer is coming from.

Comments

[Affordable Life Insurance Quotes]

A customer would be fool to change his account for something as cheap as a coffee-maker

[Susan Gunelius]

Drew,
I'm laughing very hard about your post for two reasons:

1. My dad had the clock in the picture you used in your post when I was a kid. In fact, when I was in elementary school, and he got a new alarm clock, I inherited that one, and could get all the great a.m. stations on it. :)

2. I can't believe a bank would even considering offering a coffee pot to try to incent customers to move their account. That's hysterical. It's really one of those, "what were they thinking?" moments.

Thanks for giving me a good laugh and reminding us how not to use incentives.

[John Rosen]

Drew: Very interesting. In my experience, too many of my clients have a "grab bag" of incentives, supposedly proven over the years, that they -- quite literally -- run to use whenever they are missing their numbers for the quarter! That is, their use of incentives is even less strategic than might be imagined and implied by your basic advice to be sure the incentive is commensurate with the pain. I would have to observe that these clients chosse incentives that are commensurate with the numbers they (not their customers) have to hit.

Since thier customers are willing to spend very little time to review and analyze the incentives on offer -- they are generally impatient or reluctant as you suggest and have a very quickly ticking stopwatch -- our clients often overshoot. Since the clients' objective is to make the quarter and the customer's objecitve is get it all over with quickly, the client ends up offering MORE than necessary.