Executive Summary Leadership at Commerce Bank knew what it needed to do to be successful in the banking industry. They knew from the get go that they wanted to focus on differentiating themselves from competing banks.
They wanted to compete on service rather than price recognizing that their prices weren't always the best in the industry. Their corporate strategy was set around their customers having a positive, memorable, and consistent experience when they visit any of the Commerce Bank branches.They relied heavily on research to determine why customers left their uncial institutions in favor of a competitor and they made it their goal to make Commerce Bank stand out from the rest. Commerce Bank capitalized on what other banks were doing wrong. Over the years, Commerce Bank did everything from being opened seven days per week to handing out dog biscuits for drive-through customers to having bank mascots in the branches entertaining customers.
During 2002, the retaliating concept was introduced (Fret, 2006). The idea was ensuring customers were entertained even if they were in the branch waiting in long lines.Branches were encouraged to come up with ideas for the new concept. Ideas ranged from having hot dog carts in the branches to having Jugglers engage in a performance.
The goal was to give customers the ultimate experience while in a Commerce Bank branch and continue to deliver on the company's mission of differentiation. Background From the beginning of Commerce Bank in 1973, their main corporate strategy was to differentiate themselves within the banking industry in order to grow and gain market share. The first bank location was opened in southern New Jersey and has since spread into Pennsylvania, Delaware, and New York.Expanding into New York presented a huge opportunity for the one-time community bank. Commerce Bank branded themselves as "America's Most Convenient Bank" with branches open seven days a week and expanded hours during the week of 7:30 AM - 8:00 PM (Fret, 2006).
Some of the drive-through windows were open as late as midnight to accommodate customers. Through research, they found that one of the key reasons why banks lose their customers is due to them finding a more convenient bank elsewhere. Commerce Bank wanted to capitalize on this research by becoming a bank of convenience for its customers and future customers.Feature Article - com/fsibl-report-3713/">Fsibl Report
It's served as entertainment for kids and other customers in the branch. The arcades were free of charge to both customers and non customers. This would bring traffic into the branch and attract new customers at the same time. Problem The issue that Commerce Bank faces surrounds the retaliating concept introduced in 2002.The Bank has built their reputation on differentiating themselves within the banking industry while maintaining consistency among branches. There has been extensive research, planning, and execution involved with getting the brand to where it was prior to retaliating.
The retaliating concept has allowed branches to come up with their own ideas of how to entertain guests in their branches. There have been some reported issues with retaliating. One branch had a hot dog cart and a Juggler providing entertainment for customers. The hot dog cart caught on fire and the Juggler in trying to help caught himself on fire (Fret, 2006).The leaders at Commerce Bank are now questioning whether they have taken it too far with retaliating.
After building the brand and reputation on service, they are concerned about what role retaliating plays in delivering the Company's mission. Analysis Commerce Bank leadership built their bank around the philosophy of creating a retail experience for every customer. While other banks were competing on price, Commerce recognized that their prices were not the cheapest in the industry so they had to differentiate themselves in a different manner.The organization's founder, Vernon Hill, really sought out to understand what factors affected customers leaving their bank and what key reasons lead to their dissatisfaction.
He used that information over the years to create a successful service model that would ultimately set Commerce Bank apart from other banks. Many other banks focused on loans as their growth strategy while Hill's point of view was that the banks real value was based on deposits rather than loans. This focus on deposits meant that Commerce needed to strategies based on its products, locations, service, and promotions.While most banks offered checking accounts that were very similar in nature, Commerce had to differentiate its account offerings to drive deposit growth. To do this, they offered an overdraft protection line, free debit art, and low minimum balance requirements. They also offered the first year free of monthly service charges and the first order of checks for free (Fret, 2006).
Their locations were carefully planned out to ensure it was in a heavy traffic area but not too heavy and ensured that all branches, with few exceptions, had a consistent look.The idea was that regardless of what branch a customer went in to, they would have the same consistent experience at each location. The bank also spared no expense when it came to promoting a new branch location. For example, the promotion budget for each new location in New York was $500,000, which was vive times more than they usually spend (Fret, 2006). They also focused on driving the customer experience through exemplary service. To do this, they implemented the WOW! Program to measure service excellence.
Employees can win lavish awards for providing exceptional service.Training was also a focus when it came to employee management. Commerce sought to immerse employees in the Commerce culture and ensure all employees were provided with consistent and ongoing training. When compared to the industry, Commerce's deposit growth between 1998 - 2001 was 160% while the industry was only 20%. Additionally, for 2001 alone, Commerce's opposites grew tat 40% rate while the industry average was only 2%.
Net income over the same four year period grew by 100% for Commerce but only 20% for the banking industry.This shows that the Commerce strategy of focusing on deposits as the value base is working. Recommendations and Conclusions Commerce Bank should continue to focus on the same factors that made them successful from their inception. Their attention to customers and dedication to service excellence has been substantiated by the growth figures previously discussed. When compared to the industry through 2001, they are well ahead of heir competitors in regards to growth and net income. Their belief that value is created based on deposits rather than loans has paid off.
Commerce Banks mission is centered around doing things differently from their competitors. They have proven success of this mission over the years. While they do need to continue to be innovative, they need to remain cognizant of the Company's overall mission to provide high quality service to its customers and determine what lengths they need to go to achieve this mission. The idea of retaliating is clearly something Commerce's competitors have yet o think of and while their mission is to continue to differentiate themselves, retaliating appears to be a good way to do that.As competitors discover what makes Commerce successful, they will try to replicate it or put something similar into place to mimic their success.
Therefore, Commerce must stay a step ahead before they get behind the competition and retaliating is a great way to do that. The recommendation for Commerce Bank is to focus on learning from retaliating mistakes made and continue to improve the idea to make it a success and continue to drive deposit growth. References Fret, F. (2006). Commerce Bank.
