Dealing with small-business customer attrition.

• Author: Clapp, Bruce

Small-business customers can be a valuable source of lasting, highly profitable relationships. Obviously the business customer can provide deposits and loans as well as utilize core banking services. Often, untapped potential exists in further developing and expanding relationships with business owners, their families and employees. The powerful combination presents an opportunity to build long-term value for the successful financial institution.

However, quite frankly, many small-business products and services are simply retail products supercharged with higher transaction counts that masquerade as business accounts. This lack of innovative products and scattered focus on small business leads to attrition. Research indicates that most attrition is caused, at the root level, by an unmet product need. Small businesses have needs that are unmet on the surface (remote deposit capture) and under the surface (cash management, etc.)

I have owned my business for approaching seven years. In that time period not once has my "retail" bank asked for my business accounts and, almost as stunning, my "business" bank has not asked for my retail accounts! So, what has happened? I have switched my business accounts three times to meet my business needs, taking my profitable accounts with me. Your bank needs to establish a Small Business Retention Team that addresses the immediate issues of attrition and then focuses "upstream" on getting products, services and delivery that aligns with the needs of your small-business customers. The best bet for gathering information: focus groups with your small-business customers! Ask them what they need ... they will tell you and it may surprise you how "people" focused their needs truly are.

The lessons learned

The late Charles Murphy used to say, "Fools learn from experience. Wise men learn from the experience of others." Let's take a look at some best practices for retaining...