The cost of divorce--business style.

• Author: Hall, Robert
• Position: Marketing Solutions

Everybody knows that in banking the strength of customer relationships has a strong impact on customer retention, referrals and number of products purchased. Granted, plenty of actions have undermined customer relationships over the years--things like shooing customers out of the lobby, inhibiting calls to the branch, charging for teller transactions, taking away checks or automating customer service. At times we have cut too much trying to be efficient sold too hard trying to drive revenue and overinvested in technology for fear of being left behind. Through all the missteps, we have dusted ourselves off, licked our wounds and moved forward. More often than not, smaller community banks and a few of the larger banks with strong customer focus have demonstrated that, over time, strong customer relationships are a winning strategy.

There is another thing that most everybody knows--or at least they say they know. That is that strong employee relationships are a key to strong customer relationships. The CEOs at Commerce Bank, Wells Fargo and a number of smaller banks seem to know it in a more powerful, actionable way than others, but there would be little disagreement on this point.

Less apparent is that customer relationships are increasingly at risk because of instability in our employee relationships. While the loss of jobs due to automation, offshoring, and immigrant labor has been much publicized, the problem of employee turnover, especially as baby boomers check out of the work force, is only beginning to surface.

Since 2004 ... turnover among managers has jumped from 4 percent to 8.8 percent. Among salespeople it rose from 8 percent to 16 percent, and among skilled manufacturing workers it went from 7.5 percent to 17.5 percent ... In the 2004 survey, more money was the main motivator This time around, most of the employees polled said they were after more responsibility or the chance to gain new skills. (Anne Fisher, Fortune, "Playing for Keeps," Jan. 27, 2007)

Houston, we have a problem. When we look around, we see that the workplace is not the only segment of our lives where relationships are less stable. For example, we have seen the marital divorce rate double over the past few decades. Many would say that our political relationships and discourse have become more fractious. In recent years we have seen an increase in the rate of customer defections. But until recently we were able to avoid the relationship crack-up sweepstakes...