ONE COULD SAY that Sovereign Bancorp Inc. went the adoption route to grow its financial family. The Wyomissing, PA-based retail bank has completed 24 acquisitions since 1989, growing into a $37 billion company with 530 banking offices and about 1.5 million customer households. Aaron Garner, senior vice president for strategic marketing, joined Sovereign in 1998. One of his first assignments was helping to integrate 93 newly acquired Pennsylvania and New Jersey Corestates/First Union branches into the Sovereign fold. In 2000, he also facilitated the integration of 281 Connecticut, Massachusetts, Rhode Island and New Hampshire FleetBoston branches bought by Sovereign. Fittingly, he started his banking career on the customer-facing level 13 years ago while in college, as a teller with Dauphin Deposit Bank (now part of Allfirst Financial Inc., owned by Allied Irish) in Harrisburg, PA. He was with the bank for four years, moving into retail lending and then marketing, where he worked on product management. He also spent time with Union National Bank in Westminster, MD, first as director of product development and later as director of marketing. “It was at that point where I started to really get into recognizing the value of tapping into your customers and understanding their needs and wants.” The bank is making retention a priority, looking at ways to better gauge lifetime value of its customers, each of which have purchased about four products or services from Sovereign. Garner talked with DIRECT about the bank’s retention and customer service initiatives.
DIRECT: Is retention a big concern for Sovereign? Do you have retention programs in place, particularly for the customers acquired through acquisitions who didn’t come to the bank by choice?
Garner: I think retention is a big concern for every bank. Are we experiencing a lot of retention issues? No. [For example,] when we did the Fleet divestiture and so forth, we did not have a ton of people running out the door. We don’t have a problem but we are concerned about it. We have instituted programs that will help us not only to improve retention but to prevent it from becoming an issue.
[This month, we’ll be] looking at instituting a relationship management person on the retail side of the house. Most banks have relationship managers on the commercial side. What research in focus groups has shown is that our high-end retail customers want that relationship as well. They want a person with a breadth of product knowledge, who understands what we offer and can sit down and talk intelligently about things that would be of a benefit financially to a consumer. And these people [will receive incentives based] on retaining and growing that base.
DIRECT: Are you concentrating on growing the existing customer base?
Garner: We are. We’re using CRM tools such as the Harte-Hanks Allink Daily Deposit Builder to dig into the data and find out who are our high potentials. And we’re going to do dedicated cross-sell initiatives through direct mail, with follow-up teleconsulting with our branches to those customers. There’s going to be a concerted effort to get those customers up to the next level, maturing those relationships and getting them through the customer life cycle.
[We’re also using] Allink from a retention standpoint. We’re monitoring deposit transactions daily and building a profile of each one of our customers. As those daily deposit transactions are hitting, [the system] is pulling out unique and uncharacteristic transactions. We’re able to send these leads to our individual branch offices so they can follow up in 24 to 48 hours.
We’re able to intervene immediately when a customer is in [the process] of, say, [withdrawing] $20,000 out of a $40,000 money market account. [Usually] you wouldn’t see that until a month after it happened. We want to get in front of that cycle and intervene immediately. What we see isn’t that a customer comes in one day and closes everything out. They bleed the account and diminish the deposit dollars over time.
Here’s a perfect example. We had a customer who had written a check out of their account for $150,000. The individual branch contacted the customer with a service-level call, seeing if there was anything we could do to meet their needs and making sure everything was OK. The customer mentioned they were in the process of meeting with a financial planner to move into investments. That customer [ended up] buying the investment through us and we kept that money, rather than it leaving the bank and going with a Merrill Lynch.
DIRECT: Who does Sovereign see as its competition?
Garner: It varies from market to market. We’re in Pennsylvania, New Jersey, Rhode Island, Connecticut, New Hampshire and Massachusetts. Overall, we consider our main competition Fleet and Citizens, which are both our markets (New England and Mid-Atlantic) since Fleet bought Summit Bank and Citizens moved into the Mellon branches. PNC has always been competition for us in the New Jersey and Pennsylvania area, First Union Wachovia and Commerce Bank in the Mid-Atlantic. And from a region-to-region perspective, there are midsize banks we keep an eye on.
DIRECT: How does your marketing strategy vary by region?
Garner: We’re looking to focus more on a micro-market plan — from an area-by-area geographic standpoint rather than a total bank-wide blanket. There are different cells of customers out there. In Philadelphia there are going to be more inner-city-type segments, vs. Boston, where you might have more upper affluents. It’s just understanding where those pockets of customers are and saying OK, if we’re in an inner-city area, does it make sense to be offering high-end products or should we be doing things like free checking?
DIRECT: Overall, how quickly are you implementing CRM?
Garner: Many companies never get to the point of implementation because there’s always something new to put in place. We’ve taken it from the standpoint of ‘How do you eat an elephant?’ You eat it a bite at a time, because if you swallow the whole thing you’ll choke and die. We’re going to take little bites. We’re going to implement pieces of [our CRM program,] measure the return on those pieces and then go ahead and start exploring other options, [if] from a financial standpoint it makes sense to keep making that technology investment.
A CRM initiative is only as good as your salespeople. I can create sales opportunities. I can go to the branch and I can deliver leads. It’s not closing the deal. It’s that individual branch person who receives a lead and does the follow-up call that makes everything work. That makes the value of the investment come to life. Our branch network is probably where the majority of our sales are generated on the retail side. So we say let’s harness and build off that, rather than worry that everybody in the organization is concerned about communication flow, because that could be an initiative we don’t realize for two to three years. Let’s focus on what’s going to give us our return.
Welcome MATTERS
Sovereign rolls out the red carpet to improve customer service
Sovereign Bancorp Inc. is getting ready to roll out the second phase of a customer service initiative designed to increase satisfaction both in and out of its branch offices.
The program, called Red Carpet service, began in January. Prior to the launch, the bank conducted focus groups to gauge depositors’ desires, says Aaron Garner, Sovereign’s senior vice president for strategic marketing.
“We said, ‘OK, if you could build your ideal bank, what would it be and what would you expect from it?’” says Garner.
The feedback, while not surprising, was informative, and led Sovereign to make service guarantees such as teller service within five minutes; returned customer service calls or e-mails on the same business day if received by 3 p.m.; statements mailed not more than seven days after the statement cutoff dates; and 24/7 telephone service. (The bank has 324 reps employed in its Reading, PA and East Providence, RI call centers, and has tested outsourcing some after-hours calls to a vendor in Bombay, India.)
“We take it very seriously,” he says. “We have a person within our organization (Stephanie Wheeler) who is strictly assigned to the initiative.”
Part of Wheeler’s duties is to monitor calls coming in from customers requesting a potentially costly feature of the program: a $5 credit to their deposit account if they inform the bank they did not receive “Red Carpet” service.
“They provide reports on a daily basis where we’ve missed an opportunity to service our customers,” says Garner, noting that not many calls for rebates have been received. “It’s been a pleasant surprise.”
Red Carpet’s second phase will include several research initiatives that will help Sovereign get a better idea of what customers want from a bank.
“Customer retention and cross-selling to customers are interconnected with the customer experience, [including] the emotional factors that affect customers’ decisions to buy,” he notes.
The bank did some promotion of the service when it was first rolled out, like in-bank signs, pop-up ads on SovereignBank.com and statement stuffers. With the next phase scheduled to begin, a direct mail effort is under consideration.
— Beth Negus Viveiros
