Banks woo their best clients

By SIMON HENDERY

Forget the gold card. You know your bank really loves you if its glossy magazine arrives in the post.

As the established banks gear up for a customer retention battle when the People's Bank arrives on the scene next year, WestpacTrust has decided one way to clients' hearts is through their reading glasses.

While some clients grumble about rocketing fees and growing queues, New Zealand's largest bank has launched a lifestyle magazine it hopes will "develop and strengthen relationships" with its top customers.

Exchange a glossy 68-page offering with an in-flight magazine feel will be published three times a year and posted to an elite 70,000 of the bank's 1.2 million customers. The first issue hit mail boxes last week.

"Traditionally a lot of our communication with customers is formal," said personal markets head Henry Lynch.

"Exchange aims to develop and strengthen WestpacTrust's relationship with customers and we want it to be both readable and enjoyable, so this is a real change in style for us."

Customer retention is of particular interest to WestpacTrust. Auckland University's latest annual survey of banking satisfaction found WestpacTrust customers were the most dissatisfied.

While on average 63 per cent of bank customers said they were "satisfied" or "very satisfied" with their bank, only 46 per cent of WestpacTrust customers felt that way.

At the same time WestpacTrust was the country's most profitable bank, making a $409 million net profit in the year to September 2000.

But the basis of any bank's continuing profitability is its customer base. Each year 174,000 of the country's three million bank customers switch banks. More than half of those who switch do so because they are dissatisfied.

New Zealand Post expects the number of bank-hoppers to jump when it enters the market next year, with its locally owned and community-centred People's Bank.

Banks with the highest fees tend to have the most dissatisfied customers, a trend New Zealand Post plans to exploit by offering slightly lower fees.

And while many of those attracted to the so-called Jim's Bank will be low-income customers whose small balance accounts other banks may be happy to lose, New Zealand Post could, at the same time, attract a very lucrative type of clientele.

Older customers with large savings accounts and a sentimental approach to banking may be attracted to the new bank, and it is these banks will fight to retain.

The banks are fairly coy about exactly what they are doing to combat the impending arrival of the new competition. But it is clear that all have done considerable research into what their customers want, have carefully targeted advertising campaigns under way and are putting a big effort into retaining important customers.

Dr Mark Colgate, of Auckland University's marketing department, said all banks were trying to build better relationships with those crucial elite customers.

"The question is whether they are doing it in a way that is seen by customers as relationship building, or just as a way of trying to sell them more products," he said.

The director of banking studies at Massey University, David Tripe, said that while the aim of better communication was laudable "is [a lifestyle magazine] going to make anyone bank with WestpacTrust?"

A WestpacTrust spokesman, Peter Thornbury, said sending out Exchange magazine differentiated the bank from its competitors.

The bank had researched the magazine's target market customers with whom it did a significant amount of business and had found "these customers want to have communication from us, but they don't necessarily want it to be about us," Mr Thornbury said.

Exchange publisher Stephen Hart said "customer relationship" magazines were a growth industry worldwide. In the UK they accounted for six of the top 10 magazines by circulation.

Two of New Zealand's largest circulation magazines fall into the customer relations category: the Automobile Association's Directions (which has a circulation of 557,000) and Sky Television's Sky Watch (more than 332,000).

WestpacTrust is selling advertising in Exchange to offset production costs. The first issue, which is available at WestpacTrust branches for $5, also promotes bank services. Mr Thornbury said having outside advertisers helped build the credibility of the magazine.

Other banks are also taking steps to improve communications with their customers.

Steve Fisher, a spokesman for ANZ - rated bottom of Auckland University's customer survey in 1999 - said the bank was well aware of the importance of developing relationships.

It recently launched a "Tips for better banking" campaign aimed at its one million customers on ways to reduce their fees and organise their finances.

National Bank spokeswoman Cynthia Brophy said her bank had recently put more effort into communicating with customers and regularly send out information with statements.

"Every bank is doing different things in this area [of customer relations] and we've certainly got a lot on in terms of what we are doing with certain groups of clients."

The National Bank's unique effort on the communications front is to have a cricket section on its website - developed through its sponsorship of the sport - and Ms Brophy said it was proving increasingly popular.

The big question is whether the community appeal of the People's Bank will bowl over the corporate strategies of the existing players or whether the new bank will find itself stumped for a duck.