Remember Old Commerce Bank?10REMEMBER OLD COMMERCE BANK? Commerce Bank, Vernon Hills retail bank creation, was a paradigm-changer in our industry. A few years post its acquisition, a look back can better isolate the best practices we can consider adopting. 1. Crystal-clear business model. Commerce Bank had an extraordinarily tangible culture and brand identity. Every little detail in its hundreds of branches was managed with much forethought, some say micro-managed. As a result, the company developed raving fans among both employees and Customers (Commerce management required to always capitalize the C in Customer, even for internal only communications), whose loyalty persisted long past the acquisitions, and even past the change from the brands red color to TDs green. Simple and clear brand message, supported through extensive training that tugged at the employees heart strings, created an actionable brand despite teller turnover of 100%+. Now THATS an accomplishment! Takeaway: Know what you stand for. Make it simple. Inculcate in employees from Day One. Pay attention to the details. 2. Focus on customer experience: WOW: Team WOW, Wow Committee, WOW Awards. Dovetailing on the culture was the desired customer experience, which tied directly to the employee experience. Commerce was a very tightly run bank, no doubt about that, but it was also FUN. Management set out to wow its Customers, yet service parameters did not resemble what we typically espouse in community banking. The mandate was to take every opportunity to surprise & delight the Customer The Customer was at the center of the value proposition, and every employee understood that. The first training new hires went through was a two-day culture session. Executive management staffed a Department of their best employees dedicated full-time to creating the WOW experience for Customers and employees, which culminated in the famed Takeaway: If you value culture show it in multiple ways and reinforce constantly with both positive and negative incentives. Money is an excellent motivator, but heart might trump money if you can engage it. 3. Be truly local. Ill never forget the opening of Commerce Banks branch in Takeaway: Local works, but it doesnt always mean what we traditionally think it means& 4. This is war. Commerce offered bounties for hiring key employees from the competition, bringing over major customers and, most importantly, forcing the closure of a competing branch. Every employee of the victorious branch participated in a $5,000 bounty once their competition closed their doors. Doesnt sound very gentlemanly and bank-like, I know, but for a woman from Takeaway: Single focus and a common enemy are both strong motivators. 5. Geography rules. Commerce was a line-of-business bank, but the power truly resided in the geography. One testimonial to that is the fact that most of the regional presidents are still with TD. Central production and local delivery is a winning combination, and Hill figured that out. In addition to regional executives the bank had field marketing managers and other more local support to help execute the vision that originated from HQ. Those folks ensured that merchandising, community development and other activities were consistent with the corporate vision, and also provided feedback from the field to improve the connection with HQ in Takeaway: Matrix organizations can work if the lines of demarcation are clearly laid out. 6. Perfecting the core of the value proposition. Commerce played the convenience card to the Nth degree. That was their differentiator, and it was near impossible to duplicate by the competition, since it was evident in every facet of the operation. Management continued to enhance the convenience perception and did not compromise on it even when the stakes were high (e.g. the location and size of the Takeaway: You can create a sustainable competitive advantage bysticking to your brand promise and flawlessly executing it. 7. Detail counts. Commerce had a long check-list of items that were checked every day at every branch before opening. It copied the fast food store model well, including the micro-management of the details to minimize the role of individual decision making at the lowest levels. The apparent result was consistent customer experience across branches and the entire network. The other side of the coin was disengaged employees where micro-management became a burden. Takeaway: Detail is important. We often dont pay enough attention to detail to effectively execute strategies. At the same time, mind-numbing detail leads to a dummied-down workforce and unmanageable turnover. 8. Major investment in training. Commerce truly invested in training. Some say it overinvested, including the waterfall in its training center& The training wisely focused on the brand and the feelings evoked by it, not on mechanical behaviors (a-la Starbucks during its hey day). Employees were taught how to be vibrant, fun, energized, happy etc. Once training was over, these expectations were reinforced in the field (something that doesnt always happen in our own shops), leading to a customer experience that often met the brand promise. Takeaway: Functionality is a necessary, but NOT sufficient, condition. Focusing on what we want our customers to feel when they enter our branches, and then reinforcing constantly when trainees get back in the field, are the secret to success. 9. Unique compensation system. Im a firm believer in incentives. They are very effective in changing behavior when they are clear and easily understood by employees. Commerce did not have a high variable component to compensation. Instead, it offered high base and low incentives. This makes sense when you consider the expectations from the customer contact people, but I still have trouble with it. How do you motivate people to do what matters if you dont pay them to do it? Commerce found a way, through its training, clear brand identity, and the churn-and-burn of their front-line employees& For the record, this is not an ode to Commerce Bank. There were many things wrong with the bank, especially as it grew larger. One glaring flaw was playing the convenience card in a place that didnt value convenience as much as price ( Not sure if you want a 10th, but&.. 10. Public Perception or Core Operating Model. Commerce Management quickly realized that Retail deposit growth could only grow them so far. So without adjusting the brand they presented and reinforced with the public, Americas Most Convenient Bank, they aggressively moved into Commercial loans and deposits, cash management & insurance. They establish core competencies and lead market shares for Healthcare & Governments. This wasnt anything they advertised, but these areas grew to become significant contributors to their success (and ultimately downfall&). Takeaway: Never stop thinking about reinventing or at least evolving your model. Just dont sacrifice your core principles.
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