What do we really sell?

When talking with Disney executives, it became clear to me that Disney is very clear about their product: they sell happiness. Particularly in the Disney parks, the happiest place on earth, Happiness is what it is all about. All employees know they are to smile at all times, and the "ugliness", including all the wiring, places to fix costumes, and locations where employees can vent, are hidden, often underground. When you visit the Disney parks, you will only see smiling faces and considerate employees, people who pick the trash as they see it and ask how they can help you at every opportunity.

Executing so effectively across thousands of employees is am amazing feat. Many factors enter into this flawless execution, including people selection and excellent training, as well as significant downsides for lack of performance. But, first and foremost, every employee knows what Disney is about: the product is happiness. The Disney rides aren't the best, scariest or most modern. But the environment is unmatched.

Starbucks is another example of effective product definition. Starbucks doesn't sell coffee; it sells an experience; a respite in the middle of a busy day, a few minutes of luxury and relaxation. Paying $3 for all that wealth of experience seems almost inconsequential.

Banks have missed on this opportunity to clarify what it is they are selling. Some are clear, such as TCF or Commerce Bancorp, who sell price/convenience and service/convenience combinations, respectively. Most banks, however, have not determined what is their product. The actual products we sell are difficult to differentiate. It is the way we sell them that makes the difference, much like Starbucks or Disney. Ultimately both these companies sell a customer experience, not a product. The Starbucks coffee is good, but not brilliant or significantly different from others. Disney has great rides, but others have better rides. What no one can touch is the over customer experience as they spend time in those venues.

Bankers should ask themselves the same question: what is it we're selling? Only very few companies have identified their product and have focused on perfecting their value proposition around that specific product. Commerce of NJ is one. The Company offers convenience that is distinguished from other banks. Their convenience is beyond what others offer both in terms of hours and days open, as well as services within the branches (the famous coin counters). While others charge for coin counting and ask their customers to wrap them in unyielding wrappers, Commerce simply offers to count your coin at every branch through the investment in a coin counter and without headaches. The value of the service is minimal, but the perception of convenience and customer care is huge. Commerce also has a branch "look" that they duplicate elsewhere (a la Starbucks), again aimed at creating a consistent customer experience and similar expectations for every branch. As a result, Commerce is one of only a handful of financial institutions whose brand is clearly recognized as standing for something. The others, such as Citigroup and American Express, are a hundred times larger.

The underlying reason for Commerce' success is their management's clarity as to what the company is selling. They are selling convenience. Everything "advertising, branch networks, product line and customer service" is designed to deliver on that promise. Customers understand that and recognize the Commerce value. This customer experience appeals to a sizeable segment of the population, and the bank is capitalizing on it through unprecedented de novo growth.

A handful of other banks have followed the examples above to yield a clear product identity. These include TCF, Charter One, Northern Trust, Synovus, Citizens Business Bank and others. They know what they are selling and so do their people. This common knowledge creates greater consistency of customer experience and greater value to the brand.

Banks need to determine what their product is (beyond the money) and articulate it to their various constituencies. They further need to determine the key elements in their product (like Commerce did, by focusing on hours, branch "look", perceived value etc.) and ensure that all employees execute on those elements consistently and flawlessly. It is this level of dedication and execution excellence that separates great companies from good ones, and promises long term performance versus temporary success.