Wednesday, March 7, 2012 | Edited by Daniel Moores
||Bank Customers Defect Due to Fees, Poor Service
Fees are the main reason customers shop for a new primary bank, according to the J.D. Power and Associates 2012 U.S. Bank Customer Switching and Acquisition study.
One-third of customers of big and large regional banks cite fees as the main shopping trigger. However, poor service and unmet customer expectations also have fueled increases in defection rates among customers of large, regional and midsize banks.
The beneficiaries of the exodus from larger banks are primarily smaller banks and credit unions. Acquisition of new customers by smaller banks and credit unions has increased by 2.2 percentage points to an average of 10.3% in 2012 from 8.1% in 2011.
Among big banks, regional banks and midsize banks, switching rates average between 10% and 11.3%, while the defection rate for small banks and credit unions averages only 0.9%, a significant drop from 8.8% in 2011.
The study, which examines the bank shopping and selection process, finds that 9.6% of customers in 2012 indicate they switched their primary banking institution during the past year to a new provider. This is up from 8.7% in 2011 and 7.7% in 2010.
"When banks announce the implementation of new fees, public reaction can be quite volatile and result in customers voting with their feet," said Michael Beird, director of the banking services practice at J.D. Power and Associates, in a release.
However, customers weigh the price they pay against the value of their experience.
"It is apparent that new or increased fees are the proverbial straws that break the camel's back," Beird said. "Service experiences that fall below customer expectations are a powerful influencer that primes customers for switching once a subsequent event gives them a final reason to defect. Regardless of bank size, more than one-half of all customers who said fees were the main reason to shop for another bank also indicated that their prior bank provided poor service."
Promotions and cash incentives helped attract customers shopping for a new bank.
At one of the highest-performing big banks, 19% of customers indicate these promotions were the reason they selected their new bank. However, according to Beird, doing a good job for customers is not just about dollars, but also about loyalty and retention.
Only 32% of customers who selected a new bank because of promotional offerings said they definitely would not switch banks again in the next 12 months. In comparison, 46% to 51% of customers who chose the new bank because of either good service experience or positive recommendations say they definitely will not leave within the next year.
The 2012 U.S. Bank Customer Switching and Acquisition Study is based on multiple evaluations from 5,062 customers who shopped for a new banking account or new primary financial institution during the past 12 months.
The study was fielded in November and December 2011, and includes Bank of America, Bank of the West, BBVA Compass, BB&T, Capital One, Chase, Citibank, Comerica Bank. Fifth Third Bank, Harris National Bank, HSBC, Huntington National Bank, KeyBank, M&I Bank, M&T Bank, PNC Bank, RBS Citizens, Regions Bank, Sovereign Bank, SunTrust Bank, TD Bank, U.S. Bank, Union Bank and Wells Fargo.
(Source: Marketing Daily, 02/27/12)
||Box Office is Booming Despite a Largely Lackluster Slate of Films
Hollywood loves a comeback story. Now it's trying to live one out.
After an abysmal year at theaters, moviegoing is back. Through the first two months of 2012, ticket sales surged 18% over the same period last year. More importantly, attendance was up 20%, even though this year's films appear to be no stronger than last year's.
If anything, 2012 is flourishing despite the movies. Last year's early-season No. 1's included The Green Hornet, Just Go With It and Gnomeo & Juliet -- films that earned middling reviews, at best.
But compared with this year's hits, those films were Oscar bait.
Take The Devil Inside (please, said some tweeters). The $1 million horror flick opened to a staggeringly high $34 million on Jan. 6, giving the year a kick-start that hasn't slowed. Every weekend has seen increased sales over the previous, according to Hollywood.com. This, despite tough reviews for surprise No. 1 films Contraband, The Vow and Act of Valor.
"I can't recall a year that started like this, when almost every movie has overperformed," says Jeff Bock, box-office analyst for Exhibitor Relations. "The movies may not be great, but in terms of making money, the studios are firing on all cylinders."
Bock credits cannier marketing behind this year's movies, which have been aimed at niche audiences. The Devil Inside, for instance, launched a viral campaign that played on its "found footage" theme. Valor, which scored an upset win with a $25 million debut weekend, features real Navy SEALs, and publicity events were staged at military sites nationwide.
"You're seeing the studios learn social networking," Bock says. "They've caught up with the trend, and give them credit: They've got their fingers on the pulse of what core groups want to see, and are reaching them" through specific ad campaigns.
Hollywood.com's Paul Dergarabedian says the box-office defibrillation began the last week of 2011, which can be anemic at theaters because of the holidays. Despite being in its third iteration and second week of release, Mission: Impossible -- Ghost Protocol powered through the end of the year on its way to $208 million, the seventh-highest-grossing movie of 2011.
"That's when we knew something was up," Dergarabedian says. "That gave us momentum that we haven't lost."
Nor does it seem likely to slow, as studios begin a march of big-budget releases including Dr. Seuss' The Lorax (which brought in more than $70 million in its debut last weeked), Disney action epic John Carter this Friday and the best-seller adaptation The Hunger Games on March 23.
Dergarabedian says that while it's too early to anoint the year a success, the rebound marks "a shift like I've never seen before. Remember, last year was the lowest-attended in 15 years," with 1.28 billion tickets sold in North America.
"If studios can keep up the way they're marketing their products," Bock says, "Hollywood is going to be just fine."
(Source: USA Today, 03/01/12)
||What's Behind the Dollar Store Craze?
Bargain Hunters Expected to Stick Around as Economy Improves
There are few places where a buck buys more than at 99 Cents Only, Dollar Tree and other "all one price" stores, a retail sector that thrives when customers pinch pennies.
The $52 billion dollar-store industry has been expanding as middle-class shoppers trade department stores and supermarkets for extreme discounting.
Dollar-store sales have grown 4.3 percent, on average, in each of the past five years, said Justin Waterman, retail analyst for IBISWorld.
"That's extremely high in light of the recession in 2008 and the negative consumer sentiment in 2009," Waterman said. "Any time there's a slump in the economy, this industry picks up, because consumers are more price conscious."
Meeting that demand are publicly traded companies like 99 Cents Only Stores, Dollar Tree, Dollar General and Family Dollar, which have acquired smaller chains, as well as many mom-and-pop stores. They compete with Target and Walmart as well as supermarkets with smaller, convenient locations, often in urban areas.
Years ago, dollar stores had a bad rep. Shoppers perceived them as junk stores stocking leftover Halloween
merchandise and dented cans. Today's stores are clean and well-arranged, with an emphasis on brand names, and some "core" items such as bread that are always in stock. You'll find obscure brands side by side with household names like Kellogg's and Oscar Mayer, sometimes in downsized packaging to meet the $1 price point.
Dollar Tree sells everything from toilet-bowl cleaner to Mardi Gras masks and cans of Progresso soup. Another market leader is 99 Cents Only Stores, which does a brisk business in fresh romaine hearts, batteries and Malt-O-Meal cereal.
"It's a mix of everyday items but it's also an exciting treasure-hunt shopping experience, with closeouts and deliveries several times a week," said Jeff Gold, president and chief operating officer of 99 Cents Only Stores.
Gold believes that his stores have much to offer middle-class customers. "We feel that if and when they come in our stores, they'll appreciate the values we offer and enjoy the shopping experience," he said.
As dollar stores have upgraded, consumers don't feel embarrassed to be seen at one.
"Some people might have thought that there was a stigma attached to shopping at dollar stores," Waterman said, "but when they saw their friends shopping at them and realized the potential savings, they were more likely to frequent these stores."
San Diego resident Maria Lopez, 27, said she shops regularly at a new 99 Cents Only location. "I like dollar stores because even without coupons you can still get a good deal on brands," she said. "Of course, you have to make sure it's not expired and some of the products are smaller sizes. But you can fill up your pantry by shopping there."
Lopez, who blogs about saving money at drugstoredivas.net, said she found Earthbound Farm organic salad, Philadelphia Cooking Creme and Farmer John ham, all for 99 cents each, on recent trips.
"People know me -- I'll go anywhere for a deal," she said.
The big question is whether middle-class customers will keep shopping there once the economy improves.
"I've got a feeling that dollar stores are going to have some staying power," said consumer-behavior expert Bernhard Schroeder, director of the Entrepreneurial Management Center at San Diego State University. He said consumers who feel "burned by the recession" will still seek bargains and may find they enjoy the dollar-store shopping experience. "I don't think we necessarily come out of a recession and immediately run back to caviar and chocolates."
IBISWorld projects that the dollar-store industry will continue growing at an average of 2.6 percent a year for the next five years.
99 Cents Only
An industry standout is 99 Cents Only Stores, which says its per-store sales of $4.9 million are the highest in the dollar-store industry.
The company has 294 stores, mainly in California, Arizona, Nevada and Texas, and plans to open a dozen more this year. Unlike many dollar stores, the 99 Cents Only stores emphasize fresh food with perishable products such as packaged sliced turkey or a package of Dole romaine hearts, and some organic produce.
The company's employees are trained to "act with a sense of urgency" and handle constant change, such as processing one-time closeout buys, Gold said. Unlike a Walmart or a Costco, which has rigid operating constraints, 99 Cents Only is designed around handling varying stock.
The company does $1.4 billion in sales a year, but "in a lot of ways we act like a very small company without a lot of bureaucracy," Gold said. "Being resourceful is an important core value for our company."
The Chesapeake, Va.-based Dollar Tree Stores chain has around 3,800 locations and sells in bulk from its online arm, dollartree.com.
The company had an estimated $6.6 billion in sales last year, which it attributed in part to adding refrigerated and frozen food at more stores. It gets about half of its revenue from cleaning products, food, and health and beauty items, known as "trip starters" because customers visit the store with those in mind. Many people then make impulse buys when they spot bargains like Easter baskets, china plates or two-for-a-buck greeting cards, company officials have said.
A spokesman for Dollar Tree declined to provide an interview because the company's policy is to avoid media coverage ahead of making certain investor disclosures.
More than a dollar
The nation's two largest discount variety stores, Dollar General and Family Dollar, aren't strictly dollar stores but sell a significant number of items at the $1 price point. Both carry name-brand items, emphasize value prices and convenience, and serve shoppers making "fill-in" trips between visits to supermarkets or big-box stores like Walmart.
Dollar General has 9,800 U.S. stores and plans to open 625 stores this year, said spokeswoman Tawn Earnest.
Family Dollar has roughly 7,100 stores. The company plans to continue expanding in 2012, and recently opened its first California stores.
(Source: The San Diego Union-Tribune, 02/27/12)
Daily Sales Tip: Be Interested
As a rule, people aren't coming to you for your product or service because they find you interesting. There is nothing wrong with being interesting, or having a wonderful personality or fascinating life experiences. But customers aren't primarily concerned with doing business with interesting people. They want to do business with people who are interested in them. They want someone concerned with their needs, desires, fears and expectations.
If you want to remind yourself and others on your team of this important concept, just remember the lesson of young Johnny. Johnny was 10 years old when he came home from school and shared with his mom that he had a new girlfriend. "Wow, a girlfriend," his mom exclaimed, "What does she like about you?"
"She thinks I'm cute, that I'm funny and I'm a great dancer," Johnny answered.
"And what do you like about her?" mom continued.
Johnny's insightful response was, "That she thinks I'm cute, that I'm funny and that I'm a great dancer."
That's the essence of being interested. We respond positively to people who are interested in us and want to help. They make us feel good, and that's what draws us to them.
Start CARING about customers. Superior service begins with a genuine interest in and commitment to customers. It is about caring about them as individuals, and being obsessively concerned with the experience they have when they do business with you. And if you don't fundamentally care about the people you serve, I assure you that they won't care about doing business with you.
The best product at the best price isn't the best deal if you don't care about customers.
Source: Mark Sanborn, president of Sanborn & Associates, Inc.