The Science of Nice

Folsom Lake Bank staffers with Jay Freeman, director: From left, Gloria Benjamin, assistant vice president/operations officer; Freeman; Denise Droogmans, customer service representative; Tatevik Gasparyan, customer service representative; Rebecca Abbott, personal banking representative; Kimberly Seeba, customer service specialist; and Dennis Cordoba, courier.

Folsom Lake Bank staffers with Jay Freeman, director: From left, Gloria Benjamin, assistant vice president/operations officer; Freeman; Denise Droogmans, customer service representative; Tatevik Gasparyan, customer service representative; Rebecca Abbott, personal banking representative; Kimberly Seeba, customer service specialist; and Dennis Cordoba, courier.
Photo by: Richard Morgenstein

Community bank director Jay Freeman touts ‘behavioral economics’ to fully understand and expand retail relationships

By Judith Sears

Jay Freeman, with more than 30 years of banking experience and newly appointed to the Folsom Lake Bank’s board of directors, still recalls the first time he realized how much the personal touch matters in banking.

It was early in his career at Community Banking at Victoria Bank & Trust, a community bank in South Texas. Freeman noticed that the linoleum around a particular teller station was more worn and scuffed up than other areas. The explanation?

The teller at that station had worked for the bank for 40 years and was so popular that customers waited in line to do transactions with her rather than go to another teller. “She was Victoria Bank & Trust to those customers,” Freeman recalls.

The teller’s success in engaging customers was an instance of what Freeman would come to know as “behavioral economics,” that is, the study of the psychological, social and cognitive factors that influence an individual’s economic decisions.

Now Freeman is on a mission to get more banks to understand this practical reality of retailing. Over the course of his career, he has worked for both community banks and megabanks leading sales and service development. But no matter the size of the institution, he notes, the importance of how individual bankers develop customer relationships has always been a pivotal factor of a bank’s success.

“The best retailers get really good at what they’re doing by creating a special connection with their customers,” he says.

Spreading the knowledge

Today, as a community bank director and a senior advisor with The Gallup Organization, Freeman continues advising banks on how to deepen customer relationships and increase market share and profit. Community bankers may protest that they don’t need to consider Freeman’s ideas on effective retail service, he says. Strong personal service and lasting relationships, after all, are hallmarks for community banks. But, as Freeman points out, many banking customers fragment their finances—holding a card from one bank, a savings account with another, and their home loan through yet another institution.

“Most people think of sales as being able to recite products features and benefits. But that product knowledge only has relevance if you’ve correctly identified the customer’s needs. It’s about the conversation.”
—Jay Freeman, customer service expert

Clearly, there are more opportunities for all banks to generate more business from their customer relationships, he says.

Freeman believes behavioral economics enables a more empirical analysis of how well banks engage customers. He calls it the science of being nice and, yes, it is a science. To get consistent customer engagement, more community banks should be able to target very specific consumer behaviors.

“Giving customers a ‘great experience’ is too vague,” he says. “You have to show your bank’s employees the measurable and repeatable behaviors that engage customers or else they’ll never get any better.”

Critical specific behaviors for tellers could include a friendly greeting, eye contact, use of the customer’s name, or giving the customer an explanation if the teller has to walk away from a window. Likewise, loan officers, a position Freeman held for many years, can improve by focusing on behaviors such as listening and asking questions.

“Remarkably few people are really good at listening to customers telling them what they need,” he offers. “Most people think of sales as being able to recite products features and benefits. But that product knowledge only has relevance if you’ve correctly identified the customer’s needs. It’s about the conversation.”

Where to begin

It all begins with knowing what’s on the customer’s mind. What’s most important to customers may not be what you first think. Freeman says research shows the most “engaged” customers—those with the highest levels of loyalty to their bank—rate attributes such as “effectively handling my problems” and “making me feel like a valued customer” as most important. These aspects of good customer service are significantly more important than the fact that the bank is locally owned and operated.

Freeman also stresses that every community bank is unique. To determine what might be most important to more fully engage your community bank’s customers, he recommends conducting customer survey research. After surveying the core group of engaged customers, survey less-engaged customers. The surveys can take place via telephone, online or by mail and should be kept brief, he says.

Freeman recommends conducting 10 or so surveys of highly engaged and less engaged customers at different locations per month to get statistically meaningful measurement. While some practitioners might balk at the potential cost of conducting such surveys, Freeman notes that the process is significantly less expensive than other research mechanisms, such as mystery shop programs. Most important, he says, community banks can gain powerful new insights to guide their advertising as well as provide more targeted coaching to employees.

Freeman joined Folsom Lake Bank’s board of directors last year as another avenue for putting his years of banking experience to work. Being a director of a community bank is hard work, Freeman acknowledges, pointing to the steep learning curve of tighter regulatory scrutiny. However, he states that his initial experiences on Folsom Lake Bank’s board have convinced him that, now more than ever, community banking has a future.

“While the largest banks have many advantages that come from size and scale, we have a much clearer path to personalized service, minimized bureaucratic processes, and meaningful community ties,” he observes.

Freeman intends to use his new vantage point to continue to promote ways to increase customer engagement across the banking industry, including in community banking. “The more banks can enhance the quality of customer interactions,” he says, “the more they will contribute to the lasting success of the organization.”


Judith Sears is a freelance writer in Colorado.

comments powered by Disqus
Top