Customer relationships: the secret behind organic revenue growth.

What if organic revenue growth and profitability are heavily a function of the quality of interactions between your bank and its customers? We could debate whether it is 25 percent or 50 percent or 75 percent of what matters; but, suffice to say that it affects customers' decisions to do more, or less, business with you. Since many customers are dealing with eight, 10 or even 15 different financial service providers, where they decide to allocate their business certainly has a bearing on wallet share and organic revenue growth.

Many factors impact these decisions: location/convenience, produces, price, brand, to name a few. Over time, winners and losers emerge as customers allocate their resources and their allegiance to different providers. Since the ability to change locations or products or price or even advertising is limited, the financial question becomes: How do we get the highest return on customer interactions possible--given the location, products, price and brand that we currently have? How do we give the most valuable interaction possible with the finite resources of time, energy, skill that we have?

The word "relationship" is often used to mean a number of things. I recently read an article that dismissed relationship selling, saying that customers are not looking for friends but for value. The assumption was that relationship was simply about being friends. Strong customer relationships are based on valuable interactions over time. Interactions that showcase competence, build trust and demonstrate commitment have very tangible value to customers--regardless whether the interactions are provided by tellers, service representatives in a call center, personal or private bankers.

Demonstrated competence results in better ideas, decisions and actions for the customer. If we believe in the value of competent medical staff or smiled athletes, it is not hard to believe in the value of sales and customer service professionals who navigate us to better and more efficient decisions and actions.

Dealing with someone you trust to tell you the truth, even when it is not to his/her advantage, saves us the time and tension of seeking alternatives to ensure we are not being taken advantage of. Think of how much time you spend in an average week validating information because you do not trust the source of what you are told. Relationship dishonesty and distrust are very inefficient.

And then there is the issue of commitment. Uncommitted relationships--that is dangerously close to an oxymoron. How much more effort does it take on your part when you deal with someone lacking commitment on his/her part? We all know the feeling of interacting and transacting with someone who is just going through the motions--when the primary objective is to mindlessly and with as little effort as possible be able to say "done." Next! When the transaction is an out-of-body experience for the customer--because the needs of the customer are hopelessly partitioned off from the interaction. When the result is all manner of subsequent questions and problem--wrong product, misused product features, complaints, returns, defections, and horrible word of mouth circulated in the local market place.

Conversely, when competent, trustworthy, and committed interactions produce value, relationships form. It is these relationships that then build up value and then give oft value that show up as organic, growing, sustainable revenue--that withstands competitive encroachment, episodic mistakes and bad days. It is the relationship, with stored up value, that has the capacity to extend grace--that serves as insurance for the temporal and even the catastrophic.

With all the pressures on cost efficiency and for revenue growth these days, surely there is opportunity here. If we could somehow calculate the cost of faulty interactions on sales, service, customer retention, including opportunity cost--we would find it to be astounding. Further we would find that many of our strategies initiatives are contributing to the problem. Why? Because most of our strategies, metrics and incentives ignore the value of the interaction as a key asset that is to be managed for return. Most often interactions are still seen either as a cost that needs to be reduced or as a short-term revenue opportunity that needs to yield immediate sales. The concept of "return" implies that the first step is to make a worthy investment that you hope produces some multiplier effect over time. You have to give value first and then--if you are competent, trustworthy and stay committed over time--you receive a bountiful return. Planting cannot be omitted nor can it precede harvest; it is as simple as that. And in the harvest, you are constantly learning about what value means to different types of customers--which aids you in reallocating and refining finite interaction investments in ways that give more value and thus return more value.

Like it or not, we are in the "customer interaction" business. If it turns out that we have decided to treat it as a commodity business, we will all suffer at the hands of those who treat it as a source of value and differentiation.

Robert Hall is author of "The Street Corner Strategy for Winning Local Markets." E-mail: [e-mail]