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Banking that Rocks

It was interesting watching the discussions of bank retailers at the USA’s BAI Retail Delivery
show. There was little discussion of the credit crisis, the bank
bailout or subprime, although this was ever prevalent as a backdrop to
the Show, and it was noticeable that major groups such as WaMu,
Wachovia, Citi and others were not present.

I guess Citi's absence was explicable in light of today’s
announcements of the U.S. Government’s rescue plan. This rescue
involves $20 billion of cash for shares from the Treasury, and a $306
billion guarantee of their mortgage book from the FDIC.  That should
hopefully do the job.

Anyways, the BAI Show discussions were more about Mavericks, Innovation, Authenticity and Experiences.

Now I know everyone likes a buzz word or two, so there’s four for a start.

Mavericks: unfortunately a word tarnished by the Republican camp during
their long campaign for the elections, but meant to mean 'being

Innovation: no, this is not a word that means ‘being different’ but
‘being new’ – innovation is all about finding new ways to change the
business model to find new markets, customers, products and services to
generate future revenues.

a word used by Arkani of ING several times, and it’s all about
believing and living the brand and the promise. Arkani’s example is
that they don’t just place a motorbike outside some of the ING Cafés
for a laugh or as a gimmick, but because he drives a motorbike himself
and that’s part of the bank’s DNA. If you make a brand promise, it has
to be believable and true. In other words, it has to be authentic.

a big buzz for a while now, experiences and experiential marketing is
all about giving customers something memorable. It’s about moving from
services, where you provide customers with a smile, to experiences
where you provide a totality of sensory surround.

Now I expect you’re sitting there going, ‘What a load of management
consultant psycho-babble’, as a lot of this comes across that way.
However, there are examples of firms that do things differently by
creating new business models that they totally believe in and manage a
superlative experience.

Disney was and is one of those, in their parks and approach to ‘guests’.
Build-a-bear is another. Your kids get a total experience by building their own toys rather than just buying them off the shelf.

But the one that Joe Pine and James Gilmour, who have written the management consultants guides to these things, cite more often than not is the Hard Rock Café.

Hard Rock Café is the baseline for great customer experiences that are authentic in a retail environment.

How come and what can banks learn from them?

Hard Rock invented the ‘experience’ of eating out back in 1971 in
London, and succeeded for a whole range of reasons based upon rock and
roll experiences.

This is a crucial point as it defines the whole ethos of Hard Rock, as
I learnt last Friday from Jim Knight, who heads up the employee
training for the Group.

Jim spent a morning with me and a few banking friends, talking about
how to create a culture in banking where you generate banking that

Jim’s view of the world is not to serve customers through staff, but to
create raving fans by giving ‘guests’ a great experience through

Sure, we’re into more management gobbledy-gook over terms, but the core
of his message is that you should imagine everyone who walks through
your front door is a ‘guest’ in your home. If you’re having a dinner
party at home, how would you treat those guests? Extremely well would
be the answer.

Equally, if you’re dealing with a guest, you might treat them
differently if they were charged an admission fee to come in through
your door. That’s a key factor – how would you treat guests if you
charged them to come into your home or office?

From the employee side, you can also think of them differently.

Imagine, for example, that your staff are all volunteers. How would you
treat them if they weren’t paid, but came in voluntarily because they
loved your business so much? Just look at any community or charitable
organisation, and you know you treat them differently if they are

So Hard Rock’s view is that you should treat the people who work for
you as though they are volunteers and your paying benefactors as guests
who have been charged to visit with you.

Those two factors change the mentality fundamentally for a start.

Jim also talked about how they build an ‘experience’, and it is based
upon multiple factors from the staff and menus, which are irreverent,
to the music and memorabilia.

For example, how many of you know that Hard Rock Café’s are official museums to Rock and Roll?

How many of you know that Hard Rock has more original works of rock art than anywhere else?

You can find everything from Elvis Presley’s suits to Kurt Cobain’s
guitar plectrum, from Kanye West’s Bling to Buddy Holly’s glasses, from
Eminem’s Chain Saw to John Lennon’s piano. You name it and you can find
almost anything in the Hard Rock archives, and that’s a core part of
the attraction. You get to virtually experience the Rock world.

That's why half of their guests are folks who come in just to walk
around with jaws dropping as they view the guitars, photographs,
posters and autographs of their idols and heroes of music.

That's the experience.

And experiences create memories creates loyalty creates advocacy.

Jim had a thousand other messages about Hard Rock to share, and you can
read a lot of these messages in the management consulting books, but I
walked away with one clear insight.

The Hard Rock Café makes only 4% of its profits from food and beverage, and yet it’s somewhere you eat and drink, right?

So how can you run a restaurant that makes no money out of food and drink. How so?

Because they generate the rest out of retail. Selling shirts and sweaters, jackets and mugs.

So imagine a bank that thinks of customers as guests and staff as
volunteers. Who sell bank memorabilia thanks to the cult following the
bank generates. A bank that makes no money out of banking, which is why
they can focus upon deposits and still be profitable … they just make
their profits out of retailing.

Oh, I forgot to mention that those banks exist!

In fact, I think my last two blogs about Commerce Bank and ING Direct illustrated
this. For example, Arkani states that one in four of ING Direct’s
customers are ING junkies who buy everything they offer.  That’s why
ING Direct has a store where you can buy pens, mugs, t-shirts and hats.

So these guys are not just banks dependent upon deposits, but these
are banks who retail … or should I say they are just banks that rock?

About Chris M Skinner

Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here...

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