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How To Kill Off Your Customers

My Grandfather's Gun I used to be a customer of a certain banking institution based in Wayzata (Minneapolis), Minnesota. I say used to because they used to stand out from the crowd. They used to be different from the rest of the banks that typically make headlines. They used to have a different attitude. Until they didn’t.

One of this bank’s main differentiators was Free Small Business Checking. Believe it or not, it was still relatively “free”. There is always an asterisk after “free” these days, but their terms and conditions were reasonable. So much so that I don’t even remember them because I was able to easily meet them through my normal banking activity. If you can meet terms and conditions without needed to think through your activities, those are decent T’s & C’s.

That was until December, 2011. That’s when they slaughtered their purple cow. They killed their differentiator. They left small businesses out in the rain. They added a $4.95 per month fee to their “Free” Small Business Checking. That’s almost $60 per year just for the privilege of having a business checking account. Ridiculous! So much for helping businesses get back on their feet during this economic recovery.

Sure, the fee irks me. But what really chaps my lips is the fact that they blatantly killed a method that makes them look and feel different from their competitors. In this age of ever increasing and more complex fee structures, simplicity is the new black.

Understand that I’m not just a business owner with an axe to grind. I was a 14+ year loyal customer. Do banks even have many of those any longer?

Just to confirm that the fees charged to my account were accurate and not some computer slip up, I called customer service. Sure enough, those fees are now being charged to “Free” Small Business Checking accounts. While Edgar was kind, he said, “We’ve held off fees for as long as we could. I think you’ll find that our fees are competitive with other FDIC banks.”

Ok, that’s nice, but the game has changed. Your competitors are not just other FDIC banks.

“I can go to a credit union and get truly free small business checking,” I said.

“Well, they’re not FDIC,” he replied.

“I don’t care. They are still insured.” Seriously, does the consumer really care who insures his money as long as it is safe?

As a result, this bank will lose not only the small business checking account, but my personal checking account and my personal savings account. Three accounts for one stupid fee. Is it really worth it?

With the elimination of their “Free” Small Business Checking, the only remaining differentiator is longer banking hours than other institutions. While this is a nice perk, will it be enough to attract and retain customers?

On a related side note, on their first quarter investor conference call, their CEO sited “checking account attrition” as an item weighing on their results.

In the interest of fairness, Edgar did say that he would waive this month’s $4.95 fee as a one-time courtesy. That’s nice. It should give me enough time to set up my accounts with my new credit union.

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