Making Fees Palatable

Years ago, my Dad went to the local car dealer ready to buy a pickup truck. He knew exactly what he wanted, and it should have been an easy sale. But first they tried to talk him into a lease – despite the fact that Dad made it repeatedly clear that he didn’t want to lease. When he finally got the table to negotiate, they then talked fees. My Dad – an auto industry veteran – asked for an explanation of the fees. The answer back? “They’re just standard”. Dad, “But what are they?” “Just fees.” Dad was livid:“Let me talk to your manager.”

The manager? They’re “just” fees.

Dad never did buy that pickup truck, and he never returned to that dealership – instead choosing to drive four hours to Atlanta for his next car purchase. So how did something that should have been an easy transaction turn so sour?

Transparency
“Hidden fees are one of the worst problems,” says Ed Mierzwinski, consumer program director at U.S. Public Interest Research Group. “If we have clear fees, then we have the ability to comparison shop.”

Your customers don’t like surprises that cost them – but they will be satisfied if they know they’re paying for something that is fair and reasonable. According the Pew Charitable Trust, customers don’t know what they’re being charged – and the pages of disclosures are overwhelming. No wonder trust in the banking industry has declined!

Another tip? Don’t conduct a “fee-ectomy”. As Mike Branton of StrategyCorps shares, this practice involves charging a fee for something that you’ve given away freely for a long time – think free checking – with no perceived increase in value to the customer. Customers don’t like these types of surprises – think creatively if you plan to increase your basic fees. A spoonful of sugar helps the medicine go down – what can you offer the customer to make the fee more palatable?

Meeting Needs – and Marketing it So Customers Know Why
The first mistake the car dealer made? Never talk the customer into something they very obviously don’t want. Take the time to meet the needs of your customer – and educate them so they know why certain products are good for them. If your customer doesn’t know or understand your product, they’re going to deem it unnecessary.

Think outside the box when it comes to fees. 67% of consumers are willing to pay for services like identity theft alerts and personalized couponing to the tune of $6 per month. What kind of service can your bank uniquely offer to your customers?

More food for thought:

Don’t close that branch just yet – consumers still want personalized service.
How three community banks in Michigan are harnessing the power of social media.
What will be the most immediate effect that the CFPB will have on banks?

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