Commerce Bank Case

Table of Contents

Executive Summary 1

Background 2

Problem Statement 2

Analysis 2

Recommendations and Conclusions 5

References 7

Appendix A- The Service Encounter Triad 8

Appendix B - Types of Service Customers 9

Executive Summary

Commerce bank is well established company that excels in industry by placing value and focusing on providing first-rate customer service and not just offering typical banking services. The level of customer service and their initiative of "retailtainment" has driven customers to the bank, however the issue of how much is too much has the company questioning its methods because it could jeopardize the professional bank atmosphere that provides customers with the security of knowing their business is taken seriously. It is important for Commerce bank to maintain the level of customer satisfaction in order to catch the attention of and maintain loyal customers. Commerce bank should continue to focus on the current model of being a customer-centric culture and use "retailtainment" to enhance it while keeping in mind a professional attitude and environment.

Background

Commerce Bank was founded in 1973 by Vernon Hill. He was determined to be different and that is exactly what he accomplished by delivering exceptional customer service in a very unique way. Hill created a retail franchise with branches opening earlier and staying open later than competitors. Drive-through windows were even open as late as midnight at busy locations (Frei, 2006).

Commerce Bank developed this model as well as other innovative methods to attract and encourage customers to visit its branches by having "happy customers" as a top priority. This focus allowed them to increase customer deposit by over 30% per year since 1996 and by 2001; Commerce Bank's depositshad grown by almost 40% while its household grew by 20% (Frei, 2006). Eventually, this growth allowed the bank to expand in other markets such as Pennsylvania, Delaware and New York.

Currently, Commerce Bank is feeling the pressure from other banks, which lately have decided to imitate Commerce's model to attract new customers. In order to prevent the competition from taking costumers away, the bank has proposed "Retailtainment" as its new original idea for "WOWing" costumers. This concept consists of adding entertainment to the bank lobbies including giving away free hot dogs, an employee on roller blades dressed as a big "C" character, a guitar player and a juggler (Frei, 2006).

Even though Commerce bank is willing to go to extremes to make the costumer's experience worthwhile, it needs to consider if "retailtainment" is what customers want or is the company putting its great service at risk by adopting this new concept.

Problem Statement

Commerce Bank needs to determine the role their new initiative "Retailtainment" will play in enhancing their mission to deliver better service than competitorsand ensure it will not put the bank atmosphere at risk.

Analysis

The nature of Commerce Bank's service offering is intangible actions performed on the customer's assets. This type of service act has significant implications for facility design and employee interaction because the impressions that are made on the customer will influence his or her perceptions of the service (Fitzsimmons & Fitzsimmons, 2011). Service firms, like Commerce Bank, have the opportunity to build long-term relationships because customers conduct their transactions directly with the service provider, most often in person. For this reason Commerce Bank has followed a customer-centric approach since its founding in 1973. Through this approach, Commerce has achieved great success with high deposit growth rates, as well as customer retention. Commerce has continuously tried to find new ways of maintaining service differentiation as its competitors began mimicking some of its service offerings. Services are created as they are consumed and the customer is often a participant in the process thus an opportunity exists to tailor a service to the needs of the customer and create a differentiation from competitors in this manner. "Retailtainment" was proposed in 2002 to become a part of the "WOW!" initiative which was developed in 1994. "WOW!" represents good service offerings that are measured through quality-assurance at each branch, and are rewarded when goals are achieved or exceeded. "Retailtainment" is intended to improve these services by entertaining customers waiting in branches on Friday afternoons.

The customer-centric culture at Commerce Bank has afforded them great success. They have been able to accurately identify and implement the services that are important to customers, such as convenient bank hours and locations, employee behavior, and attention to small details. Their bank branches were able to break even within a year to 18 months, whereas the average bank broke even in 3 years. Therefore, it is important for Commerce to maintain and increase the level of customer satisfaction in order to attract and maintain loyal customers. However, some of their "retailtainment" gimmicks retract value from their services rather than add it, such as the hot dog cart and the juggler.

The type of relationship between banking institutions and its customers is a membership relationship where service is delivered continuously (Fitzsimmons & Fitzsimmons, 2011). These numerous interactions, which defines the quality of the service in the mind of the customer, has been called a "moment of truth" (Fitzsimmons & Fitzsimmons, 2011). These types of moments occur whenever the customer is evaluating the service and forming an opinion of its quality. In a financial institution, a customer experiences many encounters during a single visit, and each moment of truth is an opportunity to influence the customer's perceptions of the service quality. Every moment of truth involves an