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5 protocols to prevent “CADS”

Key steps—and commitment—prevent “Customer Attention Deficit Syndrome”

5 protocols to prevent “CADS”

This is the third in a series about a persistent ailment affecting many banks, especially smaller to midsized community banks—Customer Attention Deficit Syndrome (CADS). You’ll find links to the first two installments at the end of this blog.

The symptoms of “CADS” are hard to diagnose, as there are no specific aches or pains nor any overt signs that lead to its diagnosis—not directly. The results can be mildly to moderately debilitating. And the condition is rarely fatal, but produces a long-lasting malaise that infects both customers and bankers. The condition is self-inflicted and is usually both prolonged and expensive before it is diagnosed.

CADS is simply the presence of a widespread, poorly understood, rarely diagnosed case of the failure to appreciate one’s customers appropriately. It has been observed in all sizes of banks, but tends to appear most persistently among banks that do not have state of the art customer and household account profitability measurement systems.

5 steps that turn intent to action

There’s no one working for a bank (and concurrently happy in his or her work) who’s not in favor of good customer service.

We say we give great service, we mean it, and, for the most part, we deliver it. What we’re really describing here is a “brand” that delivers sustained and consistent service from one end of its geographical territory to the other.

There are protocols for preventing and curing CADS. They require the use of technology, a consistency of approach, and a unified mindset that continuously focuses our attention on the best and the worst of our customers, as measured by profitability, and commits us to specific actions across the entire account spectrum.

Protocol #1: Get the right tools—and use them

Banks must have the tools to measure account and household profitability.

These tools are almost universally available to banks in some form. Yet I’m constantly amazed how such systems are not always fully implemented in daily routines, nor completely integrated, nor are necessarily one of the core building blocks in pricing decisions.

Most of us who have been in the business a while know these tools under the generic label of “account analysis.” Account analysis was originally used primarily in loan pricing decisions and continues to occupy a high perch in the operating discipline of most banks. These tools are very useful in measuring the relative profitability of customers, whether borrowing or not.

Account analysis routines capture all items of activity and price them out according to internal cost accounting methodologies. Debit items, deposit items, coin wrapping, internal costing of funds used and internal estimates of profitability on funds generated and used by the bank are simply a very short listing of the things that account analysis tracks and measures.

Decisions rooted in the consistency of the values of the various cost and income components, plus an effort to capture the values or costs of all activity over time, are very productive.

Protocol #2: Seat of the Pants analysis comes out bad in the end

Each employee must recognize that any individual judgment on the overall “value” of a relationship to the bank that is not driven by broadly based and consistently gathered data is simply Seat of the Pants  (SOP) analysis—and frequently wrong, if not outright misleading.

As account administrators and business developers we have to have the humility to admit that we don’t always “know” what we think we know. I’ve got lots of stories on how wrong I’ve been on that score and I bet many of you do too.

Account analysis tools give us the opportunity to separate the “sheep from the goats.”  We can view all relationships, allowing us to rank our customers from best to least in terms of financial value and do something positive to improve profitability across the complete customer spectrum.

Protocol #3: Don’t treat your own bank as a utility.

All commercial relationships that are unprofitable should be cross-sold other bank services that will add value and ultimately bring them into the black.

Failing the ability to do that, they should be service charged aggressively and without apology or, as a last resort, run out of the bank.

We have no obligation to bank anyone who walks in off the street nor to keep anyone who is not profitable.

Protocol #4: Feed and water the best in the garden.

Those customers who demonstrably represent our best and most profitable relationships should be cultivated—thanked and appreciated in a myriad of tangible ways.

We should acknowledge them when we see them and seek them out, particularly if we don’t know them or see them very often.

Customers like to be appreciated, just like we do.

Do we do this part of our jobs well?

It’s hard to know. But ask these questions this:

• Are there customers who show up at the top of the profitability chart who we hardly know?

• Are there others at the bottom whom we simply tolerate but don’t have the courage to run out of the bank or service charge them to break even or better?

If so, then the answer is that we have work to do and that CADS is an active parasite in your bank’s culture.

Protocol #5: Don’t be afraid to compare customers—and act

We need to be in the habit of looking at customers through the prisms of quantitative analyses of their account relationships. We need to adjust individual judgments for the potential additional business each of them may represent. Only then can we as an institution develop a true sales culture driven by information, not just data.

It takes a commitment to profitability analysis systems and a commitment to use the information to drive behaviors, especially appreciating the crème of the crop among our customers. If your bank is not using a state of the art profitability system, you are playing a high-stakes card game with less than a full deck.

If you’re operating in an SOP environment, you are missing some diamonds in the rough.

You are tolerating some potentially poorly performers.

And you lack a clear road map on whom should be cross sold.

You don’t whom to thank and you may squandering effort and favors on the wrong customers.

Now and then, leave your chair

But even if you’re good at using tools of account profitability effectively, all of us can get lazy and forget that customers like to be called on.

Why do we seem to be so collectively slow to remember that basic fact of our business and of human nature itself?

I used to work for a boss who often said, “If you want to have a good day, go call on a prospect. If you want to have a great day, bring in a new customer.” 

I can directly relate to that advice.

And it’s not practiced at the bank nearly so well as it is at the customer’s place of business.

Ed O’Leary

Banking Exchange Contributing Editor Ed O'Leary, a veteran lender and workout expert, spent nearly 50 years in bank commercial credit and related functions, working with both major banks as well as community banking institutions. His last job before retiring was as the CEO of a regional bank headquartered in Alburquerque, N.M. He earned his workout spurs in the dark days of the 1980s and early 1990s in both oil patch and commercial real estate lending. O'Leary began his banking career at The Bank of New York in 1964, and worked at banks in Florida, Texas, Oklahoma, and New Mexico. He served as a faculty member and thesis advisor at ABA's Stonier Graduate School of Banking for more than two decades, and served as long as a faculty member for ABA's undergraduate and graduate commercial lending schools. Today he works as a consultant and expert witness, and serves as instructor for ABA e-learning courses. You can e-mail him at [email protected]. O'Leary's website can be found at

In mid-2016 O'Leary's "Talking Credit" blog received a bronze excellence award for the Northeastern Region from the American Society of Business Publication Editors.

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