Can a brand rebuild loyalty with customers after a scandal has broken their trust? Several case studies are currently underway: Volkswagen is attempting to rebuild relationships after their diesel admission scandal; in Canada, Air Miles is attempting the same after their miles expiry debacle of last year. In the US, the reputation of retail banking giant Wells Fargo imploded last year after an investigation revealed that the bank had been bilking customers for fees by signing them up for new accounts and credit cards without their knowledge. Now some hard data has emerged - and it appears that, at least in this case, consumers are inclined to be forgiving.
By Rick Ferguson
A Wells Fargo company press release reveals new retail banking customer data for February 2017. The short version of the story: while consumers have been slow to forgive the bank for its transgressions, customer loyalty is showing tiny green shoots of improvement.
First, the bad news: according to a Wells Fargo press release, consumer checking account openings have fallen 43 percent from a year ago, while credit card applications have fallen by a whopping 56 percent. On the positive side, customer loyalty scores actually rose for the fourth straight month to 57 percent, while banking deposits have risen six percent from last year. The company also reported that early 2017 trends were in line with the company's expectations. Money quote from Mary Mack, Wells Fargo's head of Community Banking:
"After factoring in day count differences, February trends were generally similar to January's and were within our expectations. It will take time for us to work through the changes we are making in our business, but we remain focused on strengthening our relationships with existing customers and building new ones with potential customers."
That Wells Fargo's consumer activity is as good as these numbers suggest is perhaps surprising, given the magnitude of the company's sins; the bank's hyper-aggressive sales tactics resulted in employees signing up customers for over half a million credit cards and $1.5 million in deposit accounts, all without customer knowledge. Only when customers starting getting hit for fees for cards and accounts for which they never applied did the scandal break.
What early lessons may we learn here? Is it that customers are really that forgiving of such a dire betrayal of their trust? Or is the retail banking environment in the United States so consolidated that Wells Fargo remains the de facto first choice for millions of consumers despite the scandal? The jury is still out.
For their part, Wells Fargo appears sincere in its desire to make ammends, even if their focus is a little too fixed on rebuilding trust with their shareholders over rebuilding trust with their customers. The company just announced a series of initiatives designed to rebuild that trust. Money quote from Wells Fargo CEO Tim Sloan in a press release:
"We're making things right for our customers and our team members. We are fixing problems, and we're building a better bank for the future. As we rebuild trust, we will reintroduce to our stakeholders what our Wells Fargo bankers have always been known for, and that's helping our customers to succeed financially."
During a company town hall meeting, Sloan unveiled six new long-term goals for all of Wells Fargo. The goals entail becoming the leader in the following six areas:
- Customer service and advice: "Provide best-in-class service and guidance to our customers to help them reach their financial goals."
- Team member engagement: "Be a company where people matter, teamwork is rewarded, everyone feels respected and empowered to speak up, diversity and inclusion are embraced, and 'how' our work gets done is just as important as getting the work done."
- Innovation: "Create new kinds of lasting value for our customers and businesses by using innovative technologies and moving quickly to bring about change."
- Risk management: "Set the global standard in managing all forms of risk."
- Corporate citizenship: "Make every community in which we live and do business better."
- Shareholder Value: "Earn the confidence of shareholders by maximizing long-term value."
Wells Fargo is a storied name in American consumer banking, and the money here is on the company making good on its promises and rebuilding trust with its customers. Sunlight, as they say, is the best disinfectant.
Rick Ferguson is CEO and Editor-in-Chief of the Wise Marketer Group.