Checkbooks & Bank of America

Back in the mid-80s (no, not the 1880s!!!), when I was running CitiPhone for the Brooklyn/Long Island/Staten Island Region back in NY, I was also responsible for managing the checkbook business.

Doesn’t seem like much, but it was costing us almost a million dollars a year net, despite the fact that we were charging customers for their checkbook orders!

Something hadda be amiss.

I quickly learned a whole lot about the business, especially from the various vendors themselves who were competing against each other for our business.

I paid several visits to their various production plants, spoke with their superiors, talked with their Customer Service people who interfaced with our branches as well as my people.

I also set up a competitive bidding process along with an RFP/Request For Proposal. In the RFP, I laid out various conditions that any prospective bidder must be willing to meet.

In the first year i handled this responsibility, we managed to turn a tidy profit of $500K, after incurring a net loss of ~$800K the previous year.

Soon after, I worked to totally redo our customer pricing structure.

Here’s a quick example…

I imagined that most customers didn’t care about checkbooks & would simply say “Gimme the cheapest checks you have. I’m not interested in any fancy designs or flowers on my checks!”

Yes, we offered the simple, no-frill checks, commonly referred to as “line checks”. We priced them at $6/order for 200 checks.

We also had dozens & dozens of different “designs” (flowers, balloons, sea shore, etc.) & several different “styles” (normal, 3-on-a-page in notebook format, duplicate style, etc.).

These “fancy checks” started at $12/order, but could run as high as $20, $30 or more for personal checks & waaaay more expensive for the business checkbooks.

I could see that there was a significant gap between “the cheapest checks you have” ($6/order) & “everything else” (starting at $12/order & going much higher).

One of the very first things I did was increase the price for the “cheapest checks” from $6 to $11 per order!

They were STILL the “cheapest checks we had”, but now, with ~500K orders a year, we suddenly were making an additional $2.5MM annually in profits!

By changing one simple price.

We were still getting the same price from the vendors as before, so 100% of the price increase represented pure profit. 500K x $5 = $2.5MM in incremental revenue!

I also worked out a deal with the checkbook vendor for a rebate for every order we entered on-line, directly into their system.

By yr 2, we jumped from a ($800K) loss to a $500K profit…and now, to a $5MM profit!

Oh, you wanna know what “my share” of that was? Really? Can you count from 0 to 0?

In all honesty, I was taken care of “pretty nicely” by my bosses when it came to my annual merit increases. And I was actually awarded a VERY nice, 1-time salary increase of almost 20%…SAF (Salary Adjustment Fund)! It wasn’t a bonus, but rather. a permanent increase & I still got my normal 10%+ merit increase that year as well!

But was I ever paid what I was really worth? NEVER!!!

(One year down in San Antonio, as I personally “owned” the CitiPhone WorkStation Notes system, I decided to make some changes to how & when “certain notes would automatically pop on the reps’ screens”.

Different notes would have different retention periods, that is, they stayed on the account anywhere from 30 days to 999 days, with one note (the infamous #998) that was permanent. In addition to that, some notes were designed to display, one at a time, as soon as the account number was entered.

The rep could NOT proceed until he (hopefully, read & then) cleared the note from the screen. And these “forced notes” would display one at a time.

For example, if the customer moved 2 years ago, reordered checks & replaced his Citicard, these 3 notes would automatically display, one at a time, every time he called & spoke to a rep.

For the next 999 days!!!

At a minimum, it would take the rep 2-3 seconds to clear the screen after each note displayed…and probably 5, 10 secs or longer if they actually read the note!

I made changes to which notes would automatically display as well as their particular length of time (how many days from when they were originally placed). Taking everything into consideration, I was able to decrease OVERALL AHT (Average Handle Time) by almost 10 seconds!!!

Doesn’t sound like a lot, heh?

With a Customer Service group as large as ours, every second in AHT that was deducted would save us $200K annually!

Took me about 2 hours to save the USCC a little under $2MM every year!

i remember asking my boss (before I told him what I already did) if he would agree to give me a 2% finder’s fee if I could save us a significant amount of money!

He hesitated & developed a sudden stutter.

“Forget it! Oh, BTW, I just saved us about $2MM a year! And it’s already in effect!”

I walked out of his office. I later sent out a memo to senior management, explaining exactly what I did & why. “It makes us more efficient, should make customers happier & poses absolutely no add’l risk to our organization!”)

*Back to my checkbook story*

They already had a working arrangement with Bank of America out in California whereby the BofA back office would enter orders (taken on paper) received through their Customer Service Unit into a terminal provided by the vendor.

No, there was no direct connectivity into their system through our account management system (CitiSmart) at that time, but that was an application that I later helped design & develop with our Systems & Technology partners. It was a wonderful tool to use & it saved us millions by eliminating the need to handle customer orders/reorders manually! It was quicker, more secure & eliminates the middle man entirely…and we converted those advantages into cost reductions for Cust Svce manpower & increased rebates from the checkbook vendors.

But it was still the mid-80s & we were just getting our feet wet in this arena.

I wanted to see the ENTIRE BofA operation at work so I asked our vendor if they could arrange a visit for me to their back-office operation, located about 30 minutes north of San Francisco.

Bank of America agreed to let me in.

(Just between me & you, I had no intention whatsoever to just look at the “remote order entry process” at work.)

I wanted to look around their entire shop to see what, if anything, I could learn about how they handled various Customer Service functions as well as to “verify” the different policies & procedures we had in place for my people, the branches & our customers.

I flew out to SF about 2 weeks later & met up with a representative from the checkbook vendor at the BofA facility.

We got a demo of the “remote order entry” process & were able to see it used by their staff. I spoke with their employees & supervisors about the advantages & challenges they experienced with this new process.

It was nothing really complicated & the show-and-tell lasted about 30 minutes.

Then the fun stuff began.

(Note: At this point in time, Citi did not have any major branch presence in California while BofA had more than 1,400 branches there!

Conversely, BofA had no branches outside the state of California.

While this would certainly change in the upcoming future with various failed Savings & Loans takeovers, bank purchases & corporate mergers, at this point in time, we weren’t really competitors on the retail branch side of the U.S. banking business.)

So they really had no serious problem with me snoopin, er, being around their back-office operation.

In fact, they were proud to “show off their place to me”!

I sat down with some of their Customer Service reps to listen to phone calls. I was able to view just about every different function they had housed there, as well as speak with the various employees & supervisors.

After spending well over 6 hours in their shop, we called it a day & I returned to my hotel.

With pages & pages & pages of notes I had taken.

I was thrilled to see that we handled a great many more functions in our Customer Service Unit compared to theirs. Seemed they kept referring callers “to their home branch” to complete (what I would consider to be) rather routine service requests.

Because I kinda felt guilty about this being a one-sided exchange, I decided to make a recommendation to them that would significantly improve their functionality, save money & improve customer satisfaction.

BofA were referring customers who wanted to place a stop payment order on a check they wrote to their home branch.

Huh? Why?

I explained that we handled the overwhelming majority of stop payment orders in our CitiPhone unit.

They seemed bewildered.

I’m like, “Look, you’re already talking to the customer & you’re able to verify the caller’s identity with personal & account information you have housed on your system.

“I don’t understand what you’re afraid of.

“Do you think that the crook is going to try to place a stop payment on a check he stole???

“The security risk is minimal & there’s really no assets or funds at stake. That’s what we do. Verify the caller, place the stop payment order on-line, the system automatically applies the necessary edits & charges the fee to the customer. You recap what you did with the customer, let him know about writing out replacement checks & send him on his way.

“Your branches don’t have to get involved, the customer doesn’t have to drive anywhere & everything is over.

“Oh, and the “need” to have the customer’s signature is really totally unnecessary! You already handle other requests from the customer without his signature, as long as you can properly verify his identity, right?

“No need to handle stop payments any differently. We’ve been doing it for years!”

They were extremely thankful for the advice & said that they would follow up with their senior managers.

“Before you do that, first go to your Legal Dept & get their formal opinion. I guarantee you that that’ll be the very first issue that your bosses will raise!

“Good luck!”

The trip turned out to be a resounding success.

I brought back a few good ideas on things BofA did & was able to basically verify that we, indeed, were proving exceptional service to our customers.

I also compared our formal “service performance indicators” (standards set on different aspects of the business related to timeliness, quality, customer satisfaction, accuracy, etc..) to theirs & I was pretty comfortable that we were measuring the right stuff & had more-than-strong enough goals in place.

It’s always good to compare your service delivery to other companies in your industry as well as to the top service companies, regardless of industry, across the country.

If you can’t get into your competitor’s premises, don’t forget to speak with your own people & other employees in your company who’ve worked elsewhere before they joined your firm.

Go to industry conferences & seminars & training courses to learn as much as you can. You’ll also find that your lunch hour & break time are super-valuable as you can compare your experiences with your peers at other companies.

“So how do you guys handle the growing problem of absenteeism?”

“Do you guys have a formal variable compensation program to reward your people for outstanding performance results?”

“What do you guys use for Reward & Recognition?”

“How do you guys communicate important info to your reps when the work environment always seems so busy & hectic?”

There’s a whole lot to learn out there…and regardless of how experienced or intelligent you may be, you can & should learn something new every single day!

Thank once again for listening!

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