Case-Commerce Bank

Submitted by,
Debarghya Das
PRN No.18021141033

Q1. Analyze Commerce Bank’s service delivery system prior to retailtainment. How well does the
company’s operation design support its competitive position? Which decisions in particular do you
find critical to the bank’s success?

Ans: In Banking Industry, one needs to be really competitive with respect to Quality Services,

presence in terms of Branch Network, Brand Recall value & providing Value added services.

Commerce Bank (CB) started its operations in 1973 in Southern New Jersey. Mr Hill was very clear

since the launch of the bank that if he has to survive in New York, he needs to be different from

other banks which he did by finding innovative ways and means to find a place in the competitive

world.

The way he conceptualized the retail model was more like a restaurant chain i.e. extended working

hours so as to benefit the working class who could either finish their chores in the early morning or

late in the evening when they came back from work. Offering freebies for opening of account was a

new idea altogether. By giving more importance to the personal touch that the bank added to its

service it had hit a bull’s eye as the clients were drawn more by the whole experience rather than

the rates offered by the CB. The business promotion strategy was also thought of very well whether

it was by way of lollipops, dog biscuits, CB umbrellas or by way of Branded cars etc.

The best thing was the thought which was not concentrating on profits alone but keeping an eye on

the recall value it created in the customer’s mind which brought them back again and again and also

helped in getting more clients around by word of mouth. This was basically because it thought of the

unique idea of giving back to the customers. It created a new definition of service altogether by not

charging on ATMs, providing Penny Arcade and other such additional services.
In the corporate world establishing a brand identity requires something distinctive. For instance,

Apple has become known worldwide for their innovative products and minimalistic, aesthetic

appeal. When it comes to service companies, Domino’s Pizza used to guarantee that their pizza

would arrive in 30 minutes or it’d be free (DeMers, 2013). All the exceptional ideas helped CB also to

stay ahead of their competitors.

In doing all this CB never forgot the sustainability factor, which can’t be there without maintaining

the quality content in the service. This was taken care well by way of decoy customers or Mystery

Shoppers as they called them who kept a check on the service quality and kept all of them on their

toes.

CB's operation design was very planned & systematic in structure. Mr Hill decided to have same

arrangement across all the branches so that customers don't feel any difference. All great brands

strive for consistency in operations and human resources. Mc Donald’s is a very good example of

maintaining consistency across its outlets in terms of its menu or structure. Why does the buying

public go to a quick serve? Sure, it might be the cost advantage, or maybe it’s because people like

the food. But as we all know, a big part of the reason rests in predictability: They know what they’re

getting when they walk into McDonald’s. Same logic applies in the banking sector also. The larger

the chain, the more this competitive advantage matters (Newman, 2015).

The decisions that helped Commerce Bank to have an edge over its competitors are as follows:

• Extended Working Hours: Long working hours on weekdays & banking facility

even on weekends was the first of its kind initiative taken by CB. It’s pertinent to

mention the extra 10 minutes in the morning and evening shows how well they knew

the human nature.

• Launch of Penny Arcades: A true businessman is one who immediately grabs the

opportunity created by its rival. When other banks were charging their customers for

accepting coins, they started a very simple process of accepting coins from customers
 as well as non-customers that too free of cost. This created a positive impact in the

minds of the customers and led to heavy footfall in the branches.

• Employee Motivation: In service industry, it is difficult to maintain the level of

service being rendered to the customers. This is because of the involvement of the

human element in rendering services. To be consistent in rendering quality services,

the employee needs to be highly motivated and fully involved in the important

decisions. CB kept the motivation levels of their employees at exceptionally high

levels by organizing WOW! Awards, giving WOW! Stickers to employees who

rendered exceptional services to the clients. While it is certainly possible to build a

brand in the short-term without passion, it’s almost impossible to sustain it in the long

run. When we examine massively successful people like Steve Jobs, they all have a

serious passion that keeps propelling them to work hard and continually deliver

greatness. That passion leads to enthusiasm and genuine joy, which is infectious.

Consumers often become just as enthusiastic about a product or service, leading to

word of mouth advertising and referrals. Passion also helps businesses persevere

through inevitable setbacks (DeMers, 2013).

• Employee Training Programs: Let’s use McDonald’s, Yum! Brands and Burger

King as examples. All three brands have a roadmap so that everyone in the company

has a clear picture of what goals are important and how to achieve them. All three do

a great job communicating what is important to the entire company (Newman, 2015).

CB was also equally clear of their goals since inception. They knew that it was the

training programs & initiatives which would help them stand apart from the rest in the

industry. So CB laid equal emphasis on training its employees & imparting them

skills and knowledge to render a WOW! Experience to the customer. They strongly

believed that they should treat their customers the way we want them to be treated.
 These training programs were value additions to its employees. Commerce

University, a special initiative of the CB offered a lot of courses for its employees and

they were rewarded with stock options on completing a particular course.

• Strong Brand Value: CB had a very strong & positive brand value in the minds of its

customers. Some very small gestures also helped them in building their brand name.

For e.g., escorting the customers to their cars under Commerce umbrellas when it

rained, giving away Commerce pens, Dog Biscuits or Red Commerce lollipops at

drive through windows.

Q2. What was the motivation for the Retailtainment program? How well did Retailtainment meet
these goals? How if at all would you modify the program?

Ans: The main motivation may have been bringing out new ideas for getting in more footfalls as well

as more deposits to the bank. The concept encouraged the Branch Managers to come up with ideas

for entertaining branch customers on Friday afternoons. The unique proposition on which the

success of CB laid was giving the customer a WOW! Experience rather than competing on the rates

offered on deposits. This way even though CB made money but it followed its belief of sharing the

same with the customers. So they came up with a new terminology called Retailtainment where free

hot dogs would be given to customers, a guitar player & a juggler would be available to entertain the

customers, CB logos (Mr C and Buzz) would be all around the branch to greet them.

The Retailtainment was not going in the right direction because in this entire service thing they had

gone a bit overboard as all this reflects on the costs. Moreover, the concept was in a state of

confusion as for brand value sake it had to be followed in the same way in all the branches. In fact

they should concentrate on their strong selling point i.e. being unique in whatever they do. For e.g.,

they could provide customers with Free Wi-Fi service so that they could check their mails, connect

with friends while waiting for their turn (Wirelesslans official website, 2015).

If I were asked to launch a program like Retailtainment, I would have done it in the following

manner:
 • It should be a monthly affair say on the first Friday of every month

• Should have been restricted to new branches and that too for a short period of say first

two months

• As the Branch Managers would be an experienced lot with good amount of training,

they should have been set free to plan the programs as per the temperament of the

clientele they catered to.

4) Do you see support or a cause for concern, for the bank’s strategy in the financial statements?

Ans: The Financial Statement embedded in the case study show very progressive upshots. CB has

been the market leader in terms of growth of deposits. CB has been doing exceptionally well in

terms of Employee Strength as well as count of branches. Even though they have a conservative

approach in terms of permitting loans but still they have managed to double their book as compared

to the industry standards. Another key highlight in their financial statements is that the Non-Interest

income has also doubled up from 1998 to 2001. In fact, they have excelled the industry standards in

almost all the measures.