Commerce Bank Essay

965 Words4 Pages
Commerce bank 1. What is Commerce Bank’s strategy? Commerce Bank’s strategy is centered on the customer experience, as opposed to simply providing banking products or services, with the belief that customer satisfaction and loyalty drives profitability and growth. Customer service is the basis of the Commerce bank culture and model, and the company invests considerably in facilities, training, and its people to maximize this core experience. Commerce Bank’s customer focus is exemplified in such ‘unorthodox’ practices as extended bank hours (open 7 days a week, 361 days a year, opening before and staying open after listed hours), and offering many free services, including ‘coin-counting’ machines, online banking, bill pay and check cards. The company also works to create a friendlier, more intimate consumer experience by greeting customers at the door, awarding customers with gifts for opening new accounts, and offering prizes to customers who participate in such activities as ‘red’ Friday. 2. Does this strategy make CB more expensive to operate? By how much? While other banks seem to be increasingly turning to online banking and encouraging ATM use, circumventing the teller and branches in an attempt to cut overhead costs, Commerce bank has increased spending on this front, using the face-to-face customer “relationship” model as a means to grow and diversify their business from checking accounts and deposits to mortgages. Clearly, cultivating this experience has come at a considerable cost, as reflected in such metrics as Capex/Sales and SG&A/Sales. When comparing capex as a % of sales in 2006, I found that Commerce Bank ranked much higher than its peers at almost 28% (see table below). When I averaged out Commerce Bank’s competitors’ capex/sales in the same year, I got 6.13%. In the 10k, I found that this ~512mm is not just growth capex, i.e., increasing its
Open Document