The Power of WOW!
How Commerce Bank
Created a SuperGrowth Business in a
No-Growth Industry
Vernon W. Hill, II
“Our whole
story is
—Vernon Hill (Top-line driven; standard
is bottom-line driven by cost cutting)
8,000 Radio City
Music Hall … J.D. Power/Customer
service/Bank/NYC/1st in 5 of 6; 2nd in #6 … Inspired by
Ray Kroc … $36B ($100B in 6 years); +$750M per
month/373 branches in 7 states/900 in 6 years … player
piano … Penny Arcade/$25K per machine … 9M lollipops,
2M dog biscuits … stupid rule (red) button … call center
not “cost center,” but opportunity/human by second
operation … over-invest in real estate … designexperience fanaticism … Red!/Red Friday/Hot music …
deposits available next day (vs ½ on 3rd; ½ on 5th; focus
on 99%, not 1%) … LONG HOURS!!!! (7/week/12
hours/Fridays/15 minutes before) … “Do whacky things
for customers” (VH) … “create magical moments of
surprise and delight for employees” (VH) … “Hire for
attitude. Train for skills.” (VH) … Chinatown/10K first
day; 28K first week … Commerce U in ’93 (“underlying
theme is fun”—VH)
Commerce Bank: From “Service” to “Experience”
7X. 730A800P. F12A.*
*’93-’03/10 yr annual return: CB: 29%;
WM: 17%; HD: 16%. Mkt Cap: 48% p.a.
Thesaurus of WOW!
“They” hate it if you call them “bankers.” “They” love it, on the other hand, when
you ask to see their #s—stupendous. “They” are … Commerce Bank. These absurdly
fast growing, insanely profitable “retailers,” rewriting the rules of East Coast retail
banking, sent me a copy of their booklet, “Traditions.” It explicates their
the Customer Philosophy.” At the end there’s “A Collection of
Commerce Lingo.” I won’t define (use your imagination), but simply offer a small
sample: “Fans, Not Customers.” “Say YES … 1 to say YES, 2 to say NO.” (A staffer
has to get a supervisor’s approval to say “no” to anything.) “Recover!!! To Err Is
Human; To Recover Is Devine.” “Leave ’Em Speechless.” “Positive Behavior.”
“Positive Language.” “Kill A Stupid Rule.” (Get cash rewards for exposing dumb
internal rules “that impede our ability to WOW!”) Make the ‘WOW! Answer Guide’
Your Best Friend.” “Buzz Bee.” “CommerceWOW!Zone.” (A K-12 financial education
program.) “Doctor WOW!” “Ten-Minute Principle.” (“Stores” open 10 minutes before
posted hours, stay open 10 minutes after posted hours—and the hours, such as
open 7 days a week, are already incredibly generous & tradition-shattering.) “Wall of
WOW!” “WOW! Awards.” (The annual recognition ceremony—Radio City
Music Hall, with the Rockettes, in ’05.) “WOW! Patrol.” “WOW! Spotlight.”
“WOW Van.” “WOW Wiz.” (A service superstar.) Etc.
Say Yes
Make Each Customer Feel Special
Always Keep Customer Promises
Think Like Our Customers
Standard bank: Keep ’em out of branches;
ignore middle income; cost-driven
following mergers. (“No great American
retailer was ever created by doing
acquisitions”—VH “No examples of
seriously broken retail models that
have been fixed.”)
CB: deposit focus; customer experience;
best facilities; no stupid rules; revenue
driven; better experience for lower yield
“ … cut costs at most banks.
‘We have to push them out
of the branches.’ ‘We have
to push them to machines.’
We have to push them to
the Internet.”
Source: Vernon Hill
“We defy conventional
wisdom, operating more
like the young bucks at
Starbucks than the old
farts at the Bank of
America.” —Vernon Hills
TP: Experience … Top-line
fanaticism (vs Costfanaticism) … Deposits
…Drive ’em to the branch …
Experience/Wow! … design
… little touches … no stupid
rules … Talent/Attitude/
John Laing
“We don’t
‘close units,’
we build
—Larry Webb,
John Laing Homes
“If you want to gain
advantage fast, the
best place to do it is
in sales.”
—Larry Webb,
John Laing Homes
“Builder of the Year”/Professional
Builder … Experience … Communities/
Family values/ Relationships/After-sale “
…talk to our customers …” J.D. Power
awards … Warranties … Price premiums …
Design!!!! (all Divisions winners) (Top
“names”) … Data/market research … Top
company to work for … Team development
… “I just love being a home builder.” (LW)
… Brand … Emaar Properties (Robert
Booth/Int’l: “They have a tremendous
focus on the customer, and that is hugely
important to us.”)
“Soft Skills,
Hard Dollars”
Source: Headline, BigBuilder, September 2006
“A couple of years ago, the Los Angeles
division [of John Laing Homes] decided it was
going to become the king of Hispanic housing
[sarcasm], because our research shows
there’s a huge demand. They were right to go
after that market, but I looked around the
room, and it’s full of white guys. They were
telling us how much they know about
Hispanic buyers, and they were making it up.
… We’re getting better now.
We hired two smart, young Hispanic
managers. … We are working through a
partnership with [former HUD secretary]
Henry Cisneros. We’re learning, but we have
a long way to go.” —Larry Webb
“We are a
‘life Success
Dave Linegar, RE/MAX
jim’s group
Jim’s Group: Jim Penman.*
1984: Jim’s Mowing. 2006: Jim’s Group.
2,600 franchisees (Australia, NZ, UK).
Cleaning. Dog washing. Handyman.
Fencing. Paving. Pool care. Etc.
“People first.” Private. Small staff. Franchisees
can leave at will. 0-1 complaint per year is
norm; cut bad ones quickly.
*Ph.D. cross-cultural anthropology; mowing on the side
Source: MT/Management Today (Australia), Jan-Feb 2006
X.06.23: Whole Foods Markets …
Starbucks … Wegmans … Commerce
Bank … John Laing Homes … Apple …
London Drugs … Griffin Hospital/
Planetree Alliance … The Met School/Big
Picture … Carl Sewell … Progressive
Insurance … Stanford women’s sports …
Stanford D-School … HSM … Washington
Speakers Bureau … Build-A-Bear …
RE/MAX … Donnelly’s Weatherstrip
Service … Jim’s Group … Cirque du
Soleil … (U.S. Grant) … (Horatio Nelson)
… (Stew Leonard’s) … (DeMar Plumbing)
… (FBR/Friedman Billings Ramsey)
X.06.23: Whole Foods Markets (high-end, experience-design,
demographic) … Starbucks (people, experience) … Wegmans
(people) … Commerce Bank (nuts about customers, WOW, people,
execution) … Apple (design-experience, breakthrough, “virus
management,” resilience, talent, “seriously cool”) … London
Drugs (design-experience, people, “solutions”) … Griffin
Hospital/Planetree Alliance (customer-centric, “whole person”) …
The Met School/Big Picture (engagement, self-control) … Carl
Sewell (experience!) … Progressive Insurance (speed, IT) …
Stanford women’s sports (demographic, Blue Ocean) … Stanford
D-School (design-biz-engineering, Blue Ocean) … HSM (execution,
experience) … WSB (integrity, broad view of customers,
execution) … Build-A-Bear (experience) RE/MAX (people/“create
success stories”) … Donnelly’s Weatherstrip Service (high end,
execution-reliability, simply the best) … Jim’s Group (imaginationBlue Ocean, demographic, customer-centric) … Cirque du Soleil
(talent, R&D, Imagination, resilience, design-experience,
partnering) … (U.S. Grant/execution, delegation, people, K.I.S.S.,
action-at-all-costs, win, bold ) … (Horatio Nelson/execution,
delegation, people, K.I.S.S., action-at-all-costs, win, bold) … (Stew
Leonard’s/people, experience-design, Wow) … (DeMar
Plumbing/experience, people, Blue Ocean) … (FBR/Friedman
Billings Ramsey/research, focus)
High end.
Crazy for customers!
Crazy for Patients! (“Whole person”).
People first, second, third.
Breakthrough or bust.
“Seriously cool.”
“Virus management.”
Tippy top talent.
“Solutions,” not “just” “satisfaction.”
Self-control. (Customer/Patient/Student control.)
Blue Ocean.
“Mundane stuff” made great.
Great demographic.
The best. Period.
Effective partnering.
Play to win. (Offense > Defense.)
Action! Always!
*Focused on growth and revenue and “offense,”
not defense and cost containment.
*People-talent obsession.
*Provide mind-bending experiences. (Driven
by design primacy.)
*Nuts about customers.
*Happy to use words like “Wow.”
*Pretty close to the high end of the market.
[*Ability to make silk purses filled with gold out of
sows’ ears: Wegmans-Whole Foods-Stew Leonard’s
and groceries; Jim’s Group and dog-walking;
Donnelly and weatherstrip installation; DeMar
and plumbing.]

The Challenge: To Create More Value in All Negotiations