I have been a Wells Fargo customer for 21 years and remained with the bank through their ups and downs. It has been a pleasure banking with Wells Fargo, the staff has taken care of my needs to the best of their abilities. What I am about to share comes from a conversation I witnessed on 7/31/18 at a branch office in San Diego. The conversation and response go against everything I was taught in business school and learned in the real world, so I wanted to lay out my thoughts and calculations. Please share your thoughts after reading this.
While making a deposit yesterday, a mother and three teenage girls walked up to an available teller. With much excitement, the youngest girl (13 years old) placed several rolls of quarters on the counter that she put together from collecting change. She told the teller that she would like the quarters exchanged for paper money, from my vantage point it appeared to be about $80 in quarters (note, the quarters were already rolled). The teller proceeded to inform the mother and girls that Wells Fargo has a new policy in place that prohibits non-customers from exchanging more than $20 worth of coins. The mother explained to the teller that Wells Fargo has done similar exchanges in the past, but apparently, the policy is newly established. Neither the mother or girls were Wells Fargo customers, so the teller refused to help them. The mother then looked at the girls and said: “girls, this is why we will never bank with Wells Fargo.” I have not been able to get that comment out of my head. As the girl walked out bummed and deflated, I realized Wells Fargo probably lost a customer for life.
I have attempted to calculate the loss of potential revenue for Wells Fargo as a result of not helping this young lady exchange her coins. I can almost guarantee this young lady, and her mother will never become a customer. Here is my thought process, one day the young lady will need a savings account, checking account, home mortgage, credit card, financial advising, etc. Why would she use Wells Fargo for any of these financial needs after yesterdays experience? In short, my calculations show that Wells Fargo potentially lost $600,000 in business over the next 49 years, not accounting for inflation, from losing this young lady.
Potential Home Loan Loss
In San Diego the average home price is $622,300, however, in Carlsbad, where this took place, the average home price is $848,500. The interest a bank earns on a 30-year mortgage equates to approximately $568,103, which Wells Fargo will never see from her when she is ready to purchase a house.
Potential Credit Card Loss
This young lady will also apply for a credit card one day. Nerd Wallet calculated that the average American pays $904 a year in credit card interest. Say she has a credit card for 49 years, paying the yearly average interest, a loss of revenue of $44,296 could be expected.
Potential Advising Fees Lost
Most financial institutions offer financial advising to savvy investors. Since she showed good money habits early, I have no doubt she will look for these services one day. Eventually, this young lady will have a full time job, potentially earning a large income. She will hire an advisor, which makes a percentage of the account balance. Wells Fargo charges 0.50% annually for a “tech-powered portfolio.” You can see my Excel calculations below, I estimated Wells Fargo conservatively lost out on $49,000 in advisor fees from the age of 28 to 75.
Customer service should be the highest priority of any business, it creates new customers and retains old customers. The damage done by not exchanging $80 worth of coins might have come at a much higher cost. While this “no customer, no exchange” policy might look good on paper, in actuality it’s going to hurt Wells Fargo. For a company that is trying to save and rebuild its reputation after the credit card scandal, wouldn’t they want to be attracting new customers, not driving them away? The young customers are the ones to get, in my opinion, since they have their entire financial journey ahead of them still. I am thankful for witnessing this conversation, as it has taught me to fully think through any company policy I may create in my business career.