E-Loan Founded on Loyalty
By John Hennessy
Since its founding in 1997, E-Loan has tried to distinguish itself from other firms in the online-financial-services sector. In every public proclamation, the company notes its refusal to add lender’s fees, its non-rate-based commissions, its posting of competitors’ rates, and other product and service-related policies. These policies evidence an important philosophy regarding the company’s willingness to sacrifice short-term revenue for increased long-term customer value. E-Loan knows that it is better to increase the value of a customer relationship than to take all the money it can from the customer in the current quarter.
Some examples of E-Loan’s efforts on behalf of its customers include:
- Providing customers with access to their credit scores in 2000 (which led to credit score provider Fair Isaac and others allowing consumers to access their credit scores), and;
- Sponsoring financial privacy legislation.
E-Loan’s chief marketing officer Catherine Muriel likens the company’s tactics to a “quiet revolution.” But when asked whether E-Loan sacrificed short-term results for longer-term gain, she chafes. “‘Sacrifice’ seems a little bit strong to me,” she explains. “Without a doubt, there are things I don’t do in marketing that I could get better results with — more modeling, getting triggers on mortgages or whatever else from the bureaus, including more personal data in direct-mail pieces. But overall it’s not worth it. What we’re doing is comparable to the Apple and Nordstrom mentality: if you do the right thing by your customers, they’ll do the right thing by you.”
“You don’t want to come across as too sanctimonious,” she notes. “When you tout rates, you see an immediate difference. Convincing customers that you’re really on their side is a much trickier sell.”
Moderator’s Comment: What companies in retailing and consumer products manufacturing are profiting by running their business based on long term customer
value rather than short term financial gains? Should more companies adopting a long term, customer oriented approach to their business?
Knowingly sacrificing short-term gains with the belief that you are creating long-term value for your business and your customers can only be accomplished
if it comes from the top and is supported from the top. That kind of leadership and clarity of purpose is uncommon, which helps the companies who follow this philosophy stand
out even more. –
John Hennessy – Moderator