Take this study from the W. P. Carey School of Business at the Arizona State University. It says that from 1976 to 2011, customer dissatisfaction increased by 13%. That means that dispute the technological gains in communication, we are doing a worse job overall.

It also goes on to say that the most irritating part of the process is the loss of time. That the complainant lost more time trying to get resolution than it was worth to do so. That might be terrific for companies looking to get rid of complaints but it is not good for companies that actually want a brand people can trust.

I am giving complete credit to the university for this survey and I am not going to reprint everything here, but I am going to summarize some of the points that I have professed over and over again.

Complainant Complainant satisfaction is strongly correlated with increased satisfaction is strongly correlated with increased brand loyalty AND Non-monetary remedies are strongly correlated with increased complainant satisfaction.

Wow. As I have said before, all customers want when they complain is recognition of the problem. Most complaints can be fixed in a very short amount of time and with very little give.

Ping-ponging is a key metric strongly correlated with complainant satisfaction For example. an average of 4.4 contacts needed to resolve complaints.

You should give the resolution ability to the front line people. In our stores, the clerks and drivers can fix a problem without coming to us. Why not?

Telephone is still the primary channel for complaining (69%) vs. the Internet (9%). 

Customers want immediate satisfaction and the internet (chat, email, websites, and social media) does not resolve complaints. But I have been saying, once it makes it to a social media site or similar, you have already lost. Good customer service means you take care of issues before they become complaints.

Those are a few of the most important results. I suggest you read the report yourself and be surprised.

Final Thoughts with Don Noble

But there comes a point where you can go over board.

Last week, I called a American Express Credit Card. Amex is a company that has terrific customer service in my opinion. I called for two reasons. We could not find one of our employee’s cards and needed a new one, and another employee’s card was going to be sent to the wrong address and I needed it sent to another. I was not mad and did not need consoling.

Funny thing about good customer service reps, is that they usually take detailed notes during the first part of the conversation. This part of the call is usually the customer reciting the problem. Amex does this well.

But the CSR made a point of saying the following “I am sorry about the missing employee card and I am sorry about the incorrect address.” When I heard this, I immediately knew that they had been trained to apologize but the CSR must have know that these were not “Sorry” events and was just reciting what they were told. Although the overall customer service was incredible, the double “Sorry” was not needed and made me feel a little put off.

Nitpicking? Yes a little. However, if you can say the right things to the customer, it builds confidence. What should have been said was “Yes, Mr Noble, I can help you with both of those issues.” Cleaner, more appropriate, and it would build a better platform.

Final Thoughts with Don Noble

Every company screws up once in their career (only once if they are lucky; sometimes it is more). They take more orders than they can delivery, they receive substandard goods and do not catch the mistake, or they double bill customers. But all of these are just actions and can happen to any company.

What happens next tends to define a company’s customer service level and I believe and can prove, it provides higher growth, revenue, and income. Companies that accept a commitment to great customer service usually follow some simple rules:

1. Act quickly. Once a mistake is found, it is important to get in front of it. In today’s world that can mean many paths. Social media, customer, recipient, and employees should be touched to see if the problem is resolvable.

2. Admit the mistake. Yes, I said admit the mistake. Every lawyer will tell you that should not admit to doing anything wrong, but I differ in opinion. When you admit to the customer that a mistake was made, then the underlying issue is resolved right there. So many times, I read complains about companies that obviously made a mistake but are unwilling to fess up.

3. Make the customer happy. Refund their money, send them another unit, invite them into the store, or write a personal email. Whatever it takes to make the customer not only whole again, but make them feel good about the experience. Why not? Some people say that customers will take advantage of this experience. I say, so what! So 1/10 of 1% of customers ask for a refund and a free product. Compare that to that same customer never coming back and telling their friends to not come back or worse yet, producing a video showing the mistakes fro all to see.

4. Thank them for their review, their purchase and for choosing you. Make them feel valuable. Why do this? Because they are valuable.

In a recent poll on customer service, over 60% of customers that complained about a problem just wanted acknowledgment that a problem existed. They did not want money, or refunds, or anything like that, just acknowledgement. Think how easy it is with such a low expectation, to WOW them.

If you do not believe me, check out some companies that do it correctly.

Amazon.com

Zappos.com

1aauto.com

Then consider companies that do not do it correctly.

dell.com - Dell used to be tops. Then they hired a CEO that was more focused on the bottom line than the customer. Since Michael took over again, it has improved but not returned to normal.

AT&T Wireless – I am stuck with AT&T. I need to be able to check email and talk at the same time. But their service (from purchase, through connectivity, to billing and call center) is terrible. Everyone agrees. That is why everyone left when Verizon got the iphone.

Final Thoughts  with Don Noble

WENDY’S Restaurant

My wife and I stopped by a Wendy’s on the way back from Richmond, VA. The person at the front counter was very busy as I think he was helping the drive through and taking our order at the same time. He would dart from taking our order to the window and would come back apologizing. After he took our order, I filled my diet coke and my wife waited (she did not get a drink). The clerk asked my wife if she would like a cup of water while she waited for the food. This was so unexpected that my wife asked if she heard him correctly.

What a terrific offering. Normally, you have to ask for water and they do not want to give it out. WOW. Kudos to this gentleman and to the chain.

This was the Wendy’s at 4609 Williamsburg Road, Richmond, VA 23231. Sorry but I cannot remember the clerk’s name.

Americlean Dry Cleaners

We have a business account here where we get all the uniforms cleaned. When I walk in, I am always greeted promptly and addresses by name. They do not make me wait but quickly ask if I need any additional services. They are not high tech nor do they have extended hours but I will always take my cleaning there. Good job.

Americlean Dry Cleaners is located at 4324 New Town Avenue, Williamsburg, VA 23188.

Sears Master Card by Citibank

I applied for this card as it gives big discounts off two items: Craftsman tools and all Appliances. I do not use it very much as it has a high interest rate. However, if you pay it off immediately, it can save a lot of money. Anyway, because I do not use it very much, last month I forgot to make a payment (annual fee was on there). So I called up expecting the same routine as all other credit cards. Wow, was I wrong.

First off, all I had to do was enter my CC number and I was instantly connected to a representative (this was 10:00 am on Tuesday morning, no less). After asking a few questions, she said I would be transferred to a account expert. I was expecting annoying music when she came on the line. She asked me verification questions, then said “I bet you are calling about this late payment. You are a terrific customer Mr Noble and we will take care of the late payment so it is not on your credit report and we will reverse the late charge. Is there anything else I can help you with today?” I was shocked. I did nto have to explain. I did not have to sit through the sales pitch for credit protection. Nothing.

I said thank you and told her that I had not received my payment reminder email although I have received all other communications. She said she would personally look into it and get back to me. Wow. Talk about great customer service. I will use this card more often.

Sears Master Card by Citibank

These examples of excellent customer service show how little changes in how companies approach customer service can lead to better brand and product loyalty. You do not have to “give away the store” in order to make customers happy, and these examples prove that.

Final Thoughts with Don Noble

One of our largest vendors, 13% of our total revenue (maybe not large to them, but large to me.), must have the most antiquated accounting system known to man.

About four months ago, while I was paying bills as normal, I noticed that our payments were not being applied to the invoices properly. On the statements, I would see big negatives (payments) and many positives (invoices from way back). For a month, I decided to pay the total at the bottom.

One day I called accounting and asked why the payments could not be applied to the open invoices, oldest first. The person told me that I had to tell them that I wanted it applied that way, so I said YES and said I wanted it that way. She confirmed that I would not see that again. (Note: I am sure there are other ways to apply payments to invoices but cannot for the life of me figure out why anyone would want it another way).

For the next month, the same thing was happening. I called our corporate office and told the purchasing person what was going on and she said would handle it. Sure enough, next statement was correct. They had one suggestion; send advice on which invoices the checks were for (basically check the oldest invoice as the accounting department cannot figure that out). IMPORTANT PART: From then on, every two weeks, I would take the statement, write the check, mark the invoices that it was to be applied to, then copy the check onto the invoice and send back to accounting by email. I then would mail the physical check. I have three accounts with them and I would do this three time.

Easy, Peezy, Lemon Squeezy (or so I thought).

Day 1. Mid-January, I was looking at my online banking and there was a ACH debit for this vendor for the amount I wrote the checks for. Three accounts, same thing. (usually they show up as checks with an image and such). I called the vendors accounting department. She said that although nothing had changed, sometimes they cash the image of the check. She asked if I sent the physical checks. I said yes. she said she would stop them from being deposited. Mental level: Irritated and confused.

Day 2. Thursday Next day, the checks were cashed and withdrawn from the bank account. I then emailed my contact in the vendor’s accounting department with a copy of the bank account showing the double charge. She replied later that she confirmed the double entry and asked how I wanted my refund. I received the email while traveling and called her to say it would be easier for me to have the ACH debit reversed. Mental Level: Concerned and a little peeved.

Day 3. Friday. I checked the bank accounts to see if any money was transferred in. No money. I called again and left a message.

Day 4. Monday. I checked the bank accounts and no money. I called up the accounting department. I said my name and company and asked what they were doing to refund my money. Believe it or not, she asked me who I was and what this was referring to. This was the same person that confirmed that they took the money. I told her again about the debits. She asked about how I wanted the money refunded and asked me to hold on (at the point I am about 98% positive she asked the CFO or similar if she could refund the money).

When she came back on the phone, she said: “If you could show us the bank statements proving that we double dipped from you, then we will refund your money”. Wow. So many thoughts are running through my head. Is your system not good enough to show payments? Do you not remember the customer you talked to last week?

I then PDF’d my bank statements and sent this email.

Attached please find the statements from our bank that show the double cashing of the same check we sent to you.

To refresh your memory, your team used the check copy on the invoice to process a direct debit on our bank account; then you cashed the physical check. I am not sure this is even possible as you should have to have the check in hand, but that is for my bank to decide.

For several months, I have been sending a check copy with the invoice copy to advise you on which invoices to pay. However, this is the first time this has happened.

I am unsure why you cannot reverse the debit and put the money back into our account. Unfortunately, we are in Connecticut now and I fear that by the time you process a check refund to us, then send, then we cash (seeing as our bank is in Virginia) that a week or more will pass.

 So, I am not sure what to suggest as I think this was your team’s mistake and it seems you are pushing it back on us.

 We pay our bills and according to XXXX, we pay better than most. So, please consider that when you decide how to correct this mistake.

To which I received (10 minutes later):

Thanks and I do apologize we will process ACH reversal for all three accounts.

Mental state: Utter disbelief.

Day 5: Tuesday. Check the bank accounts, no money Also have received no other communication from vendor.

Day 6. Wednesday. I check the bank accounts and send this to accounting (btw: I am now cc’ing the sales rep, VP, Operations and our corporate head of purchasing).

This email was from Monday and as of this morning (Wednesday), none of the funds have been replaced in our accounts.

So, I am forced to assume that you are not returning the funds.

The total amount of you withdrew from our accounts based on a COPY of checks is 7,515.40.

If you are still planning on ACH’ing the money to us (now a week has passed since you did this) then please do so quickly.

Goodbye,

 Don

I think that got their attention. First I received a email from accounting showing me a record in their accounting system that I was paid (which is pretty much useless). I then get it forwarded to me from the VP saying it was paid. So I call the VP and tell him that the paper is worthless and that I have not received any money. He vows to get to the bottom.

The VP calls me and tells me he asked the accounting clerk and she said it takes 5 DAYS to process an ACH deposit. By now I am furious and so is the VP. I say fine and will keep checking the bank accounts. Later, I get a call from the vendor’s CFO. So summarize his call.

This is Bob, CFO of XXXX. How are you today? (I wanted to tell him the truth, but held back). I have been cc’d on a lot of emails and I wanted to apologize. This is not how me or my team does business. (Really Bob? I would say it is exactly how you do business. I really did not know what to say to I listened). I understand you are opening another store? (Yes, Bob, I am. I have to go. Bye).

You will notice that he never asked if I received the refund, never offered any more information, never once asked if there was anything he could do to make it better, never said he would call the bank, nothing. Pretty much the worst apology call and the most demeaning call I have taken. I took it as “Look, we are big, you are small, I have more to worry about than your small account”.

I finished the day and went home. At this point, I never think I will see the money or get any satisfaction. Mental State: Resolved.

That night I wrote the CEO and CFO of the company, the VP, the sales guy, and several members of my company. It was too long to print but very diplomatically, it said that they reason they are in a low margin business is because they treat their customer like garbage. Because of that, their customers will leave them with a change in price of $0.10.

Day 7: Thursday. No money yet. The VP called me and said the CEO wants to meet me. I told him I have no interest, but cave and arrange a meeting for next week.

Day 8: Friday. No money. I email them all just to keep them informed but no one responds.

Day 9: Monday. No Money. I send another email.

Day 10: Tuesday. Money is deposited into my account. I tell the VP.

Summary:

The vendor makes the customer adapt to the vendor’s accounting system. They double cashed three of my checks (legal?). They dragged their feet in responding. After admiiting their mistake, they made me prove it happened. They SAY they are giving me the money back. No communications or confirmations. A very condescending and banal apology. A total of 15 calendar days and 11 business days from the double charge to receive my refund.

I have been to companies where they say they cannot give the customer what they want, because it will hurt their bottom line. What they don’t realize is that it is the other way around. The most successful companies work to improve their customer service and have great top and bottom lines.

Final Thoughts with Don Noble

That’s a bold statement, Don. Yes it is, loyal reader. But this is one that just got worse with each phone call and still is unresolved.

So, this weekend, I am going to type up this story. The reason I am waiting a few days is that I am debating putting the company name in the post. see, I am afraid that this vendor will shut me off and I will not get my fruit shipments. Sorry, I slipped up there.

Don. You have blasted AT&T, FEDEX, RITE AID and yet you are afraid of a local vendor. As a matter of fact, I am.

If you read this and have a suggestion on how to approach the name of the vendor, please me know.

Almost Final Thoughts with Don Noble

I only have one prescription and I take it to Rite Aid for filling. Their prices are very competitive and I love their website refill service (at least until today).

Each month, when my bottle gets near the bottom, I go online to www.riteaid.com, login, select the prescription I want, and boom, two hours later, I can pickup it up. Easy Peasy Lemon Squeezy.

Today, after logging in, I was greeted with an unmovable page saying “wellness+® ONLINE ENROLLMENT IS NOW REQUIRED TO ACCESS YOUR ACCOUNT. IT’S FREE AND EASY TO ENROLL.” in big red letters. If you don’t know, wellness+ is their loyalty program. It is obvious that someone at corporate thought it would be a good idea to force customers into its loyalty program and what better way to do it than its many prescription customers.

I did not want to take the time to find my wellness+ number and enter it so I started clicking everywhere. No good. Same screen every time forcing me to enter the number. Sensing that this was not going to go my way, I decided to contact the company.

Under Contact Us, I was told I would be getting terrific customer service and noticed the big CHAT NOW button. (Boy that guys looks friendly).

So I begin the chat. I have a choice Wellness Program or Customer Service. I think this is a problem with the website, so I choose Customer Service. A nice counter says I have 30 seconds so while waiting, I get my wellness+ card and try to input the number. When I click submit, it comes back and asks me to “Correct the error below and resubmit.” Problem is, there is no indication of what the error was. So, I recheck the number and resubmit.

I try 5 times before I give up, but the chat is ready so I start there. As with most chat sessions, I try to explain quickly. “I cannot enter my wellness+ number.” Within a second, a response “I will transfer you to a wellness representative”. Before I can respond I see another 30 second countdown, so I try the website again. 5 more times, no success.

The rep from wellness+ comes on and I repeat my problem. Very quickly, they say “That is a customer service issue” and transfer me back. I closed the window.

This post is getting long, so I will speed up. I called the 800 number thinking it might be faster. LOL. I get a 10 second recording on their latest coupons that I cannot bypass. Finally an automated phone tree. First option is whether I want to talk to the pharmacy about a prescription. Second is if I want to subscribe to the newsletter. I punch 0(zero) a few times and it repeats that it cannot understand my option. I hang up.

Finally, I decide to send a nice email explaining my problem and telling them that I am leaving. I cannot believe the response so I am posting the whole thing.

Dear Donald Noble,

Thank you for contacting the Rite Aid Wellness+ Customer Support.  I do apologize for any inconvenience to you.  The error message that you are receiving is due to the web browser that you are currently using.  Internet Explorer 9, Mozilla Firefox and Safari are all having difficulties in loading the page correctly.  I suggest using an earlier version of Internet Explorer 9 or Google Chrome.  If you have any other questions or concerns, feel free to email us back or give us a call at 1-800-RITE-AID.  We thank you for your business at Rite Aid and have a wonderful day!

First of all I was using Chrome. But REALLY? Downgrade to an earlier version of my internet browser so I can bypass a restriction that you put in that keeps me from buying a product from your company. I cannot stop laughing. On this one, I really could not stop laughing.

Here we have a complete disconnect between management, marketing, technical support and just about every other connected department at Rite Aid. What started with a good idea (drive membership in our loyalty program) ends up a complete failure which will lose sales and lose customers.

How often does this happen at other companies? How many customers choose a competitor because of frustrating restrictions like this? Probably a lot.

Lesson #1 in retail: Treat each and every customer as gold. Once they know you are using them, they will leave you in a heartbeat.

Final Thoughts with Don Noble.

I do not know where to start. I was watching COX TV CONNECT on my iPad. I love the app and loved COX (see the past tense). The app is cool. While at home, I can watch live TV (most channels) with my headset while my wife

During the show, an error popped up and said ” the cox network is unavailable”. The app then closed and when I re-logged in, I got another error saying “you must be on the COX WIFI to watch tv shows” and the app closed again. Now, I disconnected my 3G and had only WIFI on. Same error.

So it told me to call a 877 number. Unfortunately, I did not have a local phone number (how many people now rely on their cell phones primarily) so when I called, I got a “you cannot call this number from your phone”. This is actually beginning to be funny.

So I logged into my account to find the local number. I did. When I called I had two options. Troubleshoot my cable TV or my internet. HMMMMM. Not sure which one of the 50-50 choice I was, so I tried internet. It asked me to determine if I had a WiFi network or not. Although I am sure that after an hour or so of this I would get to something irrelevant, I opted for the tech support CHAT option.

So, unabridged, here is the text of the chat. (I have not changed the name to protect the innocent, nor have I edited my frustrated, misspelled responses)( I HAVE added emphasis where I thought it was funny).

Thank you for choosing Cox Communications. A representative will be with you shortly.
You are now chatting with ‘Dennis’.
Dennis: Welcome to Cox Live Chat Support. I will be assisting you throughout this Chat session.
Dennis: I understand you are having problems connecting on your iPad. Is that correct?
Don Noble: yes and no
Don Noble: I am having trouble with COX Connect on my ipad
Don Noble: your app that allows me to watch tv on my ipad
Dennis: Sorry for the misunderstanding.
Dennis: I will be glad to assist you.
Dennis: Have you installed the application on your iPad? (really? Have I installed the app?)
Don Noble: YES
Dennis: Let me check this out, please.
Dennis: Are you using a Cox Primary user ID?
Don Noble: yes
Dennis: May I have it, please?
Don Noble: ad**********\
Don Noble: sorry
Don Noble: ad**********
Dennis: Thank you very much.
Dennis: I will send you a link, so you will be able to troubleshoot this issue on your iPad.
Dennis: I would like to do this for you, but I do not have access to your iPad from here.
Dennis: To troubleshoot this issue, please click here. (here is a link to the TV connection page)
Don Noble: Dennis
Dennis: Were you able to access the link above?
Don Noble: I am really trying to be patient here
Dennis: Or, you can contact our Specialized Team by phone at: 1-866-590-4229. (the same number I called from my cell phone and did not work).
Dennis: Could you open the link above?
Don Noble: I tried to call the number and there is no option for Cox tv connect
Don Noble: there is only cable and internet
Dennis: What number have you tried?
Don Noble: when I go tto internet, it asks me to troubleshoot my internet wifi
Don Noble: 866-590-4229
Dennis: May I have the number, please?
Don Noble: I am on my computer chatting with you
Don Noble: not my ipad
Dennis: That is the one I have for Cox TV Connect.
Don Noble: soince I cannot chat with you on the ipad. (Sorry…… Really? you cannot chat with me on the iPad? If you could wouldnt I be on the iPad chatting with you?)
Don Noble: I cannot see the link there
Don Noble: HOWEVERE
Dennis: I do not have another one.
Don Noble: I did open the link and it asks me
Don Noble: 1. if my wifi is on.
Don Noble: gotta love that since i was ising the app before the error message
Don Noble: 2. verify that the app is installed
Don Noble: again, I was watching the app when it gave me an error message
Don Noble: 3. ask me to sign in again
Dennis: According to the link, you need to set up your WiFi connection to connect to the Cox TV Connect.
Don Noble: so again, when it fails, it kils the app so I HAVE to sign in again
Don Noble: wow, let me ask you
Don Noble: are you intentionally not listening or are you just not reading (Sorry Dennis. I really am, but now you are being just mean.)
Don Noble: ?
Don Noble: see number 1 above
Don Noble: if you cannot read the english
Don Noble: I can translate to your language
Don Noble: indian
Don Noble: ?
Don Noble: chinese?
Don Noble: perhaps?
Don Noble: maybe brazilian
Don Noble: I understand they are outsourcing there now
Don Noble: let me ask you another question
Dennis: Thank you very much. You are so kind.
Don Noble: how can you troubleshoot my prblem when you do not knwo what the problem is?
Don Noble: is it possible to ask many inane questions fist
Don Noble: first
Don Noble: just in case
Don Noble: >?
Don Noble: so, since you did not ask
Don Noble: I have COX tv connect on my ipda
Don Noble: ipda
Don Noble: I was watching tv
Dennis: That is why you need to call. We do not troubleshoot iPad’s via chat.
Don Noble: I recevived an error
Don Noble: saying the cox network was not responding
Don Noble: again, you do not have an ipda option on the call line
Don Noble: so i am in a circle of no answers
Don Noble: you point me to the phoen
Don Noble: and the phone does not cover ipads
Don Noble: anything else?
Don Noble: maybe I can send an email to the tech support for internet
Don Noble: that should help yes?
Don Noble: is it ok, that I copy this chat when I complain about cox’s customer support?
Dennis: Go ahead. If that makes you feel better.
Dennis: Are there any other questions I can help answer?
Don Noble: actually, it makes me sad
Dennis: Sorry to hear that.
Don Noble: that customer support has reached this level
Don Noble: that you do not have the tools to do your job properly
Don Noble: that you are frustrated by not being able to help
Don Noble: someone that is truly having a problem with you companies product
Dennis: Not at all.
Dennis: Do not worry about it.

Really, “DO I HAVE THE APP INSTALLED?”.

BTW, the link he sent was to troubleshoot my TV connection.

So, while I was verbally parleying with Dennis, the app started working. So, it was probably a network or similar error.

I believe sometimes, a CSR should say “I don’t know how to fix the problem.” Wouldn’t that be easier than providing useless troubleshooting steps and answers that do not lead to anything?

I will leave it for you to decide?

Final Thoughts with Don Noble

Anyway, I am back in Middletown, Connecticut for some business and I could not help checking up on my good friends, FedEx. If you remember, I wrote about what I considered a customer service failure at FedEx. I received so many comments on that post, it demanded that I do a follow-up.

So, while in Middletown, I needed to overnight two packages. I prepared the contents and went to Fedex.com to print out the waybills. I then began my trek to find a FedEx envelope.

The last time I did this, I only found one box that had any supplies in it (in fact, it was fully stocked). So, I started there. I found one envelope and nothing else. I completed the envelope and drove to Staples to drop it off. I figured I could deposit the completed one and get another envelope. Unfortunately, that box was empty. I went into Staples to ask for an envelope, but their pack and ship is UPS only, so no luck.

I then went to all the boxes I went to last time to look for an envelope. As it was approaching 6:00 pm, I tried to hurry. Four boxes later and no envelope. So, I decided to wait and see if the truck had any envelopes.

The truck pulled up and I was hopeful. I felt like a kid on Christmas day. I asked, do you have any envelopes. The driver was very nice but said no, he did not have any.

So, long story short, I went home, cancelled the shipment, and went to the US Post Office the next morning and shipped my package.

Last time, I calculated that FedEx lost incremental income in the millions of dollars. This just confirms they do indeed lose income. How many people have faced this same situation and decided to not use FedEx again. Either one or one million, it is lost income.

So, to April at FedEx, or Roberto (Drinker of Purple Kool-Aid), I still consider this a failure. For all those people that read this, how much revenue and how many customers is your company losing because you are forgetting that customer service is a key (and I consider THE key) to success.

Final Thoughts and Happy Holidays from Don Noble.

P.S. I don’t mean to be targeting FedEx, it just happens that I am using their service and they failed me.

But yesterday, I decided to call an friend of mine who works with mid-size banks. Although he was adamant that he is not an expert, he does have an enormous amount of knowledge of the banking sector and was willing to share a bit with me. Here are some of our talking points with commentary (in no particular order).

1. NO NEW BANKS – There have been no de novo banks since 2010. I thought that there would be a ton of new banks as older banks are laden with bad debt, asset problems, etc. A new bank would have a fresh start and be able to borrow money from the Federal government at great rates and really jump start the economy. However, government regulations since the meltdown have increased the barriers to entry for new banks. (For the statistic minded, the breakdown of new banks is (0 in 2011, 2 in 2010, 20 in 2009, 73 in 2008, 144 in 2007 and 152 in 2006).

2. THE SBA IS DYSFUNCTIONAL - The SBA has introduced many new regulations on lending that make it much harder to receive a business loan. One change in particular is to require a lien on assets (personal and business) for a new loan. So unless you have the money or assets in the first place, you cannot receive a loan. To me, this really cripples small business creation. The SBA is supposed to help small business start and grow (isn’t that what SBA stands for) and here they raising the barriers to start a new business.

3. LIMITED LENDING – Larger banks (BofA, Suntrust, et al) all have asset and income problems. As such, they are setting the barriers to new loans very high to limit the exposure. Also, the government has set regulations for banks to increase their income diversification (reduce interest only income) and they are making fewer loans. Just a note here. Each bank sets its own rates and policies regarding loans. Although they can go through the SBA, the bank can set almost any rate, term or conditions they want.

4. NO ONE KNOWS THE RIGHT ANSWER - Although I thought this was the case, I was surprised to find it was so widespread. When banks downsized after the meltdown, many cut to the bone (means they cut too far). Many loan executives were fired or moved on and the staff left is picking up the pieces. So finding the decision maker has become harder.

5. TOO BIG TO NOT FAIL???? – This is not worded correctly on purpose. After 30 minutes, my friend and I came to the conclusion that all banks have to grow larger to avoid failing. With no new or small banks starting (and feeding into the system), eventually the consolidation of banks will result in even larger banks that cannot be allowed to fail. Seems paradoxical to me but I am only an armchair economist.

Our suggestions to small businesses: Look for regional banks with assets of $1 – 1.5 billion. Some of these banks are lending often. Also, before considering the SBA, find an SBA preferred lender that has lended consistently for the last 2-3 years. These banks tend to have a fast track process and also have few decisions makers.

As always, if you have any comments, please send them along.

Final Thoughts  with Don Noble