Capital One's Next Challenge: Persuade ING Direct Customers to Stay

Many Upset By Acquisition, but How Many Will Actually Leave Unclear

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After acquiring online banking company ING Direct, Capital One Financial Corp.has put itself to the difficult task of transitioning and retaining a customer base that has largely expressed no interest in staying.

Reactions to the $9.2 billion acquisition, which closed in mid-February, on social-media sites like Twitter from ING Direct customers were mostly negative, with many announcing they had already left ING Direct or were looking for alternatives. Despite the diffiiculty, some experts said Capital One will be able to rely on a powerful asset, customer analytics, to ultimately make the deal successful.

"Capital One and ING Direct are two radically different brands in terms of personality, culture and customer expectations," said Jim Garrity, CEO of marketing consultancy firm BridgeTwoWorlds and former chief marketing officer at Wachovia.

While ING Direct customers praise their bank for its great customer service and no-fee checking, many people see in Capital One practically the opposite -- high-fee credit cards and annoying commercials. "They have to leverage the best of both brands, but I can't think of any point of intersection," Mr. Garrity added. "It's a real challenge."

Public distrust of large financial institutions since the crisis of 2008 and the subsequent government bailouts have also dogged the transaction.

At this point, ING Direct customers are sure of only two things: The ING Direct brand name will disappear within the next 12 months; and they can make free withdrawals from Capital One Bank ATMs. But Capital One has remained evasive about its integration strategy and has provided no firm guarantee that it will maintain the perks ING Direct customers have enjoyed for a decade.

"Capital One has no current plans to change ING customer accounts," Amanda Landers, a spokeswoman for Capital One , said in an email. "Customers will still enjoy the competitive rates, no fees and the same experience they've come to know and love from ING Direct." Customers remain skeptical, though some are giving the company the benefit of the doubt and are willing to wait and see.

"Creating harmony in company cultures and in customer relationships will require Capital One to respect ING employees and their customers," said Susan Waldman, partner in strategic services at branding firm ZilYen. "They will need to listen carefully, respect the qualities and practices that created its success, and find creative ways to bridge the gap between ING's approach and Capital One 's. With both groups, Capital One will have to work quickly to build trust and relationships based on mutual needs."

What may matter more to Capital One in the end is homing on the customers with the highest return, and its experience with customer analytics may prove to be key.

"Capital One has historically been one of the most respected companies in the area of customer-based analytics," said Wes Nichols, CEO of MarketShare. He added that predictive analytics, which can help determine decisions such as which products should be offered to different customers, is becoming increasingly important in acquisitions. In Capital One 's case, it will play a key role in understanding customers, products and cross-selling.

It is too early to tell whether the wave of customers' complaints on social-media sites will translate into defections. "If it's their most profitable customers leaving, there may be a problem, but if it's not, it may be good riddance," Mr. Nichols said.

Whatever happens, experts agree that this will make a great case study in a few years. "Capital One is known as a very strong marketing organization," Ms. Waldman said. "I am sure they understand what they are up against, and will do everything possible to make it a case study on what to do instead of what not to do."

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