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First Chicago Corp.'s new line of checking accounts is getting good grades from bankers for business strategy, but the company has earned an "F" from marketers for the handling of its public relations.

From the streets of Chicago to Capitol Hill, consumers, community activists and politicians are decrying the new line of accounts because several include a $3 service charge for some customers who use bank tellers for transactions that can be done through an automated teller machine.

Already, rival banks have begun ad campaigns poking fun at the charge and urging consumers to move their accounts.

Marketing and public relations experts are cringing over the way the company handled the announcement and are criticizing the bank for failing to anticipate customer and competitor reaction.

The biggest problem for First could be that, while its executives believe they've greatly simplified customer accounts, even some sophisticated consumers remain confused about the changes.

Instead of fading, the uproar over the changes-announced last month-has increased. Members of Congress are warning of boycotts, and competitors are posturing with advertising and gimmicks, hoping to capture accounts at First Chicago's expense.

"Obviously, it's a public relations brouhaha and marketing nightmare," said Mary Ann McGrath, associate professor of marketing at Loyola University. "The problem is, it's very complicated. When you get the whole picture-if you really can remember and understand the whole picture-it's not so bad. But the problem is, no one will pay attention to or remember the whole [picture]. They just remember $3 and a teller."

Strangely enough, First Chicago marketing executives were aiming to grab some headlines for the plan. With more than 650,000 customers to be notified of the new accounts by mail, the bank wanted to make sure the announcement didn't wind up, unopened, in customers' trash.

So, First Chicago invited reporters to a breakfast with President Leo Mullin, where the new accounts were unveiled. Officials said they expected "$3 headlines" the next day.

"The media wasn't an accident," said Senior VP Robin Foote. "We wanted to announce the new products in the press because, frankly, we were concerned [customers] were not going to read the mail."

Added Ms. Foote: "We don't have to worry about that one. We solved that problem."

But within a few days, as outrage mounted, Chairman-CEO Richard L. Thomas was forced to step in.

He sent a letter to customers stressing that, because more than 80% of customers have four or fewer teller transactions each month, most customers won't incur teller charges. The mailing, which included the company's press release about the accounts, also blamed the media for ignoring the benefits of the new accounts and confusing the public.

Barbara Molotsky, president of Bozell Worldwide Public Relations' Chicago office, who maintains checking and savings accounts with First Chicago, is still angry that she found out about the changes in the newspaper.

"Then, I got a news release more than a week later and there was really no explanation about what it meant for me," she said. "Even the letter I got was not very good. I wonder if they did any testing with their customers to see what the reaction would be."

First Chicago officials said the bank conducted extensive surveys for 18 months to determine customers' banking habits and preferences. In October, the bank even scrapped a plan to introduce new checking accounts and fees for fear that any misstep with an ambitious program could be damaging. A plan to issue service credits that could be redeemed for banking services was considered too complicated.

Instead, First Chicago shaped the current offerings, reducing the bank's consumer checking accounts to five from seven. The bank figured the simplified offerings would be easier to grasp. Tellers and service representatives said the new plan was appealing, a First Chicago spokesman said.

Nonetheless, plenty of customers remain confused. The bank said it plans to walk customers through the new system. It has set up a hot line and instructed tellers and customer service reps to take time to help anyone still befuddled.

Still, some marketing and public relations professionals contend that, by delivering its message to customers through the media, First Chicago missed the chance to fully explain the new accounts and present them in the most flattering light.

"You talk about all the bells and whistles, all the terrific things you have to provide," said Judith Ladniak, VP of Din & Pangrazio a Chicago-based marketing and communications company, laying out a hypothetical campaign. If using automated teller machines is an easy way to avoid fees, then stress that, said Ms. Ladniak, who is also president of Chicago Financial Advertisers, a trade group.

"It seems to me, you don't want to let reporters think they caught you. It just makes them excited," said Philip Bromiley, associate professor at the University of Minnesota's Carlson School of Management.

Now that the damage is done, one marketing expert said that, if the bank can validate its reasons for instituting the $3 fee, it should stick with the plan and explain it to customers.

"If you can't, then change it," said Rick Fischer, head of the public relations program in the University of Memphis' department of journalism.

With the benefit of hindsight, First Chicago executives concede they would do things differently. But they are not backing off the $3 teller fee.

But that doesn't satisfy Bozell's Ms. Molotsky. "They're definitely going to lose business," she said. "I had another account [elsewhere] I was going to close out and consolidate" with her First Chicago accounts. "Now," she said, "I'm going to keep it open for a while."

Ms. Mooshil is an associate editor for Crain's Chicago Business.

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