CRM FOR COMMERCIAL BANKERS - ESSENTIAL OR A WASTE?

Commercial bankers have been clamoring for CRM systems for years. Slack loan demand and plummeting loan to deposit ratios brought the topic back into the limelight. While oftentimes requests for technology enhancements are closer to an excuse than a need, this is one enhancement whose time might have finally come.

Before you buy, here are some considerations you should give thought to:

•What is the purpose of the system and its definition of success? The CRM designation is used to connote many different purposes and functionalities, from a simple contact management system to a complex cross-referral and pipeline program. Determining in advance the primary and secondary purpose of the system and prioritizing its specifications will greatly increase your likelihood of successful purchase and adoption.

•CRM only for the commercial bankers or across the enterprise? This is a decision that has far-reaching organizational implications. An enterprise-wide CRM can help break down silos across lines of business and create a better, seamless customer experience. At the same time, a broader reach adds complexity to the program. If cross-selling and customer- centric view are important to you, broadening the reach of the CRM system is helpful. HOWEVER, without strong and vigilant management support the system will NOT transform your current organization culture. It is merely an aide, albeit a powerful one, to bringing the entire company to bear on every single customer.

•Give it away or get the line to commit to a net revenue lift to pay for the system? I generally find, both within banks and outside, that free isn’t always best. Giving systems to users without expectations of performance improvement often results in lower usage of the system since the users do not have a direct stake in its success and utilization. There are other ways to achieve adoption and a sense of ownership by the users, but this is one of them.

•Should you use a big stick or a velvet glove (or both) to encourage CRM adoption? Both positive and negative encouragement will yield higher adoption rates. Presenting the system as ÷non-negotiable also helps, and linking it to incentives ( if it’s not in the system it doesn’t exist ) is fool-proof. I recommend accompanying such effective rules with an intense internal education campaign as to the system benefits to both the individual user and to their management team.

If you have made the decision to get a system, additional considerations apply:

•Pipeline application. In addition of it being a must have for an effective CRM system, make sure the software can accommodate at leave five pipeline development stages, and define the specific benchmark for each stage. For example, having a signed agreement but not disbursed yet is a good benchmark for 90% likelihood of close.

•Call and activity listing and drill-down capability. One of the major uses of a CRM system is a more potent sales management process based on fact. Among the relevant facts are the volume, frequency and quality of customer, prospect and Center of Influence calls. A good CRM system will enable sales managers to clearly identify recent activity and drill-down the content to ensure the meetings actually took place and were successful. For example, an RM might mention calling on a prospect, but clicking on the event might have no content next to it describing what transpired at the meeting, which sheds a different light on the call.

•Start simple. Many CRM systems have very robust functionality. Start slow and simple to give yourself and your team time to learn the system and get used to it before you expand requirements and input fields. True, you are not maximizing value day 1, but in return you are improving adoption rates due to simplicity.

•Put it in the cloud. Providing remote access to the system for both input and retrieval purposes is very helpful, as many an RM and other users will find the time after hours to input the data, and managers will glance at it before they go to bed to be ready for next morning’s sales meeting. Whether you use cloud technology or other secure remote services is immaterial. Accessibility IS.

•Expect and leverage institutional knowledge. One of the main benefits of a CRM system is the transfer of knowledge from one RM’s mind into a retrievable system that can be accessed by others. It supports the notion of the customer being the bank’s customer, not just the individual banker’s customer.

•Cross-sell implications. CRM can greatly improve cross-selling across line of businesses if properly used. It is designed to provide a complete view of the customer and its bank-wide relationship, thereby clearly reflecting service gaps that can be acted upon. With strong management support and incentive consistency, the data embedded in the system can be most helpful to expanding share of wallet.

•Management commitment to using the information: weekly review of pipelines, especially what’s closing next week; and activity reports volume, quality and veracity. The mere availability of data is not sufficient. Using it and acting on it is necessary to get results and achieve behavior change. A CRM system that can yield the first condition but providing the data. Management actions upon the data are the second element to success.

•Adjust pipeline metrics to actual past results. Neutralize grade inflation or pessimism by correcting and checking probability of close against historical close ratios by RM, team or region.

•Sales management implications. There is no sales management without data. CRM can give you the information you need to properly coach your team to success. Reviewing their call reports and relationship plans as well as matching historical activity pledges to actual results are the first step to helping people get better. Without this information and without weekly reports management cannot predict future sales volumes nor can it help current RMs improve in a fact-based mode.

•Link to incentives. Money talks. If you want to achieve quick adoption of your CRM tool, link it to recognition and incentives. As mentioned, if only activities and results recorded in the system get credit toward incentives and rewards, adoption will be near-immediate.

•The devil is in the details. For example, specifying how to record all corporate names is key to effective retrieval (e.g. is it Anat Bird Company, the; Bird, Anat company; The Anat Bird Company). Setting those ground rules early on will enhance retrievability and minimize future frustration.

•Include a category for relationships that might be at risk of defection. CRM typically focuses on current and prospective customers. It can also be used to identify and pursue current customers who are subtly disengaging from the bank and, hopefully, saving them through a systematic effort.

Even if all the elements above are addressed, pitfalls are never-ending. In addition to misinformation and report fudging, many large and small details can become irritants. Even data patches and system updates, a necessary step in system maintenance, can cause employee disengagement if not handled properly. The pitfall list is too long to enumerate here, but any user will gladly share their tale of woes with you.

Having a CRM system is not going to get you the organic growth you want on its own. You will need tenacious management, positive and negative consequences, aligned incentives and reward systems, etc. etc. etc. But having a CRM system can be a strong foundation to an organizational transformation toward a stronger sales and service machine, which will lead you to happier and longer-tenured customers, plus stronger and more predictable earnings.