Commercial Loan Automation
Small Business Banking
BirdsEye Viewthe bank's responsibility for sales success (second in a series)
Mike Weinberg wrote an excellent book about sales to new customers. The first article I wrote, summarizing how the salesperson and their management can improve results and what stands in their way, has been published. This article outlines the bank’s obligation to help the salesforce be successful.
Here are Mike’s ideas, comingled with some of my own.
1. Sales follow strategy.
The foundation of effective sales is clarity. It is near-impossible to be successful without a crystal clear definition of success. The sales team’s job is to take a clear strategy and execute it to perfection in the marketplace. Here’s what they need to know:
• Our reason for existence
• The direction the bank is headed and why it’s the right course
• What we sell and why we sell it
• Which markets to pursue and where we are positioned in those markets
• The competitive landscape and how we stack up against competitive offerings, why we’re better or different
• Why our pricing model is appropriate for the value we create in the markets we’re pursuing and against the competition we’re facing
• AB: Our go-to market strategy
• AB: Our brand promise and what we need to do to ensure our sales approach delivers on that promise
Many banks do not have clear answers to these questions, but they are essential to optimize the salesforce’s chances of success in the marketplace as well as support the bank’s strategy and brand identity.
2. A low view of sales: dumping garbage on the sales manager’s desk
Many banks are simply not sales driven. This is especially true in the retail space, as well as many wealth organizations. How many times have you heard one or more of the following statements:
• The salespeople wastes premium items
• The sales team isn’t using the materials we gave them
• The sales team doesn’t act on the leads we give them
• Your people do not attend corporate meetings
• Did you see the proposal we sent out? it was awful
• She tipped 18% where our policy clearly states 15%
• The customer complains that the banker didn’t return their call timely
Treating the salesforce as the problem doesn’t help, even if the team isn’t performing to perfection. The bank’s job is to help make them successful and give them the respect they should receive.
3. Heavy service burden and a hybrid hunter-skinner sales role
Weinberg says this is the single biggest issue detracting from new business development success. The sales team spends too little time proactively prospecting and therefore doesn’t get the results. All too often this is because the bank places too heavy a service burden on the salesperson, investing too much time in administration, fighting fires, handling customer service issues and shepherding projects. It’s critical to keep current customers happy, but executive management can’t have it both ways. Prospecting is time consuming, and salespeople need to be free to execute on working target prospects.
The hybrid hunter-skinner model that dominates smaller banks ensures prospecting will fall by the wayside. Appointing portfolio managers for customer servicing and expecting the salesforce to truly sell is the first step to success across all salesforces, even retail bankers.
Consider figuring out the following: How many more deposits, loans, investments etc. will you get if the top 5 bankers in each salesforce were free to do nothing but sales to new and existing customers, spending at least 75% of their time selling?
4. Illogical and unhelpful compensation plans.
AB: I have seen SO MANY incentive plans that are strongly misaligned with corporate objectives. We discuss this at the Forums often. Management says they want deposits, but incentives for loan production outweigh deposit incentives 3 to 1. Guess what good salespeople will sell? Loans, of course.
Compensation is a sticky topic because you’re dealing with people’s livelihood. Everyone gets nervous when there are discussions about changing it. Yet, smart salespeople work the compensation plan. Period. It’s in the best interest of the bank to ensure the plan drives the behaviors we want.
Weinberg has two pet peeves about incentives:
• Too large a portion of the total compensation is fixed (base). There is not a wide enough gap between the best and worst performers. Studies show that top salespeople are motivated by competition, return on effort and the opportunity to earn more money. Weinberg concludes that the more variable the possible results, the more variable the total compensation should be. AB: Weinberg does not address the risk associated with bad behaviors motivated by incentives, but it is a real concern. There are ways to handle it through claw-backs, caps on high-risk assets etc. Nevertheless, this is a very real concern in our industry.
• Many banks give commercial, wealth and business bankers a book of business. Incentives are then calculated based upon total revenue. Weinberg wants to differentiate between revenue created from existing customers and revenue generated from new business. He says: “If I’m fat, dumb and happy with a great portfolio of accounts (either given to me or acquired by me), and I’m enjoying the living the portfolio throws off, explain to me why I wouldn’t over-service my existing accounts. The bank might say it wants new customers, but the compensation plan is not set up to encourage the behavior management says it wants. This misalignment will yield behaviors consistent with the compensation plan and not with the words management utters.
5. Mistrust and micromanagement
It’s Management’s responsibility to create a culture that promotes sales success. Sales environment should be fun, competitive, results-focused and heart-engaging. “It is as much about the heart as it is about the head.”
In our industry, ethical sales are particularly important, because trust is our number one asset. Use this motto, borrowed from Alan Weiss: “If you cannot improve the client’s condition, then you should stop taking the client’s money”. Encouraging salespeople to do the right thing and to find winning combinations for the client, the shareholder and themselves is a great nurturing ground for effective and motivated salespeople.
“Sales is not like any other job. It’s about people connecting with other people. When your banker walks into a customer’s warehouse, their demeanor, their pride in the company, their energy level, their confidence, their ability to connect with the buyer all matter – a lot. Salespeople have to believe in their company, and they must have their hearts engaged to succeed”.
AB: Weinberg’s summery is a perfect one. Our best bankers are passionate about what they do and want to make a positive difference in their customers’ lives. It is our obligation as their employers to give them the trust and passion they deserve, to show them the unique and all-important role banks play in our economy and in our communities, and to compensate them to do the right thing.