Chief Investment Officer
Commercial Loan Automation
making your sales process work
As 2006 unfolds, the importance of deposit gathering persists. As a follow up to my October article on the topic, here are additional thoughts from our readers:
Graham Painter, EVP of Sterling Bank TX, shares that the bank had much success with a one time step-up 18 months CD. Those are especially popular during rising rate times, as they remove one barrier to customers' tying up their money for the duration of the CD period. This product proved popular among school districts and other municipal agencies that must demonstrate responsible investment practices.
John Hecht, EVP of AMCORE Bank, suggests exploring ethnic communities and branching into high-savings groups that are under-served by others. Such niche strategy is effective in many cases and provides all of us with food for thought. Another such niche offered by a South Carolina bank is the "pre-need" business with funeral parlors, which is deposit-rich.
Mike Shryne, SVP of M&T, recommends to focus on deposit customer retention more than ever to reduce price-based competition. He also suggests to build employee retention, as it is closely correlated to customer retention.
Duane Dewey, EVP of Trustmark, points out that statistics show that selling investment products accretes deposits to the bank. He recommends specific cross-selling programs to couple investment products with deposit products, since these accounts are much "stickier" and the overall relationship grows faster and for a longer period of time without diminishing the deposit base.
Other shared successes include returning to the Prime Based CD or offering a relatively high yielding business savings account (3 1/4%) that experiences high levels of retention.
Thanks for all these great ideas. I'm sure all of us will benefit from your insights by either executing them or spurring further discussion and creative thinking amongst us!
This week's article deals with a topic of wide-spread frustration - executing effectively a sales process. I believe that the lackluster results that many banks experience emanate from a combination of lack of true management commitment and the reluctance to approach the subject with the comprehensive solution it requires (vs. piecemeal execution). The article below offers a perspective on the myriad of elements that need to come together to ignite and launch an effective sales process. As always, your views would be welcome and appreciated.
Making Your Sales Process Work
Our industry spends millions of dollars each year on installing and refining sales processes in various lines of business, most notably Retail. In recent years, Commercial Lending and Wealth management have also been involved in structured sales processes, proving yet again that, despite their claims to the contrary, both lines of business could use significant enhancements when it comes to sales discipline.
Despite the huge investment of money, and, more importantly, management and employees' time and emotional energy, the returns have been meager in most cases. With few notable exceptions, the results did not meet expectations.
I strongly believe that sales management is a key competency for all major lines of business in banks. I believe equally strongly that installing a sales culture is doable, not overly complex, and does not require major technological innovations to be successful. Effective sales management does require an organizational commitment that starts at the top. This is true for any enterprise-wide initiative, and this is no exception.
The sales process is a comprehensive approach to sales execution, tracking and rewards. It goes well beyond training, and it is a critical success factor to effective sales execution to have all the pieces in place. This article outlines my view of the necessary components to achieve breakthrough sales results in any line of business.
In general, the following elements must be in place:
- Clear and high expectations
- Effective employee selection
- Effective and frequent measurement system
- Rewards and recognition programs
- Incentive compensation to support the process
- A downside for lack of performance
Mutual and consistent reinforcement of the sales process across these dimensions will support effective and continuous execution. This is a critical but not sufficient element to the process. The most important component to the success of the sales initiative is unwavering management commitment.
The thirteen elements described below are designed to assure that all the components outlined above are addressed such that all bank resources mutually support and reinforce the sales initiative for maximum impact throughout the organization.
Clarify role definition of key positions
As a general principal, employees should not be expected to work routinely more than 8 hours a day. They are typically fully utilized, and many perceive themselves to be stretched doing their daily tasks even before you institute a sales process. Asking them to do more by way of needs-based selling requires freeing capacity of existing personnel or adding staff.
In order to free capacity that is already embedded in the work-force, a clear definition of the role that each key position plays in the sales process is essential. The positions - teller, banker, operations supervisor, branch manager etc., -- need to be reviewed. A very crisp definition of job content and expectations should be developed. Often, job descriptions are too mealy mouthed, general and not truly descriptive of the job requirements. They sometimes aren't aligned with the position expectations, which makes holding employees accountable particularly difficult. Clarity and specificity are essential. In addition, separating tasks to ensure that the most qualified person handles each major activity is helpful. For example, branch managers will be asked not to help out on the teller line. While they may perceive this to imply service impairment, appropriate job definition for the tellers and their supervisors should assure that service levels are maintained or improved. Equally important, the manager will be freed to manage the sales process within their banking center.
Consider staffing mix given role definition
Having defined the discreet roles of each position, you need to look at their respective productivity and recommend changes, if appropriate, to staffing models and current staffing levels. For example, if your loan officers do not originate at least $10 million of new commercial loans annually or manage a $25 million portfolio, they might not be productive enough. If, conversely, they carry a $100 million of commercial (NOT commercial real estate) loans, they might be too stretched. Similarly, tellers that produce less than 2500 transactions per month aren't fully loaded.
In addition, specific issues that need to be addressed regarding the employees' perceptions of sales and service might be identified. In other words, some might feel that "sales" is a dirty word and it implies taking advantage of unsuspecting customers. Clarification of your ethics expectations associated with the sales process is important, as well as the expectation of unwavering integrity during execution.
Identify key behaviors by position
The execution of the sales process depends on each position consistently delivering a specific set of non-negotiable behaviors. For example, a simple behavior such as mentioning another product each and every time a teller is faced with a customer (even if the same customer comes in twice a week) is key to a meaningful increase in needs-based sales. These behaviors should be spelled out for each position, and coached in the context of needs-based selling to assure that all employees understand the ethical foundation of these behaviors. This is true for all functions that touch customers, including phone banking, mortgage processing etc. each customer contact provides an opportunity to further meet their needs by selling them additional services and products they need but don't own. It is the bankers' obligation to do so in order to fully meet each customer's needs across the system.
Formalize key behaviors by position
Once all behaviors are identified, they will be formalized in terms of expectations of frequency, definition of success (results) and the metrics best utilized to measure both the leading indicators (the behaviors themselves, such as sales per day) and the lagging indicators (the results, such as profit per sale).
Identifying only a small number of indicators (say, no more than five) is important. A large number of indicators dilutes the relative importance of each activity or result and often creates confusion by sending mixed signals to your sales forces. They will follow your leadership if you tell them what needs to be done in order to achieve the results you expect, so clearly putting forth expectations and calibrating activity levels to yield the desired results are the secret to success.
Train your people: Develop behavior modification modules by position (or buy them)
This component involves building and delivering the training needed in order to best equip your employees with the tools needed to effectively execute the sales process. All employees should receive the appropriate training such that everyone is speaking the same language and that all have an appreciation for the challenges of other groups or team members. I recommend that training be administered quickly, even if it causes a temporary drop in sales, to assure that the process doesn't linger, is focused and that momentum quickly builds following the training.
You might need to refresh your training modules from time to time as well. I also suggest that managers are trained first, to ensure immediate follow up once the other positions are trained. Last, training is most effective when it is delivered by successful managers who led effective sales forces. Their stories, examples and overall understanding of the process give them additional credibility and bring the training to life. They might not be your best trainers, but they are the best spokespersons for the process. This is one area where training should not be left to the trainers, even if they are better skilled at the discipline of training.
Develop key measurements and set appropriate benchmarks
What gets measured gets done. Therefore, much thought should be given to the careful selection of a handful of measurements for each position and for the entire business, to assure that the focus is placed on the most impactful elements. Select some measures where industry benchmarks are available, such that progress can be assessed relative to "best of breed", and that proper expectations can be set. Too often a team is running the mile in 15 minutes, but they feel they are world-class. In reality, they aren't even in the hunt. Comparable metrics help bring perspective into what's possible and what your competitors are doing.
Identify daily reporting requirements and work with the team on completion dates
Frequent reporting of sales results is a most powerful tool for motivation and coaching. Daily reporting provides (almost) instant feedback to retail bankers and managers on their performance, thereby allowing for swift mid-course corrections and immediate congratulations for a job well done. Similarly, even commercial lenders benefit from weekly reporting, even if their sales cycle is much longer than the typical retail sales cycle.
An important part of the sales management process is to catch people doing something right, and frequent reporting is essential to achieving that objective. I would not compromise on the frequency of reporting. It helps achieve several results:
- Immediate recognition of stellar performance
- Quick recovery from non-performance (one can recover from one bad day and still make monthly incentives; this isn't possible when a month goes by and only then one gets the report on their performance)
- Building a sense of urgency
- Providing more opportunities for recognition (you now have 200+ opportunities to recognize best performers vs. 12 in the case of monthly reporting)
A frequently voiced objection is that reporting will be difficult to achieve, time consuming and expensive. I am confident, based upon previous experience, that one can find quick and inexpensive solutions to report daily production. Reports can be generated off the main systems by downloading all transactions onto another server and manipulating the data offline.
The key here is to identify what to measure. Only a few items need be selected because too much information results in each individual prioritizing the metrics for themselves, thereby replacing their own judgment for management's. These reports should reflect the major components of the incentive program, such that team members can assess daily where they stand relative to collecting incentives, and what they need to do to earn a pre-determined reward.
Formalize and structure a feedback process
High achievers thrive on feedback. The knowledge that senior management notices their accomplishments is an even bigger motivator than dollars in their pocket. Therefore, formalizing expectations of the feedback process is essential. In addition, mid-course corrections and coaching may also be called for with some employees. Swift feedback is much more impactful than quarterly sessions, and coaching can be done more effectively utilizing the information developed in the previous step.
Management's job is to incorporate the feedback process into their daily routine as a non-negotiable item. I used to write at least 25 recognition notes a day to my bankers. It was part of my own job expectations. Management feedback is invaluable and cannot be compromised. It also cannot be overdone. I found that stellar performers never tire of getting recognized by management. It doesn't get old, nor does its value diminish over time. There is no such thing as too much recognition for great sales people, or too much encouragement for aspiring employees.
The feedback process also ties into the employee selection and coaching process.
Build inspection process including sales meeting observations
The words "coaching" and "inspection" are overused and under-executed. Setting specific expectations for sales process execution includes structuring and managing the inspection component as well, since it is often not fully formalized. It needs to be, so that management is present during sales meetings, coaching sessions and overall throughout the bank and at sales meetings at random, to observe, congratulate and coach employees first-hand. This is another integral element in the process that compounds the reinforcement loop.
At Frost Bank, the CEO, Dick Evans, regularly attends the commercial lenders' sales meeting each Monday. At BB&T, the President, Kelly King, does the same with the retail group. Their presence not only underscores the critical importance of the sales process; it also motivates the participants to bring results and not have "goose eggs" at the meeting.
In general, the cornerstone of coaching is observation. Therefore, effective management coaching involves observing the sales force interacting with customers and prospects, then following with feedback, encouragement and suggestions for improvement. Many feedback loops lack this component, and, consequently, the coaching process is anemic at best. Participation and observation are indispensable to effective coaching.
Develop communication vehicles for sales process reasoning, integrity, moral foundation, expectations, rewards
Clarity of communications is essential to the success of the sales process, because folks hear what they want to hear, and many will misconstrue the process and miscast it if they don't hear from management the purpose and ethics of the process. Further, communication is critical to the joint acceptance of the unwavering commitment to this process, and affirmation that this is not a fad but a cultural imperative, and that management is behind the enhanced sales process all the way.
What you say at this point is very important and will be misinterpreted whenever possible, so we need to carefully craft the communication and think through its frequency and format, as well as who will do the communicating.
Last, consistent and continuous iteration of the purpose and the commitment to the sales process are critical. The "this too shall pass" syndrome lurks at every lull in the communication stream, and can only be neutralized and, ultimately, eliminated through much repetition.
Develop rewards and recognition process
As mentioned, reinforcement through feedback, incentives and rewards and recognition is a cornerstone of any effective sales process. Having fun isn't always a major part of the banking business, but it ought to be! Wells Fargo's annual celebration at Disney World is legendary and caused many a performer to outdo themselves just to ensure their presence in this elite group year after year. I have found that to be true time and time again, in different contexts. What people were after is being part of the best of the best, and the environment and rewards were important but secondary. Develop a program that will build on past successes but also be consistent with the culture and style of the organization. This is a golden opportunity to inject more fun into the enterprise, and it should not be missed.
Note: Employees have the most fun when management makes fools of themselves (which isn't a challenging task...). You will build credibility by entertaining your winners and best performers, and win both their hearts and minds in the process.
What gets measured gets done, and what you pay for gets done as well. Incentives are one of management's most powerful tools. They're also tricky, because employees will do precisely what they are incented to do. Therefore, if incentives are not extremely well thought out, the results will be behaviors that may not be in the best interest of the shareholders. Incentives need to be meaningful, simple, consistent, flexible, easy to measure and fully consistent with shareholder value.
Paying significant incentives can be challenging, but it is an important tool that helps separate the super performers from the average ones. Also, incentives must be simple enough so that every employee can find out at any moment where they stand and what they need to do to earn a specific amount of money. This clarity creates motivation and changes behavior. Without it, incentives are relegated to recognition after the fact, and not a precursor to performance building.
Building the next stage of the sales process is a major investment of time, money and heart. It is also a signal to employees that the company is indeed making a significant investment in them and their skill set. Given the magnitude of this investment, it is more important than ever to curb turnover and enhance best performers' retention. One way of doing that is by hiring the right people in the first place. We will work together to identify who are the right people for the Company, how to attract them and retain them, and, most importantly, how to identify them during the hiring process so that the "hit ratio" of successful hires improves.
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The process outlined above isn't easy to execute. Sales success often requires folks to do things they are uncomfortable doing, activities that don't come naturally. If they did, everyone would do it. This isn't easy work, but the rewards are huge for all constituencies customers, employees and shareholders. While not all will applaud the sales discipline, many will benefit from it and the overall organization will prosper. Effective sales call for people to achieve beyond their self-expectations. With management's help, training and coaching, employees reach beyond what they think is possible, and the psychic and financial rewards for such achievements are considerable. There is no glory in being average. A successful sales process gives everyone the opportunity to reach for the stars and leap tall buildings with a single bound, which is a reward all to itself.