The number of hours required to maintain a single small business banking relationship has grown by 70% since 2004.  And despite banks’ best efforts to increase sales capacity, the service-related demands of today’s small business owner mean that RMs continue to struggle to find time for sales.  Today’s RMs are working longer simply to maintain the customer relationships that they have, and that necessarily means that they have fewer hours to devote to new customer acquisition and sales.

Long-time BBB members might recall a tool that we developed called the “Relationship Tax Calculator,” designed to measure the number of hours that an RM must spend on non-revenue generating activities to maintain an existing customer relationship. These are the tasks, such as administrative work or customer service, that are mandatory but that generate little to no new revenue for your bank.

We recently revisited the Relationship Tax Calculator to understand how the number of hours demanded per customer had evolved over the years.  As we guessed, the tax had gone up for small business – but by much more than we had expected. Small business RMs now must work 14 hours per year, per customer to maintain their existing portfolio, up from about 8 hours only a few years ago.

We see two potential solutions to avoid the trap of the relationship tax and to grow new revenue:

• Assign Account Teams, Not Individuals, to Manage Portfolios: A single, generalist RM cannot manage the complexity of a large portfolio and also generate new business. Surround portfolios with a team of individuals to better distribute the administrative workload, better serve customers, and boost sales.
• Embrace Service to Sales:  The amount of RM time existing customers consume has skyrocketed. To avoid a corresponding decrease in sales, banks must find a way to transform routine service interactions into sales opportunities.

We will explore the increasing relationship tax and the implications for banks further as part of our upcoming webinar on the emerging trends and forces shaping the business banking industry this year. We invite you to join us. Please visit the BBB website to register for the webinar, and to learn more about the Relationship Tax Calculator.

Starting your role as a CFO during boom or bust economic times inevitably impacts your career.  According to a recent article in the CFO Magazine, CFOs who enter the labor market during an economic downturn tend to enjoy less success than those who begin their careers in a buoyant economy.   These recession-time CFOs tend to face more internal and external head winds that are not under their control.  Due to uncertainties in the business environment these CFOs are further held back by their conservative management styles, spending less on capital investments, and research and development.

For business banks this is a clear opportunity to show value; few other business customers have a clearer objective. New-to-seat CFOs need to show good results to their senior management teams and they need to do this quickly.  Helping these CFOs succeed in their jobs can be hugely beneficial for the overall health of the relationship and future earnings for the bank.

But, helping these CFOs won’t be easy.  Recent Board research reveals that when an RM interacts with a CFO as the primary point of contact, the expectations of the RM are very high.  CFOs want to challenge the banker on the business needs and the RM must challenge the CFO on the best way to address them.  This tension demands that the RM be equipped with great solutions and great knowledge of how they deliver value.

Learn how your RMs can succeed in these critical CFO interactions by showing value where it is most needed.

Interested members should also read how Weymer Bank focuses on helping customers reduce a key cost element —interest rate exposure—thereby convincing them of the value the bank can add beyond traditional loan and deposit products.

Small business owners are relying more and more on web/online channels to make decisions about purchasing credit and other banking products before even talking to a banker.  Banks that miss the mark online with the small business segment are quickly eliminated from the consideration set.

To gain a better understanding of how banks effectively position their small business credit products online, we conducted a comprehensive review of line of credit and term loan product offers as they appear online at 18 of the largest US banks. We found that the key differentiating factors relied on how clearly banks communicate their ability to meet customer’s financial needs in online product descriptions.

These banks were able to convey their ability to meet customer needs by:

• Providing detailed credit and term loan product information including needs addressed, key features, rates, terms and conditions, and etc.
• Strategically naming products to highlight key features and customer needs addressed.
• Highlighting unique capabilities and products developed for specific customer segments.

Board members review the full report of online credit and term loan product offerings from 18 of the US’s largest banks.

Banks around the world are facing huge political pressure to support small businesses.

But meeting the needs of small businesses is no easy task when you must also drive revenue for the bank. Small businesses have the greatest appetite for advice, but they also generate less value for banks.

So how can banks meet the twin mandates of serving businesses and growing revenue? Read More »

BBB in conjunction with CEB TowerGroup is pleased to announce the launch of our new Technology Analysis product.  Technology Analysis is a comprehensive review covering the lifecycle of an investment decision across 12 components, from the initial research phase through to the vendor selection.  Technology vendors will be assessed across 94 financial services technology categories. 

The offering includes a Technology Spending Forecast, an Anatomy of a Best-in-Class Technology vendor and discrete recommendations on Best-in-Class technology vendors based on your firms’ priorities. 

In conjunction with the launch, we are highlighting specific technologies each month and providing you an opportunity to provide feedback on your current technology vendor.  In return for your time, we will provide you with a complimentary copy of the final assessment. 

Board members, take the survey on payables automation

Today’s competitive market augurs the return of RFPs – when middle market customers solicit and select banks based solely on price, not the bank’s services or unique value proposition.

How can business banks avoid the RFP trap and set themselves apart from competitors? Read More »

Sales performance is as much a function of individual productivity as it is about managing an organizational ecosystem that helps sustain optimal performance.  This ecosystem includes factors such as manager coaching to help direct RMs, incentives to make sure everyone works toward common outcomes, and sales tools to make sure everyone has the resources to sell and serve customers.

But these factors alone will only get you so far.  True high performance requires that key components of your ecosystem are pointed toward a limited and specific set of activities.  For example, we’ve found that best-in class sales ecosystems include a manager coaching program that:

1. Tailors coaching conversations toward the key weaknesses in RM skill sets

2. Encourages a regular and face-to-face dialogue with clear next steps

3. Cleary distinguishes coaching from other management routines

To help you assess and measure the extent to which your sales organization is aligned with the right attributes across key areas, we’re pleased to announce the launch of the Anatomy of a World Class Relationship Manager Sales Force.

Understanding the drivers of RM performance as distilled from our benchmarking work across the previous two years, we’ve identified 22 critical areas which impact sales performance and further catalogued best practices within each to help you determine your gap-to-best practice levels.

Stay tuned across the coming weeks as we share some of the other 22 areas we’ve uncovered and key attributes within each of them to help differentiate standard from best practice.  In the meantime, if you are interested in learning more about all 22 sales capabilities and/or administering this assessment across your own organization please contact your Account Manager or me at merchana@executiveboard.com.

As you might recall from last week’s post, nearly 40% of today’s RMs operate as de facto specialists. They excel in selling either credit or deposit products, but not both.

40% is a large portion of your sales force and begs the questions:

A)    Should you enable and even encourage this de facto specialization? or

B)     Should you strive to make every RM a generalist who can sell both product suites equally well?

We believe the former.

Specialization suggests a trade-off. But we’ve found that small business RMs who specialize in one area don’t dramatically underperform in the other:

• Small Business Deposit Masters (our term for RMs who outperform in deposit sales) generate 75% more deposits than “average,” generalist performers but only 5% less credit.
• The same is true when we look at credit specialists. Small Business Credit Masters sell 60% more credit than average performers and only 5% fewer deposits.

Not a bad trade-off.   

Join our webinar next Tuesday (or Wednesday, if you are in the Asia Pacific region) to more about how to boost productivity by allowing small business RMs focus more heavily on one product area.

Instead of being the versatile salespeople that most banks want, many so-called “generalist” RMs operate as de facto product specialists. They excel in selling one type of product, but they are average (or even below-average) when selling another product suite.

It makes sense that RMs gravitate toward one product. Everyone has a “comfort zone.” But we were surprised to find that nearly 40% of RMs who we surveyed during our most recent productivity assessment excel in either deposit or credit sales. But not both.

That begged the question: What makes an RM a de facto credit or deposit specialist, and what can banks do broaden an RM’s area of expertise?

For deposits, the secret seems to be experience at the bank and the extent to which the RM leverages bank-provided resources.

Compared to RMs who excel in credit, RMs who excel in deposits (a group we call Deposit Masters) are more likely to have spent their entire careers at their current bank, in their current role. And as a result, they know how to navigate the bank and less likely to rely on practices or sales methods learned from a previous employer. Deposit Masters, for example, are more likely than Credit Masters to rely on tools, to bring product support colleagues to sales calls, and to adhere to the bank’s prescribed sales process.

What other factors might explain why an RM gravitates toward deposit versus credit sales? And should business banks encourage specialization or strive to have everyone act as generalists? 

Please join us for our upcoming webinar during which we will discuss these questions and more, and please share your thoughts about the drivers of this de facto specialization at your bank.

Source: CFC Branch Staff Productivity Accelerator, 2009

Utilizing the branch channel to serve and sell to business customers demands that business banking leaders confront what seems like branch staff’s unwillingness to sell business products.  A closer look into branch staff skills reveals a gap between the products that branch staff regularly use as consumers themselves (and hence can sell well) and the products they have never used before.  Clearly, small business products will suffer. 

In a recent conversation, a member shared,  “most of my retail branch staff have a checking account and online banking, but a vast majority have never used a treasury management product or business line of credit.” This is exactly what we discovered when we asked branch staff focused on serving business customers to rate the ease of selling a consumer versus a business product. Over 90% of these branch staff agreed that selling a consumer checking account was easy but only half agreed that selling a business loan was easy.

Getting right to heart of the challenge,  Sontag Credit Union (pseudonym) developed their  Experience-Driven Teaching program that helps employees learn about less-common banking products by using them directly. Sontag wanted their retail staff to experience the products as a customer would. Executives at Sontag knew that staff would eventually learn to communicate key products features to their customers based on their first-hand experience. The result of this teaching program was a significant increase in the sale of products that branch staff experienced directly, such as bill pay.

Board members learn more about Sontag’s Experience-Driven Teaching program here and share your thoughts on effectively utilizing the branch channel to sell and serve to small business customers.