As the banking industry continues to lose revenue and the cost-to-serve mounts, business bank executives are turning to the retail branch to reduce costs and to sell more to small business customers.

However, this strategy will fail to grow small business revenue because while the retail branch excels in selling mass-produced products, small business customers want high-touch service and sophisticated products to meet their evolving business needs.

 The challenge for business banks is how to achieve their internal mandate to grow revenue cost effectively while still meeting small businesses’ demand for expensive service and support.

 To reconcile these two goals, the most progressive banks are leveraging the bank’s centralized resources such as risk management and sales support to help the branch deliver complex products and services in a more cost effective way.

Friedman Bank (pseudonym) is at the forefront of this trend. Recognizing an opportunity to sell more to small businesses in select industries, Friedman scales the industry-specific resources developed for commercial customers down-market to deliver specialized products and services to smaller customers through the branch. The practice helps the bank boost sales and still keeps costs manageable.

Four steps to bring industry specialization to your branch-based small businesses include:

1. Designate a Branch Specialist Champion: A single, senior point of contact is responsible for monitoring branches’ progress and ensuring that they have the resources they need to be successful.
2. Provide Specialized Back Office Support: Connecting branches to centrally-located, industry-aligned credit team members accelerates the credit sale and helps branch managers interact more confidently with small business customers.
3. Provide Coordinated, Cross-Silo Support: Both consumer and business banking regional leaders are measured on the small business segment’s financial performance, ensuring that they both reiterate the importance of small business to branch managers
4. Choose Specialization Locally: Requiring branch managers to select the industry that their branch will pursue creates accountability.

Board members, learn how Friedman Bank used central resources to transition their generalist branches to specialist branches to deliver complex business products and services.

With the pressure to grow revenue while maintaining costs, business banking leaders must rely on frontline managers to increase the productivity of their entire RM sales force. Coaching is one way banks can impact the productivity of their frontline staff while maintaining costs. However, most banks are operating under an ineffective coaching framework that assumes:

• All RMs should be coached to serve all customer types.  
• All customer interactions have equal impact on RM performance.

As part of our upcoming TowerGroup Financial Services Conference, we’re excited to outline a new coaching framework that simplifies what managers must do to deliver highly effective coaching to their RMs.

Our coaching framework challenges banks’ conventional approach to coaching in two ways:

Tailors coaching to specific customer types. We’ve found that what RMs must do or how they should act depends on the customer audience.  For example, an RMs who serves a company’s chief financial officer must be well-equipped to explain the banks’ credit standards and processes, whereas an RM interacting with a small business owner is more successful when they’re fully versed on how new products can help the business.

Focuses coaching on the specific customer interactions that boost RM goal achievement and productivity. Not all customer interactions have the same impact on RM performance. For instance, a cross sale conversation impacts a middle market RM’s performance far more than a meeting with a prospect, and a prospect meeting is far more impactful for a small business RM than a periodic review.  Therefore, a broad-based approach to coaching that focuses on all aspects of the RM job to find opportunities for improvement is both inefficient and ineffective. Managers can effectively improve RM productivity by focusing their attention on the specific customer moments that matter most.

Join us in Boston May 23 – May 25 for a presentation and discussion on this new coaching framework.

Faced with mounting pressure to hit higher goals, too often business banking executives’ first move is to hire more relationship managers to immediately boost sales production. But adding more RMs to your sales force will not boost sales growth fast enough to meet or exceed near term production goals. It takes new RMs a considerable amount of time to get acclimated to working for a new bank and the return on investment can take months to materialize.

We’ve found that frequent, high-quality coaching boosts individual RM sales production in the short and long term, yet most sales managers are too busy with their management and sales responsibilities to help RMs who need the supplemental support.

So, before you hire your next RM, why not hire a dedicated coach instead?

McKinley Bank (pseudonym) confronted this challenge head on by hiring regional coaching managers who spend over 70% of their time working closely with RMs providing one-on-one, needs-targeted, and group coaching to improve RM productivity. This role is unique in that the coaching managers are separate from and peers to the banks’ sales managers. Both sales and coaching managers work together to target RMs who needed support the most.

Board members learn how dedicated coaching improved McKinley RMs’ productivity; resulting in a 33% increase in the number of credit applications submitted.

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.

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.

If you haven’t already, now is a good time to gear your relationship managers toward customers who’ve purchased credit or cash management products in the last 12 months. 

Our Survey of Business Owners, indicates that 50% of business owners who purchased credit last year report a strong likelihood to purchase credit this year compared to 22% of business owners who didn’t purchase credit last year. Likewise, there is a 21 percentage point increase in the likelihood to purchase products for business owners who purchased cash management products last year.

This data implies that when a banking need arises, customers are likely to evaluate their other banking needs and demand additional products within 12 months of purchasing a product.

To effectively target these cross-sell opportunities, RMs should leverage customer transactional and purchasing information already tracked by the bank to identify these customers.

 Board members, learn more about how RMs can effectively target cross-sell opportunities and download a special podcast prepared specifically for your RMs to help them as they prepare for a successful 2011 close.

While uncontrollable market factors such as persistent global economic uncertainty continue to dampen banks’ revenue ambitions; how relationship managers sell and serve customers is a factor controlled by the bank.

It is imperative for banks to ensure that their primary connection with customers- the RM- can execute during critical moments with customers.

But we’ve found that 85% of middle market RMs and 70% of small business RMs continue gravitate towards actions that are actually detrimental to their goals in these critical moments.

For example: 

Middle market RMs focus too much of their cross-sale conversations on uncovering new customer needs instead of discussing the credit process and credit evaluation needed for the customer to acquire the solution. 

When engaging with prospects, small business RMs overinvest in explaining how the bank works with other customers instead of explaining the operational benefits of the purchase to the customer’s business.

To help RMs succeed, the best business bank leaders are bringing precision to the RM job by providing coaching and support through these critical moments in the customer relationship.

Join us in London on February 8^th and 9^th, 2012 for the TowerGroup Financial Services Conference where we will outline:

• How sales managers can coach RMs to identify actions that help or hurt their performance.
• How banks can provide support, infrastructure, and processes that will enable RMs to perform the best behaviors.
• Future implications for the relationship manager job.

The results are in from our 2012 Survey of Business Bank Executive Priorities.  We asked Business bank leaders representing over 30 banks worldwide to rank their top objectives for the upcoming year and rate their confidence in executing these objectives.

• 73% of Business Bank Executives running small business and middle market lines of business ranked delivering a world class customer experience as their top objective for the next 6 to 12 months.  
• Frontline support initiatives, such as improving sales manager effectiveness and creating lead generation tools followed as the next highest priorities.

Of the two objectives, executives expressed more confidence in executing on customer experience than building frontline support tools.

These top business banking priorities and areas rated with low execution confidence will be the focus of our research agenda for the next year.  We’re looking forward to it

BBB members can review the results of our 2012 Survey of Business Bank Executive Priorities.

Faced with limited demand opportunities, it is imperative that RMs execute flawlessly during critical moments in the customer relationship. However, we’ve found that 85% of middle market RMs and 70% of small business RMs gravitate to actions that are actually detrimental to goal achievement.

For example: 

Middle market RMs focus too much of their cross-sale conversations on uncovering new customer needs instead of discussing the credit process and evaluation needed for the customer to acquire the solution. 

When convincing a prospect to move their most critical financial product to the bank, small business RMs overinvest in explaining how the bank works with other customers instead of explaining the operational benefits of the purchase to the customer’s business.

To help RMs succeed now, business bank executives must provide coaching and support through these critical moments in the customer relationship.

Join us for our November 16^th webinar Bringing Precision to the Relationship Manager Job  where we’ll outline seven ways you can help your RMs, including:

• How sales managers can coach RMs to identify actions that help or hurt their performance.
• How banks can provide support, infrastructure, and processes that will enable RMs to perform the best behaviors.

Our analysis of the optimal role of the RM shows RM performance during critical moments is often the difference between meeting or missing their goal.  For small business RMs, responding to service requests is one of these critical customer moments.  But we find success or failure depends on how effectively RMs put these service requests into the hands of others in their organization.

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RMs most likely to hit goal hand off service requests to appropriate bank staff, exerting minimal personal involvement in resolving requests, while RMs least likely to hit their goals are reluctant to hand off requests and often follow up with bank staff to ensure service requests are resolved.  More than 70% of small business RMs fit this profile.

 Why?

It’s a matter of trust (or a lack thereof). Read More »