We all know that a business’s sales size is not the best indicator of future revenue potential for the bank. But few business bankers have an accurate but easy way to segment customers based on furture sales opportunity. One bank we have recently profiled under the pseudonym St. Helena has developed a relatively simple way to do just this.

Executives at St. Helena were frustrated to discover that they missed sales opportunities by under-serving smaller businesses with unmet needs while overserving larger businesses with few additional needs. They decided they needed a better way to assign customers to the appropriate channel (Branch RM or Commercial RM) based on need, not simply revenue band.

Although no system perfectly predicts customer need, St. Helena landed on a simple, three part filter to gauge future revenue potential for the bank and determine the appropriate service channel:

1. Are deposit volumes low, or have deposit volumes remained stable over the last three years?
2. Is the overall credit exposure low, and is the customer a high-quality credit risk? (Be sure to measure size of credit at other banks.)
3. Does the customer have limited for-fee products?

Customers who are currently served through a commercial RM but who answer “Yes” to each of these three questions are flagged as low potential and normally moved to the branch RM, while customers currently served through the branch but who answer “No” to any one of these questions usually migrate to the commercial RM. Executives at St. Helena were surprised to find how many customers were misaligned based only on these three filters. When they migrated customers, the commercial bank experienced a 72% increase in overall profitability.

Read more about St. Helena’s work and how they ensure a successful, sustainable realignment process.

I was on a call today when a member told me – twice – “I can’t afford to leave business on the table.” It’s not a new challenge. Business bank leaders have always been tasked with capturing as many revenue opportunities as possible. But the pressure now is like never before as business bank leaders have fewer good sales opportunities but still must make up for lower returns from the retail bank.

So how can business bank executives be sure they don’t “leave business on the table?” Read More »

Today’s business bankers have a difficult task. They must sell more, but they have lower risk thresholds and more high-risk customers. And as evidenced by the market chaos of the past couple of days, the economy remains extremely volatile. How can RMs help customers navigate uncertain terrain and still protect the bank?

See how one bank generates revenue by helping customers better manage risk. Read More »

The News: Capital One is one of the first U.S. banks to offer a high interest checking account for business customers: Clear Interest Business Checking. With the Clear Interest Business Checking account, Capital One provides customers with high interest rates for the first 12 months (market rates thereafter) along with a business specialist to help business owners better manage their money. EVP of Capital One’s Business Banking Peter Appello explains that Clear Interest Business Checking will enable business customers to manage their business’ money more effectively while also earning interest on their accounts. 

Board’s View: The recent repeal of Regulation Q allows U.S. banks to pay interest on business deposits. But Capital One’s Clear Interest Business Checking goes beyond a basic interest-bearing account and instead is an example of banks placing a greater emphasis on cash flow management and customer experience strategies. Moving away from traditional relationship banking, business owners are placing more value the bank’s ability to help them manage their cash flow and provide easy to use and convenient banking solutions. As businesses focus less on borrowing and more on cash reserves, leading banks are attracting and retaining their customers by providing innovative services and products that help them put cash balances to better use.

 How Can We Help: To learn more about customer needs and preferences in the post crisis era please consult our profile of business owners and the full summary of results from our multinational survey of business owners.

 Read the full article at Market Watch.

Business banks continue to experience elevated risk of customer default, and bank leaders debate the best way to address businesses that start to exhibit signs of distress. See how one bank creates the role of dedicated credit remediation RMs to nurse 36% of remediated credit customers back to health. Read More »

Sixty-two percent of member executives declare targeting high potential customer segments as a major focus this year.  As you know, in response, the BBB is investigating how leaders  can better serve and sell to businesses that sit on the threshold between the conventional Small Business and Middle Market divisions.  At the heart of our research sits a fundamental question. Are these businesses – with unique needs, different decision making structures, and different appetite for bank products – the culprit behind bank challenges? Or are the challenges banks experiencing with the in-between businesses the symptom of a fundamental shortcoming in business banks’ current model?  Read More »

Members frequently ask us, “How can we find businesses that want to borrow?” These banks are now on the hunt for the elusive trigger event that can accurately predict when, why, and what a business needs from a bank. To help answer that question, the Board surveyed owners of small and mid-sized businesses to understand what banks could do to predict (and act on) customers when they were most likely to buy. The results: businesses that recently experienced a high degree of financial change (regardless whether or not that change signals a positive or negative event for the business) were significantly more likely to demand credit and cash management in the future. Read More »

Early findings from the Board’s 2010 RM Survey reveal that just over 60% of all sales visits made by RMs today are to another bank’s customers.   Consider how the world has changed. Five years ago, an average of 40% of an RM’s visits were to prospects.

It is no wonder that most of my recent conversations with member executives have focused on the “out of control” nature of the loan business.  “The only way we are going to grow is by taking names away from our competitors,” is how one executive describes it.

Conventional wisdom says that poaching can be difficult and inefficient; cross sales are normally the easier and more effective way to grow. In fact, Board research tells us that very few RMs generate value for each hour they spend prospecting. But the reality of today’s low-growth environment makes poaching  a necessary evil, and so RMs are dedicating 50 percent more time to the activity than they did five years ago. Read More »

When I talk with members about the small business sales process, they often will say they aspire to be like Amazon.com with its customized recommendations: “As someone who likes that, you may also like this”. Of course, we fall short of the ideal, particularly in the branch. But what Amazon teaches us is that small improvements to the sales process can go a long way toward providing a customized experience for customers – and boosting sales. Read More »

Many executives tell the Board that they are gearing up for growth in credit. To grow sustainably, however, banks will need to invest in better coordination between the credit and sales functions, a perennial challenge.

Read More »