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Getting Your Bankers to Stop Selling Products and Start Building Relationships

Posted By Theodore A. Rosen, President, Expert Business Development, LLC, Thursday, January 16, 2014
Updated: Friday, January 10, 2014

Traditionally, banking has focused heavily on responding to customers and prospects in an effort to fulfill their needs. This reactive model grew out of the concept of the bank branch as the primary source of leads and business development opportunities. A customer or prospect would wander into the branch and a Customer Service Representative (CSR) would provide the ideal or optimal solution. Even dealing with small to midsize businesses, bankers were generally reactive as opposed to proactive.

In the world of commercial banking, the traditional Commercial Real Estate (CRE), bankers were similarly reactive. When a builder or developer had a project or a "deal” they chased it down and did their best to convert it to a sale. Those bankers focusing on the Commercial and Industrial (C&I) market, on the other hand, had to be much more relationship-oriented to develop and retain customers. Today, these skills are in great demand.

Over the last two decades, the world has changed. For a variety of reasons, including the rise of electronic banking and intense pressure from non-traditional bank (e.g., Ally, ING, Schwab) and non-bank (e.g., Costco, Walmart, AAA) competitors, consumers and businesses have a lot of alternatives to banks with bricks and mortar in their community. These competitors, along with the huge money center banks, can offer customers products and technology that would create a competitive challenge for any community bank.

"Often bankers who are traditionally product-focused fail to recognize that, with small and midsize businesses, relationship can almost always trump products."

Since community banks will never be able to outperform their large competitors based on branches or products, the one way that they can most effectively compete is by providing service and creating relationships. To further corroborate this notion, all one has to do is listen to the feedback that my colleagues receive every day. My firm’s primary business is commercial relationship building. In that context we make over 5,000 appointments each year for bankers to meet with business owners and CFOs who might be actively seeking or at least open to a new banking relationship. We usually get feedback from the decision-makers as to what their issues or concerns are regarding their current bank. The overwhelming majority express disappointment in a relationship that is either nonexistent or not very good.

In helping our bank clients build commercial relationships for the last 20 years, we have found that the key to building business relationships is understanding that they are fundamentally similar to personal relationships. Specifically, they must be earned and are not automatically created, even when the bank is already doing business with a customer. Often bankers who are traditionally product-focused fail to recognize that, with small and midsize businesses, relationship can almost always trump products. Business relationships, like marriages, require constant nurturing and attention and taking them for granted often heralds the beginning of the end in both contexts.

We have identified seven stages in commercial relationship building which reflect the same dynamics that are characteristic of a personal relationship:

  1. Engagement
  2. Discovery
  3. Common Interests
  4. Shared Values
  5. Trust
  6. Commitment
  7. Resilience

For each stage, there tare actical approaches that can enhance and accelerate the process. Here are two pieces of tactical advice that will go a long way in building and deepening relationships:

· After meeting with a customer or prospect, and especially after the first meeting, send the person with whom you met an email picking up on some part of the conversation related to either their business or their personal life. For instance, if they share with you that they like to take their family skiing to Maine, find an article on the Web that might pertain to one of the major Maine ski resorts expansion. This simple act speaks volumes about you in that a) you listened, b) they are important to you, not based on your words but rather on your actions.

· In every meeting with the customer or prospect or a referral source for that matter you should be "planting a seed”. This could be to bring in a new product to an existing customer or to move the sales process along for a prospect. Obviously, it is imperative that the "planted seed” is memorialized somewhere, in a CRM system, on a manila folder or in a Daytimer (in descending order of desirability), so that you can act on it in the following meeting or conversation. As is the case in the prior example, this this also speaks to your ability to listen and your commitment to follow up, both of which can be important differentiators when compared to the great unwashed masses represented by your competitors.

On Friday, January 24th, I will be making a presentation of this topic at NEFMA’s Winter Conference in Woodstock, VT. In that presentation I will be expanding upon the brief coverage that this article has provided and will share with the attendees more tactical approaches to help bankers create, deepen and expand relationships with customers, prospects and referral sources.

The interactive presentation will be at 1 PM, leaving plenty of time to get home for dinner.

Ted Rosen is president of Expert Business Development, LLC, based in Bala Cynwyd, PA and is a frequent presenter at banking conferences. The firm helps community and regional banks develop and expand commercial relationships and is a member of NEFMA.

Tags:  commercial banking  relationship 

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Behavior-based Customer Value: The New Paradigm

Posted By Patricia F. Donohue, Principal, The Marketing Mix, Inc., Tuesday, March 1, 2011
Updated: Tuesday, November 19, 2013

Because of the economic downturn and new regulations, it's never been more difficult for banks and credit unions to grow revenue streams. It's even more difficult without a perspective that provides a clear understanding of account and client value.

Behavior-based value is a vital component in the sales and marketing planning process in this brave new world. The behavior-based approach reflects how individual clients actually use the accounts and services they own with your organization...the balances they keep...the interest they earn...the fees they pay...their channel-specific transactions. This methodology achieves results that are straightforward, provable and actionable. And with these results you can quickly and easily determine both what a client's value is as well as why accounts and customers are profitable or unprofitable.

Focusing solely on more traditional metrics like balances or cross-sell ratio often obscures key conclusions – impacting the success of your revenue improvement plans. For example, you may discover:

  • Households with substantial deposits can be a significant drain on your bottom line
  • Your least profitable clients often have as many services as your most profitable
  • You will have two distinctly different types of high value clients – and the strategies you employ for each group should be drastically different

The ultimate objective of a well-designed model is to provide clear direction on how you can enhance your bottom line. You'll uncover winning strategies for priority client clusters, including:

  • Retention: Focus on maintaining clients who provide 80, 90, or 100% of your company's revenue
  • Cross-Sell: Pinpoint profit-based initiatives to strengthen ROI
  • Product/Pricing: Explore cost/benefit trade-offs of various approaches
  • Prospecting: Target efforts on demographic profiles producing superior results
  • Network Evaluation: Observe the contributions of clients aligned with various business units to help direct service and staffing

Everyone is working with more limited resources these days. By adding a comprehensive value perspective to your strategic planning process you'll compete more effectively by knowing where to focus those resources to achieve the strongest payback.

Patricia F. Donahue will be speaking on this topic at our May conference on Thursday, May 12 at 4 p.m.

Tags:  consumer behavior  relationship  sales  segmentation 

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