The Belief Factor
By Kenneth Cline
As Citigroup's Joe Plumeri evangelizes for a proactive branch sales culture, the big challenge is getting his own employees to believe.
Joseph J. Plumeri 2d is a man with a mission. Head of Citigroup's North American branch system, he is waging an ambitious campaign to transform the bank's 450 U.S. "financial centers" into places where committed employees use advice-based selling to help customers with their financial services problems. In fact, he's downright evangelical about the matter. "I think a lot of people who walk in and out of bank branches every day need to be saved," he says in a Banking Strategies interview.
Plumeri means saved financially, of course, but the passion is real. His other job is chairman of Primerica Financial Services, Citigroup's insurance subsidiary that is known for the near-religious fervor of its door-to-door sales effort. The 56-year-old Plumeri, who was given the additional job of managing the Citibank branches after Citicorp and Travelers merged last year, wants to imbue his Citibank branch employees with the same enthusiasm.
Therein lies his challenge. Branch culture traditionally has been reactive in terms of sales and more focused on operational and administrative tasks. Getting employees pumped up to actively solicit business from customers amounts to a monumental achievement in this industry. But Plumeri thinks it can be done by utilizing a sales tool developed at Primerica: the financial needs analysis. This questionnaire helps Primerica agents identify weaknesses in a customer's financial situation and suggest products to fill those gaps. Plumeri has revamped the financial needs analysis under the name "CitiPro," with the idea of selling a broad range of banking, insurance and brokerage products to Citibank branch customers.
Cross-selling rarely has been successful in banking, so his experiment will be closely watched. As of July 1999, Plumeri had nearly tripled profits at Citibanking North America (the retail branch system) from the prior year, to $180 million, although cost-cutting accounted for most of the improvement. Plumeri says he's been reducing headquarters staff in his unit to put more people in the branches. He expects sales to ramp up by yearend, when CitiPro moves from the pilot stage to system-wide rollout.
Banking Strategies: Coming into this job as an outsider, you must have spent some time analyzing the current state of branch banking. What did you find?
Plumeri: First, there are so many different ways that people can transact traditional banking business today other than by going into a branch. For example, you can get money market accounts from mutual fund and brokerage companies that come with check-writing privileges and credit cards. And online banking has become very popular.
But when you look at what happens in a branch on a daily basis, it's the same thing that went on years ago. So on one hand, you have developments that represent great change, whether in terms of technology or product alternatives. On the other hand, in the branch, there's seemingly no change.
I spent a lot of time walking around in our own branches before they knew who I was. The attitude of employees was, "Now you're here, just tell us what you want." I think you need to be more proactive. Most Americans don't know much about money; money doesn't come with instructions. Yet banks have never taken the position that they have the responsibility to educate people.
I noticed in our branches, as with many competitors, that there are a lot of signs. The implicit message is, "Read the sign and tell me what you want." It's online banking over here, mutual funds over there and certificates of deposit over yonder. But if I as a customer don't respond to the signs by asking questions, then nothing happens.
Banking Strategies: But isn't it true that most people come into branches to conduct specific transactions?
Plumeri: Yeah, they do. It's a quick move in and out. But if you consider your mission as an institution, it's got to be much more than being a place where people just do transactions.
I happen to believe people need financial help. If you look at all the surveys, people still say banks are the most important financial institutions in their lives. But then when you ask people about their most important needs, they talk about retirement and saving money, not doing transactions. There seems to be a mismatch going on somewhere.
People ask me, "Why do you want to change all this?" It's because I don't want to be the Woolworth's of banking. The world is simply different than it used to be. Woolworth's should have become Wal-Mart Stores Inc. But they didn't, and they closed their last store a few months ago.
Banking Strategies: What's your strategy for avoiding such a calamity?
Plumeri: The answer is to create a mechanism that facilitates a dialogue, something that prompts customers to start asking questions. I've always been a believer that representatives should sit down with people and do some sort of financial needs analysis. You can't just say, "Hi, do you have an IRA?" Or, "Hi, how do you feel about your retirement?" There's got to be a dialogue that leads to a financial roadmap. You'd never think about traveling from one place to another without giving a little thought as to how you're going to get there. But people retire all the time without having saved enough money.
So we've done a few things at Citibank to make the branch or financial center experience an exciting one. First of all, people will be greeted at the door. And it's not just, "Hello, how are you?" People are handed a "CitiPromise Card," which basically says, we promise to greet you enthusiastically; we promise to help you with your financial needs; we promise to make this an exciting experience; and we also promise to do a complimentary CitiPro, which is a financial needs analysis. If we don't do all the things in this promise, we'll deposit $25 in your account.
I want customers to understand that we're serious about doing this. This is not just a promotion; this is the way we will conduct business from now on. The trouble with banking and financial services is, it's always been viewed intellectually or mechanically. But I think financial services is based on emotion. I don't know of anything more emotional than dealing with matters that affect the well-being of somebody's children, somebody's family. As financial institutions, we need to become much more emotional about helping to take care of our clients. The things we offer are not necessarily products but solutions.
Banking Strategies: How do you get branch employees to rally behind these concepts?
Plumeri: Every institution has to operate from a premise. Aside from offering good products, there's got to be some other distinguishing characteristic that provides value for people. What we have to do is start believing in a premise. It's not just about offering a financial plan. It's not about CitiPro per se. There's got to be a way you can relate to customers emotionally. You have to put a stake in the ground, some standard that says, "This is the way we conduct business and differentiate ourselves."
The trick is to get employees to own the premise. Leadership is about inspiring people, about motivating them. That's my job. The employees either decide to buy in or they don't. If the belief is almost fanatical, then it can become contagious.
Banking Strategies: You're indeed renowned as a motivator, as someone who can inspire the troops at employee rallies. But once you leave the stage, some of that enthusiasm must inevitably die away. How do you institutionalize the passion?
Plumeri: If I'm up there for an hour or two and haven't convinced employees to own the premise, then it's gone by the time they get home. You need to get people to understand that they shouldn't just go to a job every day — they should go to their life's work. In our meetings, we spend a lot of time talking about things other than banking — about life in general. It's important to get people to appreciate the larger purpose they serve when they go to work. That's the premise of a great institution. You have to have a real sense of purpose for what you do.
Banking Strategies: Do you do anything specifically, in terms of incentives systems and sales force training, to push this along?
Plumeri: Those are mechanical things. Yeah, we've got great training. We're training people to get licensed to sell various products such as securities and insurance. We're also training people as financial analysts so they can provide advice to clients.
Banking Strategies: So, beyond training, how do you keep people motivated?
Plumeri: I have to hammer away on getting employees to believe in the premise. I don't hammer away on training or the need to be licensed. Those things are just the mechanics of the business — things that you must do well just to stay in the game. If you get people to believe in what they're doing, a lot of the mechanical things will follow.
If I don't believe that a CitiPro evaluation is an enormously valuable thing to a client, then I don't have as much motivation to go through licensing for insurance and mutual funds. But if I truly believe that what I'm doing is good, I can't wait to get to the class.
So the most important thing we have to do with our own people is make the belief factor so big that it's contagious. Our job in Citigroup is not to make products. God knows, we've already got every conceivable product. Our job now is to get people to believe.
People ask me if I worry about other banks stealing our strategy. I say no. Competitors are going to look at something like CitiPro as a product. But it's not a product; it's the way we conduct business.
We don't use the word "customer," by the way; we use the word "client." We also don't use "branch;" we say "financial center." You can't leave the same old names when you are changing a culture. We spent a lot of time helping people understand why we changed the names. For example, the connotation of the word "customer² is a person who knows just as much as the merchant he's going to see. A&P has customers. Clients, on the other hand, are people who don't know as much as the providers. Clients are looking for discernible value that they can't create themselves.
We talk a lot about the "value gap" at Citibank. You have to create a discernible value gap between yourself, the provider, and the person seeking the service. Otherwise, you can't charge for the service because there's no value. Our people really understand that. They want to live their lives providing value rather than just opening the door, turning on the lights and saying, "Okay, here we are."
Banking Strategies: The value financial institutions can offer is sometimes referred to in the industry as the "trusted financial advisor" role. And some theorists believe trusted financial advisors need to offer "best-of-breed" products, i.e., those from other providers. What's your take on that?
Plumeri: When you're offering your own products, you just have to make sure that those products are good. I find nothing wrong with eating home cooking as long as the cooking is good.
If you look at traditional banking products, you might find a little wrinkle here and there, but basically they're commodities. Our insurance, which comes from Primerica, is term insurance. Term insurance is as vanilla as you can possibly get. There's no performance comparison involved. Mutual funds are a different matter, but we offer Putnam, Oppenheimer and everybody and their grandmother, as well as our own family of funds. The same thing applies to variable annuities.
Banking Strategies: When you sell these other products to banking customers, aren't you using the same cross-sell strategy developed at Primerica, which was based on a financial needs analysis?
Plumeri: It's the same thing. When I came to the bank, I wondered: if I did it at Primerica, can I do it here? And I came to the conclusion we can actually do it better. At Primerica, the personal financial analysts have to go out and find the clients. Here, prospects walk in every day! So the bank is better off. The problem is, banks don't know what to do when customers walk in.
I then looked at our client base. I found that average, middle-income Americans walk into our financial centers, the same type of people Primerica does business with. I realized then that I didn't have to reinvent the wheel.
People ask me all the time, "Joe, do you think this strategy will work?" My answer is that it does work. It worked at Primerica, and that's arguably a more difficult proposition because the personal financial analyst has to go out and find clients and establish trust. Banks are already trusted. It would be very difficult to argue with me that it won't work here.
People always ask why cross-selling works at Primerica. There's a reason for that: you're dealing with middle-income people who are interested in finding somebody they can trust, somebody who will help them. And unlike affluent people, they're not worried about putting all their eggs in one basket because they don't have that many eggs to begin with.
Banking Strategies: Is your cross-sell strategy entirely targeted at the middle market, or do you also want to do something with affluent clients?
Plumeri: If somebody walks in and wants to give me $3 million, I'll come right down and get it. But you've got to be good at targeting. You can't be all things to all people. Eighty percent of Citibank clients have incomes under $75,000. All I'm doing is adjusting the strategy to serve the people who walk into the financial centers every day.
Banking Strategies: The emphasis in banking is usually on the high end. In fact, customer segmentation strategies are usually geared to the most profitable customers.
Plumeri: Everybody has that emphasis. Everybody's left the middle market alone. So when you wonder why Primerica is so successful, I'm telling you that's the reason.
I'm not suggesting that CitiPro wouldn't help people in the affluent category. Our strategy works for everybody. But the people who walk in and out of the bank every day are the ones who are the most ignorant about money. I just want to cater to the people who are our clients.
I tell our representatives to greet people at the door like missionaries. I think a lot of people who walk in and out of bank branches every day need to be saved. Look at how few people own investment retirement accounts in this country. Why do you think it's only 30%? It's because people don't know what questions to ask.
Banking Strategies: You clearly believe retail banking is a high-touch business. Are some bank CEOs nowadays putting too much faith in technology, particularly the Internet?
Plumeri: I don't want to speculate about whether people are adopting the right or wrong strategy. I would only make the comment that if you over-emphasize technology, you forget about the power of the human touch.
I think automated teller machines are terrific. I think online banking is terrific. Those things help you do transactions. But I don't think technology can offer people advice, wisdom, caring or knowledge. And if you go back to my original theory, most people don't know what questions to ask when it comes to money. How can they ask a computer? They're going to ask the computer only about those things they already know.
Mr. Cline is Senior Editor of Banking Strategies.