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Metrics of Small Business Banking
By Charles B. Wendel
For maximum management impact,
focus on these.
Recent years have seen an explosion
in the amount and quality of data and information available
to senior management. If anything, top management has
too much information available to it rather than too little.
Information overload has often resulted in confusion and
obfuscation rather than creating clarity about priorities
and next steps.
Our experience with top small business
banks indicates that only a handful of measures, some
“traditional” and some overlooked, demand
focus. Evaluating these metrics enables managers to concentrate
on the highest impact areas.
1. NUMBER
OF SALES CALLS. Although obvious, this is a metric
that many banks ignore. Our analysis, as well as analyses
conducted by clients, demonstrates that the more calls
(either in person or by phone) made on small businesses,
the more success banks have with this segment. As a result,
managers need to enforce high calling goals. They also
need to eliminate the non-sales-oriented activities that
keep bankers away from customers, such as administrative
and customer service tasks.
2. WALLET
SHARE. A banking client once told us that he was
already selling all that there was to sell to his commercial
customers. However, he defined his product set very narrowly.
It did not include wealth management, investments or retirement
products. Instead, he focused exclusively on selling loans
and cash management.
We find that the best banks are broadening
their definition of wallet share potential to include
both personal and commercial business. Moreover, they
are actively developing product packages and calling plans
to gain more wallet share.
3. ACCOUNT
PLANNING. Most bankers lack a rigorous process
either for determining the number of annual calls appropriate
for a customer/target or for setting product sales priorities.
They rely on instinct rather than follow a consistent
process, and they often fall short in effectiveness.
Managers should consider these questions
in determining the thoroughness of an organization’s
sales approach:
- Does the small business group operate
with a consistent and simple (one-pager) account-planning
process across the bank?
- Does the planning process incorporate
personal as well as business needs?
- Does each banker’s incentive
compensation include an account planning component?
- Does account planning include the
branch banker?
4. LINKAGE
WITH THE BRANCH. All the research we have either
completed or reviewed points to the importance of the
branch in selling to and retaining the small business
customer. Most small business owners select their business
bank based upon branch location, and they look to branches
for their servicing needs. Yet, we see cases in which
the branch and small business groups appear at loggerheads,
each protective of their turf and defensive about their
role with business customers.
Top management must break down whatever
barriers exist. One tactic is to make the two groups’
performance co-dependent. Metrics of value include the
number of referrals from the branch to small business,
as well as referrals back to the branch from small business.
Management cannot leave cooperation between these two
groups up to the goodwill or personalities of the individuals
involved; it needs to be institutionalized across the
bank.
5.TIME
TO ADDRESS GAPS. We would like to see one additional
metric — that captures the amount of time between
the identification of a performance gap in one of the
four areas above and management action to address it.
Unfortunately, no such metric exists; frankly, most senior
managers are uncomfortable being held to a metric of that
type. Still, banks can achieve benefits across the four
metrics mentioned above with forceful management action.
Mr. Wendel
is president of Financial Institutions Consulting in New
York, a management-consulting firm that focuses on developing
growth strategies for banks in the small business and
middle market segments.
Copyright © 2005 by Banking
Strategies, published by BAI.
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