The jury is still out regarding the impact that the recent financial reform legislation passed by Congress will have on community banks. They definitely dodged a couple of large bullets and will be burdened by fewer new regulations than their mega-brethren. Additionally, as the large banks are forced to impose punitive fees to make up for lost revenue, community banks will benefit from the opportunity to grab market share.
That is if they are positioned to take advantage of that opportunity. And a large part of the ability of community banks to gain market share depends upon whether their frontline staff can effectively transform the marketing opportunity into actual sales.
I have to report that the evidence on that score is mixed. As part of my firm’s consulting practice, I conduct a lot of mystery shopping of community bank branches. As our founder was fond of saying, “You don’t know what is really going on in your branches without shopping them.” Unfortunately, most bank executives – especially those charged with retail – would be disappointed by what we see in their offices.
We definitely see evidence of lots of marketing dollars being spent. We encounter ads on TV and the radio; we see yard signs and banners and window ads; we drive by billboards; and our clients send us samples of direct mail their employees have received from competitors.
Yet, when you actually enter bank branches, you find a huge disconnect. It is clear that the employees have not been prepared to determine which product is right for a prospect or how to ask for their business. These companies have not absorbed the simple lesson that marketing without training is like bait without a hook.
Seizing the Opportunity
The failure is not with marketing. Once someone walks into a branch (or calls you) to inquire about a product or service, the job of marketing is 100% done. Marketing’s job is to provide sales opportunities; training is required to make sure those opportunities get converted into actual sales. And therein lies the real problem.
In one recent month, I personally walked into about 30 community bank offices in markets as diverse as Wichita, St Louis and Milwaukee. My approach is to walk in, look lost as a new prospect would (not hard to do as I have never been in the branch before) and ask for “information about checking accounts.” In a few cases, I venture into only one office of a company. But in most cases, I attempt to visit at least three offices of the same bank to get a fuller picture.
The people I interact with are invariably friendly, eager to help and proud of the company they work for. Beyond that, however, things fall apart. Almost nobody shook my hand or asked for my name and only a few gave me theirs, usually on my way out. In only one bank did I find a consistently applied professional etiquette, where the personal banker or teller I interacted with in all three offices started off with the same process of introduction and asked me if I would like a beverage.
As for identifying the right account for me, none of them had a clear and consistent process for qualifying me to find out which of their accounts provided the best fit. The common practice was to open some kind of brochure or lay a sheet on the desk with listed accounts (or in one case, to read from a computer screen) and then go through the details of the accounts. None of the companies had a true sales tool for the employee to use and only one company had a complete brochure with every current account and its characteristics that I could take home with me.
When they were done going through the bullet points it was clear, in most cases, that these employees expected me to pick one, even though the accounts were often complicated. When I was obviously unsure, some of the reps tried to rescue me by suggesting the account they thought was best, typically a free account or one that offered some kind of rewards.
Then there was the ticklish problem of age. While most of the banks I visited market an account to those age 50 or higher – and I am in that general ballpark – the reps seemed reluctant to inquire if I might be eligible. Thanks for the delicacy, but if there’s a good opportunity, your job is to alert me to it!
Several of the banks I visited possess what I call a “product landmine.” This is a product that makes no sense in light of other products offered so employees will usually avoid talking about it. In a few cases I asked why anyone would ever take that account. One young woman looked me right in the eye and said with a smile, “You shouldn’t; that’s why I don’t talk about it.” The others weren’t as naturally confident and had a harder time explaining it.
Business checking accounts are three to five times as profitable as consumer accounts, but reps at only two banks asked me if I was interested in business as well as personal accounts. And only one of the two was actually able to help me. In some of the offices I asked about business accounts and found that employees were unfamiliar with them, particularly regarding the necessary documentation.
When I told reps that I needed to discuss the options with my wife, only three of them – or 10% - made any real attempt to get me to open the account that day. The rest were perfectly willing to let me walk right back out.
In all cases, I asked if my wife needed to be with me to open the account and what documentation we would need. The answers were all over the map. In fact, in the cases where I shopped more than one office of the same company, I got a different answer from each one. All of the answers also involved stricter protocol than was actually required.
Investing in Sales
What I have just described is not an anomaly; it’s what we see in community bank branches all across the country. Two things are clear: your employees deserve better and you deserve a better return on your marketing dollars. Your people truly want to do the right thing for you and for your customers. Some product and sales training would constitute a great way to invest in those employees.
Also, advertising is expensive. When someone “takes the bait” and comes into your lobby, you must be in position to take advantage of it – to “hook ‘em and land ‘em.” Most banks are not adequately equipped to do that.
Here are a few simple suggestions to improve this situation:
- Look at your products and eliminate “landmines.” They are unfair to your employees. If you don’t know if you have them, ask your frontline people.
- Develop a set of professional etiquette rules and have your employees practice them.
- Create a process of three to five qualifying questions that will identify the right account for the prospect. Role play this process.
- Practice recommending the product and asking for the business. It can be as simple as, “This is the right product for you; here’s why. Would you like to open that account today?”
- Commit to providing a sales tool with the qualifying questions and keep it updated. One company I visited had a multi-page catalog. You don’t need anything that elaborate.
- Re-examine your opening policies (joint accounts where one spouse isn’t present, identification, etc.) and make sure they are consistently applied. Consider ways to make it easier to do business with you while still complying with the relevant regulations.
Many of you are spending marketing dollars to create sales opportunities but are unprepared to take advantage of them. The difference between an average and a high-performing retail bank branch is three to five consumer and small business account openings per week. The opportunities are too rare and new customer households too valuable to blow any of them. Make sure your bait has a sharp and effective hook!
Mr. Platter is vice president of Lincoln, Neb.-based Haberfeld Associates, a consulting and marketing firm. He can be reached at jplatter@haberfeld.com. Alan Friesen, president and CEO of the firm, will speak on this topic and others related to improving the performance of community banks at the upcoming BAI Retail Delivery 2010.
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