As the banking industry’s ability to generate fee income comes under pressure from recent regulatory actions, financial institutions will inevitably need to place more focus on front-line sales effectiveness, particularly in the branches. Easier said than done, since banks have often struggled with branch sales.
To provide an overview of these issues, we turned to Jay Freeman, an executive vice president, sales service and development, at San Francisco-based Wells Fargo & Co. Freeman, an expert at managing the customer experience, has been chosen to lead the Sales Effectiveness Summit at this year's BAI Retail Delivery.
Freeman contends that banks need to bring more simplicity to their sales and product design efforts. “Simple is easier for the frontline team to understand and to sell and serve effectively,” he says. “Imagine a world where we could sell a deposit or credit product with the same ease as a clerk at your local Costco or Target sells home furnishings. I dream of a world where a checking or savings account requires only a bar code swipe.”
Achieving that ideal scenario, he adds, will require extensive collaboration between product design and sales staffs and a move away from the banking industry’s traditional silo mentality.
Q: What are the key challenges of developing an integrated sales strategy at a financial services company, given the siloed nature of the industry?
Freeman: Silos look different if you think about them as a mainstream retailer, as opposed to a traditional bank. Silos in the banking industry are no more significant than those found at retailers such as Safeway or Home Depot. Through practice, retailers get past this potential barrier very effectively. Why is it more difficult to stock our banks with an array of financial products and services than it is for Home Depot to stock nails, paint and other building supplies?
The best analogy is retail shelf space. It is true that, in our case, the “virtual” shelf space is the mindshare of our front-line bankers and their ability to present those products and services when a need arises. So, you need to ask a couple of key questions: “What are those products and services that can be readily fulfilled by a banker at the point of sale?” “Which products and services, because of their complexity or other documentary needs, require support outside of the store or from single focused sales teams?” When you break it down this way, the problem becomes much more manageable.
There is also the very real opportunity to work closely with product groups to make our products and services easier to fulfill within the store. This collaboration requires compromise and setting the right priorities. Product groups are necessarily eager to add additional features and benefits that they believe are consistent with customers’ wants or needs, but these product enhancements often add complexities.
It is a bit like the aerospace industry. In their world, they have to limit the number of improvements like new avionics, computers or improved radar that they add to a given airframe or the added weight will mean the plane just won’t fly. The rule is that for every pound you add, you have to take one away elsewhere so the plane will still fly.
In our financial services world, product managers should also be motivated to simplify. “Simple” is easier for the front-line team to understand and to sell and serve effectively. Imagine a world where we could sell a deposit or credit product with the same ease as a clerk at your local Costco or Target sells home furnishings. I dream of a world where a checking or savings account requires only a bar code swipe. Risk managers throw up their hands at this analogy but the point is, if we don’t aspire to simplify, it simply won’t happen on its own.
Q: So, your job as a manager is to get the different groups – sales and product design – to see each other’s side of the story?
Freeman: Yes, we work hard in our group to represent the sales side in design and deliver planning with the product teams. We all want the same thing: more solutions in the hands of our customers.
Think about the world of, say, a macaroni-and-cheese product manager at a major packaged foods corporation. It is that person’s role to put together a product that’s easy to stock, easy for the customer to recognize on the shelf and easy for the customer to prepare. Isn’t the same really true for a product manager who is promoting home equity loans? I don’t mean to pick on home equity but it seems to me a good example of a product which has mass appeal and a lot of inherent complexity.
Q: As you know, we’ve seen transactions migrate out of the branch to electronic and remote channels. What implication does this hold for the future of the branch as a combined sales and transaction platform? Should branches be re-purposed to more of a sales role?
Freeman: There are several different ways you could look at this. You have forward thinking practitioners in our industry, Umpqua Bank comes to mind, whose game plan calls for all team members to be utility players. Such an employee becomes a one-stop resource, which improves convenience. In this model, you don’t differentiate between what we would have traditionally called the platform and the tellers.
As I say, this model presents strong benefits in terms of customer convenience, but it calls on each team member to master a lot of different skills, which isn’t easy to do. Other more traditional practitioners have very clear delineation between the seller and sales roles and for those banks, it’s a trade-off between sales and transactions.
Our thought at Wells Fargo is that the teller and seller each have their own role in the store, both of which involve sales and service. So, from that standpoint, as we look at volume trends, it doesn’t become so much a matter of re-purposing the branch as it is a matter of balancing the staffing levels to the appropriate volumes and opportunities to sell. The important and never changing fact here is that a good service experience is where it all begins. Success in developing relationships (selling) can only happen on a foundation of great service.
Over time, there is no question that we see more transactions occurring in the online and mobile space. In many cases, however, this doesn’t represent pure transaction migration. It appears that many customers are leveraging the convenience of these channels and transacting more. Store-based interaction is no less important in the relationship today than it was in the past. That may change over time but we’ve just not seen a clear, actionable trend in that regard yet. It may also be that because of our social nature, face-to-face interaction will always have a key role in influencing behaviors and building relationships.
Now, there is an opportunity for many to make our banking stores smaller and more efficient. It would be difficult to rationalize building a 10,000- or 20,000-foot branch in the current environment. While sales-per-square foot is something general retailers track, it’s not a metric that we’ve generally followed in our particular industry. But it is a relevant measure of efficiency and may gain popularity among more banks in the future.
If our customers are going to continue to want to transact in our lobbies, we will do well to keep an open mind about further automation. By borrowing from ATM-based technologies in the lobby – similar, perhaps, to the self-checkout kinds of capabilities that you see in the grocery stores – one teller could serve multiple customers and let the machinery do more of the heavy lifting.
Q: Such as financial kiosk technology where customers interact with a video teller?
Freeman: Well, that is one example of this sort of technology. What I am referring to is a teller-assisted ATM. Many customers are still reluctant to do business with an ATM, especially for deposits. This technology keeps an element of human interaction while leveraging technology for greater efficiency.
Q: There’s some debate in the industry over whether service and sales are mutually exclusive or can somehow be combined or balanced. What are your views?
Freeman: Service equals sales and sales equals service. If you aspire to help your customers succeed financially, you need to help them find solutions to their financial needs. The only way that we have found long-term success in developing these deeper relationships is by creating an environment where our service and our customer experience is second to none.
This means that everybody who touches the customer takes responsibility for both service and sales. Experience has taught us that the two, sales and service, are totally intertwined and cannot be thought of as separate dynamics. When you try to disaggregate the two, you are setting yourself up for failure because the best service transactions are, of necessity, going to uncover additional needs opportunities that should be acted upon. The best sales experiences create engagement and attachment to the institution which is another way of saying service.
Q: In recent years, the industry has seen tremendous advances in customer analytics and predictive selling. But the difficulty is always making these new analytics operational on the front lines. Your thoughts?
Freeman: Leads and referrals have their place. We should remember, however, that you’re dealing with statistical likelihoods and probabilities. Analytics can set up offers and recommendations but real needs-based selling happens when we talk with an individual customer about their situation and wants, desires and dreams. Whether that interaction is face-to-face, over the phone or through a computer or mobile discussion, it’s a unique interaction. While segmentation strategies can be very helpful to product and portfolio managers, I’m not so sure they can be particularly effective for front-line sales.
Customer interaction is the most powerful means of influence. Leads and referrals are a potent sales tool but the tool does its best work in the hands of a talented team member.
Mr. Cline is managing editor of BAI Banking Strategies. He can be reached at firstname.lastname@example.org.