There’s no such thing as a field of one’s own in commercial lending. You should always assume there are at least four to five other lenders vying for the same business. Competing on price alone won’t help you stand out in the crowd. Instead, it’s all about making long-lasting connections. Here are some tips to help you build winning relationships:
Know your customer. It helps to start every interaction with a few questions such as: How is your revenue growth doing this past year to last year? What don’t you like about what you have today? And, why do you feel you need something more or different? Then follow up with questions that help you draw out the customer’s specific needs: what is he or she trying to accomplish, avoid or improve? You won’t be able to do this effectively if you don’t know something about the prospective borrower before your meeting, so do your homework and be prepared. Every borrower is different and has different needs.
Listen carefully. In many situations, commercial lenders do 80% of the talking. If you do too much talking and not enough listening, you may not understand the problem well enough to offer a viable solution. Listen and solve. That’s how you build ongoing relationships one transaction at a time.
Don’t assume you and the borrower are on the same page. Let the famous “Who’s On First” routine by Abbott and Costello be a cautionary tale about the importance of understanding what prospective borrowers are saying. Make sure you summarize back to customers what you think you’ve heard and seek confirmation that you understand their needs correctly. Assuming can have disastrous consequences for both sides.
Take a consultative approach. You’ll never touch the right buttons with borrowers if they feel you are bullying them into working with you. There’s a fine line between demonstrating expertise and pushiness. Once they feel you’re trying to control the outcome rather than merely providing guidance, you’ll lose them.
Don’t try to force a square peg into a round hole to fill a quota. If you realize a particular situation won’t be a good fit, it’s okay to turn down business. Borrowers will respect you more for being honest, and there’s a really good chance they will be back to give you other opportunities. Being a successful commercial lender means looking beyond individual transactions. Your job is to build relationships so customers come back again and again.
Treat every interaction like it’s a precious gem. You may only get one time at bat, so if you waste the opportunity, you may not get it again. Remember, commercial lending is primarily a referral-based business, and the long-term value of this approach is the opportunity to boost your business through word of mouth. You’ll never get to that point if you consistently start out on the wrong foot.
Make connections. Especially for a community or regional bank, it’s all about the personal touch. Take the time to learn about your customer’s spouse and children, as well as likes and dislikes. This is critical to developing long-lasting relationships. Customers will give you more business if they feel a personal connection.
Keep it real. People like to be remembered and recognized, so birthdays, anniversaries and hand-written thank you notes can really make a difference in a relationship. But don’t go overboard and smother your customers with unwanted attention; otherwise your efforts will appear gimmicky and superficial.
Winning new business is never easy. But consistently following these principles can set you on the right path to developing long-lasting and meaningful business relationships – a true home run for your bank.
Mr. Wardwell is practice director of the Sales and Channel Effectiveness consulting practice at Phoenix, Ariz.-based CCG Catalyst. He can be reached at firstname.lastname@example.org.