Winning Sales in the Branches

What to do with the branch in an era of declining revenues is one of the top strategic problems facing retail bankers as they look to 2012 and beyond. With fee income expected to be down 30% or more next year due to recent regulatory restrictions, banks are under pressure to make their branch networks more productive.

One approach is to cull the network of unprofitable or marginal locations and several large institutions have announced plans to do just that. The other strategy is to make existing offices more efficient via changes in staffing and sales models, which was the focus of a panel discussion at the recent BAI Retail Delivery event entitled “The New Sales Model and Staffing Paradigm for Branch Sales.”

Consultant Darryl Demos, a partner at New York-based Novantas LLC, set the stage for the discussion by describing what he termed a “crisis” in branch sales attributable to a fall in transactions at a time when branch resources remained stable. According to a Novantas benchmarking studies of about 13,000 locations, branch employees sold an average of 1.12 products per day in 2010, down from 1.70 in 2003. “That’s a pretty big shift,” Demos said.

Some of the bankers on the panel responded that while their growth in new accounts has slowed, so has attrition. “Most banks, and I can say we’re doing this as well, are very much focused on broadening that relationship with a given customer,” said Steven S. SaLoutos, an executive vice president at Minneapolis-based U.S. Bancorp. “We kind of see a drop-off onto a new plateau and a new building from there as we add more credit cards, bill pay services and other features that are part of a full-service relationship.”

Sam Guerrieri, a senior vice president at Buffalo, N.Y.-based M&T Bank Corp., said his institution has focused on deepening customer relationships through a needs-based sales process. “It’s not necessarily about selling the widget anymore but rather quality – going in deeper with these customers. And that takes more time,” he said.

Another point of focus of attention for the panel was small business banking. Both U.S. Bank and M&T Bank require their branch managers to prospect aggressively for new small business customers, typically spending about half their time on this activity. “All of our branch managers are asked specifically to be involved in prospecting and maintaining anywhere from 50 to 100 active prospects on a regular basis,” SaLoutos said. “It takes a lot of time to get people up to speed and comfortable doing that.”

Demos said his research has shown that the most productive banks from a sales perspective require their branch managers to focus more on direct selling themselves as opposed to coaching the rest of the staff on sales performance. “Your branch managers are more effective if they are part of the selling process themselves; they are often your best sales persons,” agreed SaLoutos. He added, however, that U.S. Bank still believes in the need for “observational coaching” and has utilized professional sales coaches to help provide a more consistent sales process in the branches, an approach he deemed “pretty effective.”

Guerrieri said the most successful branch managers typically maintain a full pipeline of appointments, what he termed the “dentist sales approach,” where the next appointment is booked right after the current one is concluded. “It’s all about activities, it’s all about calling and it’s all about the number of appointments,” he said. “As long as they have a calendar that’s full and booked every single week, they are going to be successful.”

Guerrieri noted, however, the danger in putting too many demands on the branch manager’s time. “There’s just so much going on and time management is one of the biggest things we have to focus on,” said.

SaLoutos mentioned that U.S. Bank was considering creating a “different type of service model” for its rural branches “where we just don’t have the sales productivity because there’s no opportunity or very little opportunity there.” This new model would involve a smaller and “more flexible work force so that literally everybody in the branch office can do pretty much everything, from running a teller drawer to taking a loan application.”

Colin Eccles, executive vice president and chief information officer at Portland, Ore.-based Umpqua Bank, said his institution has experimented recently with video banking, a technology that can connect customers to a mortgage or investments expert on a “virtual” basis. “It’s still in pilot and we need some time to look at the customer reaction because our model is really a high-touch customer environment,” he said. SaLoutos and Guerrieri said their banks were experimenting with video banking as well. “We haven’t claimed victory yet on it,” Guerrieri added, noting the difficulty of meeting customer expectations.

Mr. Cline is managing editor of BAI Banking Strategies. He can be reached at [email protected].