Executive Summary: Most banks have had limited success in transforming their branches into sales offices. One reason: management focuses on limited initiatives that usually prove inadequate to drive long-term change. While requiring more time and commitment, developing an effective sales focus requires banks to rethink some of the fundamentals. Most banks have avoided doing so; hence, the mediocre results. 

 

Branch Selling: A Worldwide Issue
 
Whether working in the U.S., Asia, or Europe, many of our clients are focusing on how to engage the branch more effectively in selling. Too often, banks rely on a single element such as providing training or changing incentives rather than taking a more rigorous view of the multiple and interconnected factors that drive sales success in a branch.

 

While still a work in progress, FIC has developed an eight-step process that, once completed, provides clarity, energy, and focus around branch sales. We think the methodology applies selling to small business, affluent clients, and other areas.

 

The Eight-Step Solution

Bank management needs to address each of the following areas to create the optimal circumstances for a branch-based sales effort.

 

1. Evaluate the current status– How are the branches performing today? What are the staff’s current sales capabilities?

 

2. Assess implications of capabilities review– Given its starting point, what are the bank’s personnel needs?

 

3. Review ongoing roles and responsibilities– How should the branch and the branch manager’s activities be changed?

 

4. Restructure the product set– What should the branch sell?

 

5. Agree on priority segments– Who should the branch sell to?

 

6. Institute a sales process– How can the bank establish a standardized and consistent sales process?

 

7. Establish metrics– How should the branch be incented?

 

8. Determine incentives– How should the branch be paid for selling?

 

We will discuss the first four areas in this newsletter with the remainder discussed in our next edition.

 

First Steps

* Step One: Evaluate the current status. Many banks operate with a fundamental handicap that they seem to ignore: branch personnel are sales-phobic. Despite the dollars spent on training and multiple internal promotions, branch results fail to show the impact of the significant investment made.

 

Step one involves understanding current performance on a branch-by-branch and salesperson-by-salesperson basis. While these statistics are usually available, management needs to analyze them in detail, for example:

 

• Why are some branches performing well while others are underperforming?

 

• What are the sales leaders doing that others are not?

 

• What internal best practices exist that can be shared?

 

• What immediate steps should be taken to improve the performance of poor or mediocre performers? What is their path for improvement or replacement?

 

Some of the above requires answering hard or uncomfortable questions that senior management often prefers to avoid. Unfortunately, it does so at its own peril.

 

* Step Two: Assess implications of capabilities review. As the analysis of the current status is being completed, management needs to focus on the emerging implications. One implication that is often ignored is that the bank is operating with round pegs for square holes. All the training in the world, all the incentives will never turn some staff into salespeople. Management’s choice is to continue to invest in lost causes or replace. Remarkably, to this day, too many players avoid this difficult but ultimately very rewarding decision.

 

People replacement is only part of the improvement process. Evaluating the branches’ current approach will also highlight issues tied to areas such as branch roles and responsibilities, product quality and complexity, and sales management practices, among other areas. That said, failing to address the people issue makes sales success highly unlikely.

 

* Step Three: Review ongoing roles and responsibilities in the branch. We have often used the unfortunate metaphor of comparing the branch manager to a sausage casing that continues to get stuffed to the bursting point. Management needs to decide what tasks it wishes its branch leaders to focus on. Non-priority areas need to be shifted, preferably out of the branch to specialized units but alternatively to dedicated compliance, human resources, and/or clerical personnel.

 

What we see happening all too often is that branches are giving more sales responsibility without other tasks being removed. Practically, that does not work.

 

* Step Four: Restructure the product set. Product managements do a brilliant job of generating new products and product packages.  It has long been our view that product proliferation needs to be replaced by an emphasis on product optimization. By that we mean banks should focus their sales efforts on the small number of products that are critically important to customers and the small number of products that generate the biggest part of earnings, basically the 80/20 principle all over again.

The requirement for product streamlining is particularly important to the branch. With the branch often struggling to find sales time and handicapped by reluctant salespeople, product areas need to view the branches as their clients for shelf space and sales time. We know banks in which dedicated business relationship managers avoid selling certain products because of their lack of familiarity with them or their complexity. The branch will be even more reticent to recommend a product they view as esoteric. In some cases, a process needs to be in place to encourage the branch sales staff to refer customers to product specialists. In more cases than not, however, the products themselves are the issue.

Next week we will continue to review other elements for branch sales success and include comments regarding some of the best practices implemented by industry leaders.