There is no doubt that providing customers with high quality customer service is a good thing. Developing a reputation as a strong service provider can increase account retention and result both in additional cross-sales and referrals to new prospects. However, while service can have a positive impact on sales, too often it does not. At most banks little linkage exists between their service and sales efforts.

 

Servicers and Sellers Often Don’t Mix

 

The reality at many banks is that those who are best at providing good customer service may be totally out of their element in trying to sell to a customer or prospect. Similarly, sales people often like to sell rather than deal with the minutiae involved in account maintenance. Service and sales usually require different skills and personality types.

 

Management at many banks has spent significant time and dollars attempting to turn branch personnel into selling leaders. Typically, that attempt fails. Several factors result in the failure to turn service-oriented branch staff into effective sellers of business services:

 

• Many branch personnel lack a sales “gene”

 

• Small business product knowledge is spotty and inconsistent

 

• Branch personnel view sales incentives for business products as insufficient given what they view as the greater difficulty in selling these products

 

• Branch personnel view themselves as overwhelmed by consumer requirements. The reality may be different but they seem quite committed to believing they are overwhelmed

One personal anecdote provides some insight into the extent to which branch bankers overlook the most obvious sales opportunities. Several years ago I needed to have a paper related to FIC’s incorporation notarized. When I went into my local community bank to seek out a notary public, the platform banker asked me if I had an account at the bank. I said no, fully expecting that she would discuss her bank’s capabilities and try to sell me on opening an account. Surprisingly, she never mentioned that, instead simply charging me a few dollars for the notary. Her service quality was excellent, but her sales sense was abysmal. Hence, I opened my account at a mega-bank rather than one that proclaimed its emphasis on customer service.

 

Many good service-oriented bankers will never be good sales people. Another example underscores this point. At one client, a commercial banking relationship manager with a great reputation as a customer service person commented that asking him to prospect for new accounts was “like putting a square peg into a round hole.” Yet, management continues to push him to get out from behind his desk even though being behind his desk allows him to excel. It is where he and his customers want him to be.

This same client has to-die-for client survey results; its clients love it and for good reason. But, it has yet to translate service excellence into the level of prospect success its performance merits. Its sales culture needs to catch up with its service culture.

 

Separate Service and Sales

 

Increasingly, we believe that banks would be better off by accepting the reality that sales and service activities need to be performed by different people. And, as a result of job redesign efforts, this split can be accomplished without increasing operating expenses.

 

On the small business and middle market sides of the business, banks can introduce inside and outside RMs. Inside RMs are tasked with managing a large number of accounts (200+ small businesses, 50-100 mid-market accounts). These bankers focus on selling more to the current customers they already know rather than cold calling. Outside RMs concentrate on prospects and have little-to-no ongoing portfolio. Ideally, they hand off the prospects they develop to internal RMs. Otherwise, they become bogged down in the type of minutiae that destroys their productivity and sucks away their energy.

 

Rethink Levels of Service

 

While separating sales from service, banks must also challenge the level of service that they provide. Today, most banks serving small and mid-sized companies have no system in place to quantify the cost of service on a per customer basis or determine the relationship between time spent serving a customer and that customer’s profitability. Anecdote and “feel” exist, but no rigorous analysis. Our “feel” is that on the commercial side of most banks, little linkage exists between relationship profitability and service levels. The “squeaky wheel” gets the most service, no matter its profitability.

 

Branch managers and service-oriented RMs should justify the level of service they provide by quantifying the increased revenues and profit they can generate in exchange for time spent satisfying current needs. Return on service should be a calculation that banks strive to develop.

 

Concluding Thought

Strong levels of service are a precondition for additional sales. Without quality customer service, cross-sales to and referrals from customers will not occur. But service should be provided with a dual motivation: first, retention, and then, more revenues from the well-served customer. Excellent service is not an end but rather a means to an end. If excellent service does not result in sales growth, management should reexamine what it is offering its customers. Either it is overinvesting in inappropriate customers or it has failed to effectively link its service and sales efforts. Both circumstances are unacceptable.