On both the consumer and commercial sides of banking, wallet-share penetration is poor. Typically, banks allow other players, whether banks or non-banks, to capture revenues that should be theirs.
Too often, bankers do not even know what they are missing. In a recent meeting, a commercial banker stated quite seriously, “There’s nothing else I can sell my customers.” We found that to be a jaw dropping comment because it was so off the mark. However, the banker was only considering a limited product set (credit and cash management) in making that comment. Areas such as wealth management, capital markets, and the personal needs of the business owner never entered his mind. To address this lack of “mind share” and increase per-customer revenues, banks need to institute a simple methodology to “force” bankers to evaluate their customers’ needs, whether loans or non-loans, business or personal.
To this day, most banks either ignore or give lip service to one of the most fundamental and effective tools for building wallet share: account planning. Account planning is such a basic concept that it seems unnecessary to discuss it. However, FIC’s client experience indicates that very few bankers (maybe one in ten) and banks (one in 20) have a consistent account planning process.
Account Planning 101
Account planning simply involves conducting in-depth reviews (usually annually) of current activity and future sales prospects for each banker’s major customers and/or prospects. Bankers assess the current relationship, evaluate other solutions/products that they can offer, and plan how and when to proactively market the new business idea during the next few months.
Our experience is that many banks will do account planning once and fail to follow through. Those banks that make account planning work pursue the process with consistency and rigor. These banks’ managers:
- Involve other product groups in the planning process
- Introduce a real sales manager
- Review success versus plan during the year
- Incorporate results into the incentive payment plan
- Establish it as part of the yearly sales process
1. Involve other product groups in the planning process. The banker who said that he had sold all he could sell to his customer is not a bad banker. He is a typical RM who knows what he knows. He needs help to look at his portfolio with new eyes, eyes that see the opportunity for areas such as wealth management and perhaps even leasing. Therefore, product specialists from these and other areas need to develop relationships with commercial banking RMs and be able to work with them to mine for opportunities.
2. Introduce a real sales manager. RMs have managers; they do not have true sales managers who are making sure that they are calling aggressively and thoroughly. Banks must turn the heat up on the sales effort and one of the best ways of doing so is to provide strong sales leadership. The managers need to ensure that account planning is occurring and becoming part of the sales culture.
3. Review success versus plan during the year. We have heard of cases where a banker writes up a plan and, in effect, puts it into a drawer. Account planning is not an academic exercise; it provides a tactical plan for dramatically higher revenue growth. Banks that make account planning work conduct formal mid-year and quarterly reviews to gauge progress and determine required actions to improve performance.
4. Incorporate results into the incentive payment plan. If a banker knows that he/she will be paid for account planning-based performance, they will do all they can to make the process work.
5. Establish it as part of the yearly sales process. All big companies, banks included, are notorious for introducing a “flavor of the month” program that then disappears. Account planning has often fallen into that category. Many banks have tried account planning; few have kept at it.
Why Account Planning Fails
If account planning is such a good idea, why isn’t everyone doing it? Why have banks that began this approach abandoned it? We think the reasons have nothing to do with the concepts behind account planning and everything to do with banker and manager preferences.
- Commercial bankers do not like to be told what to do. They also tend not to sell and invest time in areas in which they are not already experts.
- Compensation has not encouraged bankers to spend time on account planning because of limited rewards to them for selling outside their “home” turf.
- “Non-traditional” areas have lacked the political influence to insist on their products being sold.
- Sales management is neither rigorous nor consistent at most banks.
- Senior line management lacks the will to make account planning work.
At the best banks: RMs are being given clearer instructions on their sales roles, compensation is changing, the internal prestige of various specialist areas has been enhanced, tighter sales management practices are being introduced, and senior management is fully on board and leading the charge.
Why Account Planning Needs to Succeed
Growth is the watchword at banks today. Nevertheless, banks allow revenues to leak out to others. It strikes us as almost inexcusable for banks to fail to give account planning a concerted effort. Significant risk to market and wallet share exists in not committing to an account planning process with the increased revenue opportunities it will uncover.