A recent client meeting focused on how the bank could step up its sales efforts. Faced with strong growth demands and a more challenging market environment, many bankers attending that meeting viewed the bank’s current sales focus as inadequate for the future.

One team of bankers assessing the situation suggested the appointment of a Chief Sales Officer. That executive’s responsibility would center on areas related to increasing sales, such as developing a more robust sales culture, increasing cross-bank cooperation, and assessing the sales effectiveness of current compensation approaches.

 
Is a Sales Czar Necessary?

The discussion concerning this topic was fierce. Some senior managers saw a “Sales Czar” as a bureaucratic encumbrance, an additional hurdle for the organization to surmount rather than a sales facilitator. Others felt that without a strong, dedicated resource coordinating and guiding the effort, the bank’s sales emphasis was likely to be more words than action.

Our initial reaction was to side with those who opposed the creation of this position. The bank already had enough hierarchy and creating a new job with a sales-oriented title likely would not translate into heightened sales intensity. Nonetheless, for certain institutions, such a role may be very helpful.

Few banks would consider operating without a Chief Credit or Risk Management Officer. The Chief Credit Officer sets policies and underwriting processes, establishes monitoring policies, and oversees the bank’s entire risk profile and performance. Most banks also have a Chief Marketing Officer (CMO). While the CMO’s role differs across banks, the best players leverage the CMO’s experience to determine a coherent approach to markets, segments, and products. Again, this officer brings consistency and rigor to the processes employed by the bank.

But, few banks operate with a Chief Sales Officer. We know one community bank that has an executive operating in that role on a part-time basis. When he is not running his own line group, he oversees bank-wide sales programs, provides input into sales promotions, and organizes the yearly trip for top-performing salespersons. Within the bank he is known as the greatest advocate of sales. Can he make other line groups do what he wants them to do to increase sales? No, he has to lead by example rather than force.

The Optimal Sales Environment

The optimal sales environment within a bank is one in which each line area sets stretch goals and removes the roadblocks that keep branch managers and middle market RMs from selling. That means branch managers (or their designees) would be in front of customers instead of behind desks. Middle market RMs would spend 80 percent of their time selling rather than the typical 30-40 percent goal that many hardly reach.

But, stretch goals are rare and most banks’ sales cultures pale in comparison to a non-bank player like Merrill Lynch. One might also expect smaller banks to be more sales-oriented than larger banks, since they pride themselves on closeness to the customer and a lack of internal barriers. In fact, we find the bigger bankers more sales- and performance-oriented in selecting and paying employees.

Sales Czars May Be What Some Smaller Banks Need

How do you get a bank to develop a “true” sales culture and replace traditional bank complacency with free market entrepreneurialism?
 
First, you need top management to recognize the need for change and support the initiatives to affect it. Unfortunately, our experience is that words are easy, but actions are hard. Top management often talks about its openness to change. However, since change is sometimes viewed as implying past mistakes, senior management often does not push to make change happen.

Second, you need someone in charge of the sales effort. That person should report to the COO or CEO and should have both accountability and responsibility for change. He needs to be encouraged to challenge the status quo. Whether this person is a Czar or not, he is on the hook for change.
 
Third, banks need to create an environment encouraging change. The best environment for this is one in which staff believes that current approaches have failed; you often need a crisis to get change. All the sales management software in the world will provide zero impact without this.
 
Fourth, a sales emphasis must be a way-of-life. Too often, bank employees view it as the latest in a string of management fads; too often, it is.

Our experience is that the largest banks (say $100 billion plus) are much too large for a Sales Czar to succeed. In those banks, many “Sales Czars”, or business heads (charged up by the likes of Dick Kovacevich, Sandy Weill, and Jaime Dimon) create change. However, banks that are smaller in assets and geographic spread provide an apt opportunity for such a role.

One of our beliefs is that a crisis is at hand for smaller banks, especially for those with less than $30 billion in assets that are pushing for growth. Consider a Sales Czar or other alternative approaches that make your bank an aggressive selling machine rather than a reactive order taker.