Two weeks ago, our newsletter focused on some of the factors that make most banks mediocre, at best, selling institutions. Among the sales impediments we mentioned:

• Many banks have traditionally viewed selling as either unnecessary or an activity to be looked down upon.

 

• Banks fail to learn from internal best practices, usually existing outside the “traditional” bank in areas like mortgage, brokerage, or leasing.

 

• Incentives are insufficient to generate a significant sales push.

 

• Banks don’t like sales stars.

 

• To succeed in banks, excellent salesmen need to become managers, another example of the Peter Principle at work.

 

Our view is that banks have no choice but to become excellent selling machines. What do they need to do to transform themselves?

 

Eliminate all caps on incentives. Caps on incentives are indefensible if you really want to encourage sales. Companies like Merrill Lynch want their salespeople to earn as much as they can. Why? Higher salesperson incentive compensation is the result of higher sales. And higher sales typically lead to higher income to the firm. It is a simple but very powerful equation.

 

Celebrate the sales staff. Sales institutions have a President’s or Chairman’s Club to which top sales performers are admitted. The best sales people get different business cards, special trips, and clear acknowledgement, both in monetary and non-monetary ways, that they are appreciated by their employer. If your bank does not support the sales staff with some benefit like a Chairman’s Club, it is not effectively supporting the sales effort.

 

Ensure that sales can be a career in itself and not only a path to a management position. Banks don’t need more managers; arguably, they need fewer. What they do need is to develop a strong professional sales force that rivals players like Merrill Lynch or GE Capital. Over time, branch managers and commercial bankers should be able to develop a stream of annuity income that locks them into their positions much like the broker who manages a portfolio of accounts.

 

Determine what you want sales persons to sell and educate them about those areas. Our recent work with several banks of different sizes indicates that commercial bankers’ knowledge of products outside of lending and rudimentary cash management varies greatly. Bankers want management to tell them which products are the most profitable and, thereby, should be given preference (assuming their appropriateness for customers). Instead, many feel overwhelmed by product proliferation and “product-of-the-month” schemes. Senior management needs to step in and create clearer priorities for its sale staff.

 

Clarify the job.  An increasing number of banks have learned that clarifying roles and responsibilities is a fundamental element of creating a sales mentality. Within the branch, someone has to be primarily responsible for sales and another person for customer service. Within the commercial bank, it is difficult to view the banker as a true salesperson if his responsibilities include selling, underwriting, and handling customer service.
 
Manage the sales managers. Our client work shows that one of the weak links in bank sales centers on the sales manager. Too often, they are “player/coaches” who do not have the time or ability to coach effectively. Just as a professional sales person is critical for the banks, so too is professional sales management.

 

Senior management must also sell. Top performers, such as Chase in the middle market and other areas, have long ensured that senior management gives as much priority to being in front of the customers as behind a desk. Sales culture starts at the top of the bank; unfortunately, it is also the top of the bank that can prevent or kill a strong sales culture.

 

Don’t change the rules. Line bankers have told us of occurrences in which their banks have reneged on payment agreements tied to performance. In one case, the results were in when management said they wanted sales people to take a cut from their agreed-to comp because other parts of the unit had underperformed. That is an unfair and short-sighted approach that, in one case we know, led directly to a top salesperson leaving his bank and taking his sales energy and performance to another employer.

 

Fire non-performers.  We have seen too many clients that allow poor salespeople to remain. Bad credit people get fired; bad sales people get another chance. Management must move the non-sales performers out and upgrade staff (and increase revenues) by bringing in sales and incentive-driven employees.
 
Concluding thoughts. Almost uniformly, the banks we are working with are focusing on finding paths to growth, either through entering new markets or selling more to current customers; the best players will do both. Banks cannot view a sales effort as an option; rather, it has become their lifeblood. Those that sell targeted and appropriate products to their customers can thrive; those that fail to sell risk becoming increasingly irrelevant to their customers and the competition.