Within banks, service repeatedly wins out over sales; however, it is a Pyrrhic victory. Ask a commercial banking RM how much time he/she spends selling and to this day the typical answer for the main sales staff of the bank is 20-30 percent…pitiful at best.
What are they doing instead? Credit-related analysis, although in many cases their credit authorities are minimal, having been superceded by experienced underwriters; administrative tasks, although they have support personnel who are supposed to be performing many of these tasks; or sitting at their desks filling out paperwork (not all of which is forced on them by regulations) when they should be in front of customers and prospects.
The Service/Sales Conflict
It is as if a service orientation is in conflict with a sales focus. In fact, nothing could be further from the truth; the great banks are linking sales and service and differentiating themselves by doing so. It was the 18th century’s Samuel Johnson who said, “Patriotism is the last refuge of a scoundrel.” Let’s update this for banking: Focusing on service is the last refuge of bankers who do not want to sell.
One sad element of this is that the service being offered and taking so much time is often mediocre at best and actually conflicts with selling. One story gives a small indication of the negative impact of “service.” Recently, a small business owner who had moved went into a community bank for a notary for a certificate of state incorporation, In effect, this document tells the banker that the customer is moving into the neighborhood and presents a new opportunity or, at a minimum, an appropriate opportunity to ask some diagnostic questions. In fact, the question the customer was asked was, “Do you have an account with us?” “No,” was the answer, opening up a sales opportunity. Instead, the banker replied, “Then, the fee will be $3.” Nothing else, no sales solicitation nor even the slightest sign of interest. If that is the best a community bank can do….
As consultants, we are becoming increasingly convinced that senior management is over-investing in employees who will never become good sales personnel. People do not fundamentally change their stripes. It is unrealistic to expect someone who has been a relatively passive customer service person to suddenly become a sales enthusiast. Many banks are saddled with service personnel in a world in which sales is critical to the bank’s success and very existence. They can try to train and reeducate these bankers at great expense and with mixed results or they can admit defeat and bring in a cadre of sales specialists.
The Best Banks Combine Service and Sales
In our view, the best retail and business banks have focused on this issue and developed successful approaches to transition to a strengthened sales culture without destroying their service focus.
What steps have Wachovia, Bank of America, and National City’s Emerging Markets Group taken? First, they recognized the problem, focusing on the need for an increased sales effort. First Union, the predecessor bank of Wachovia, was probably the first large bank to deal with this issue, addressing it about ten years ago.
Second, each bank understood that employee disruption had to be minimized and that the employees could contribute — albeit for some, not in their old roles. The banks went through a process whereby they evaluated each professional and determined whether, going forward, they best fit as a sales RM, an underwriter, an administrative specialist, or another role. Most employees continued to have a home at the bank, so personnel disruption was kept relatively low. In some cases, however, the banks supplemented the sales-oriented RM with people from other parts of the bank — for example, capital markets, mortgage, or the branch.
Third, banks like BofA and Wachovia were consistent in execution. As we commented in our last newsletter and prior writings, banks invest in training and account planning exercises and, then, allow their impact to die out as salespersons and sales managers fail to follow through. Banks like BofA, Wachovia, and others — such as Fifth Third and Citizens — follow through fiercely. Selling is not an option at these banks.
Imagine the impact of a straightforward week-in-and-week-out discipline that begins on Monday morning with “What are you going to do this week?” and ends on Friday afternoon with a detailed review of what was accomplished.
Fourth, these banks are selling multiple products; they are not simply credit jockeys. One banker at a credit-focused bank we recently worked with actually said that there was more downside than upside to putting on a new loan because of the bank’s emphasis on credit quality. Make a mistake and you were in big trouble; do nothing and you could survive. A sales culture demands the sale of more than one product type. Too often, a bank’s focus on service can be traced to its dependence on credit as the predominate earnings generator. Wachovia, Wells Fargo, and other sales leaders sell the bank, both the commercial and the personal capabilities of their institutions.
Service is Critical, But…
Of course, service quality must remain strong if a bank is to retain its customers and have he opportunity to expand its relationships. Too often, however, it has become an excuse for not selling or giving selling a lower internal priority. Oftentimes the wrong people (high cost sales people) are in the middle of the service process. Banks simply cannot afford to take their sales people offline to handle service needs. In an environment in which the competitive landscape is only intensifying, the bank with the most feet on the street and a consistent and disciplined sales approach has the sales odds in its favor. As senior managers, if your sales people are satisfied calling only 20-30 percent of their time then take the following steps: rethink their job descriptions, evaluate their support personnel, assess the effectiveness of their sales managers, and/or recast compensation. A real salesperson should be fighting for as much sales time as possible rather than, as some do, simply bemoaning their fate as highly-paid administrators.
Without senior management taking corrective action, the sales-service gap will never be closed and, over time, those banks emphasizing service will shrink in size and profits as customers go elsewhere for their growth needs.