Let's say you're the head of the commercial division at your bank, and you are given a product line with the following characteristics:
*A demonstrated market need.
*A product line that is still emerging and improving.
*Underpenetrated markets.
*You and your competitors offer a widely divergent variety of products within the line, making competitive differentiation relatively simple.
*It is far less price-sensitive than the commodity business of lending and, as a result, is immensely profitable.
That's the good news. Now suppose also that:
*Only a few people understand the product line and, consequently, only a few can sell it.
*You have far fewer product specialists than relationship managers; and since the relationship managers view themselves primarily as lenders, profitable, nonborrowing prospects may not get called on at all.
*Relationship managers, who have the most contact with borrowing clients and prospects, rarely go further than making a referral to a specialist, if and when they uncover a need at all.
*No amount of cajoling or threats, tweaking of compensation and periodic review, or product knowledge training will get them to budge.
By now you know that the product line is cash management. Let's agree that the objective is to get the relationship manager to be what we call "market competent," to understand the total market and client potential, and to realize greater wallet share by qualifying a range of needs for delivering an array of noncredit products by breaking down the silos between the bank's profitable business lines.
In short, bringing to market the right product to the right client at the right price at the right time through the right delivery channel.
Let's also agree, that while there are many obstacles to performance, the two syndromes we often observe are:
*The "I am a lender and am measured and compensated as a lender" syndrome (often reinforced by senior management in the "No, you are a consultative relationship manager; but I am a lender too, so I see your point" syndrome).
*"I would rather stick a red-hot needle in the center of my eye than talk about products I don't understand" syndrome.
Product knowledge training will not overcome these obstacles, but there are solutions that can help relationship managers become more involved in the sale, which will make them more familiar with the products, raise their product knowledge, increase their comfort level, eliminate the red-hot needle, and develop the lender into a relationship manager.
Here are some approaches:
Use the analysis statement to create a reason to call. One of the most difficult calls you make is the one where you have nothing to say. The client is valuable and deserves frequent attention but is also sophisticated and busy. You cannot differentiate yourself with "shake and howdy" calls nor is outside calling a cost-effective delivery channel when the content is "elite chatter." One relationship manager told me, "I'd sooner lean into a left hook than bring up all the things we charge him for," but after trying it he said, "the client appreciated my interest in helping him see how and why he's charged and ideas for saving money." This is a strong retention tactic, and can work for expansion.
Ask the specialist for a needs hypothesis. A careful look at the analysis usually reveals at least one cash management need, from which you can develop a hypothesis to focus your call. Does the client issue a lot of checks? Perhaps they have reconciliation needs. Are deposits sporadic and in large amounts? Or very frequent? Or from several different locations? Does the client issue lots of wire transfers?
These behaviors suggest a possible need for help, yet most relationship managers have difficulty reading these "fingerprints." Since the cash management specialist can spot them at a glance, have a specialist review the analysis before the relationship manager makes the call and pass on one or two key ideas for discussion, along with the relevant probes.
This approach has the triple benefit of improving the relationship manager's product knowledge and qualifying skills, impressing the client with the relationship manager's insights and competency and eliminating the expense of joint calling, a serious delivery channel issue.
Shoot the fish in the barrel. "This call will be a no-brainer," said the cash management specialist when reviewing a client's analysis. "The client sends a couple of wires every day and calls them in to us. If we go out there and show him how he can do it faster and cheaper with electronic wire service, we'll sign him up today and keep him for life."
She was right of course, and her tactic of "shooting fish in a barrel," or first closing all the obvious needs, turned out to be strong for expansion and retention. It also positively positions the next sale which might require more effort.
Create a matrix of behaviors and products. Ask the cash management people to help you create a matrix that shows all the behaviors of your commercial clients down one column, and all the cash management products along the horizontal top row. Then run a practice session getting the relationship managers to recognize the clues. Your left-hand column should say, "receives encrypted ACH deposits," or "has several remote sales locations." You can think of at least 20 others.
Conduct a "fill in the blanks" exercise and then debrief it. This is a great sales meeting exercise for those commercial sales managers who are looking to provide rich content in about an hour.
Develop an interview model that avoids product solutions. Let's suppose that, on average, a bank offers 15 to 20 cash management products. It would be difficult to learn all the features of every one of them. The cash management specialists have trouble doing it themselves, so why ask the relationship managers to do it?
Besides, you only want the relationship manager to identify the need, not necessarily to sell all the features. Now consider that all cash management products - no matter what they are - do only one or more of the following three things: enhance or accelerate the receipt of revenue either for investment or utility, control the cash, or provide information.
Given this simple way of looking at it, it makes sense that a qualifying model is easy to develop for interviewing clients regarding needs. Next time you make a call with a cash management specialist, listen to the questions. Nothing fancy here: "How often do you get the mail? How do you forecast payments?" and so on. Create a simple interview that avoids the complexities of data transmission and other scary topics, yet still gets at your clients' needs.
Look for a different set of clues on your calls. Years ago I worked with a commercial lender who told me, "I can tell a lot about a company just by looking at the parking lot, the inside office, and the condition of the factory floor." Most lenders would agree that the clues from those observations are numerous and valuable.
A similar set of clues is available to the observant relationship manager for spotting cash management opportunities in a revealing on-site visit.
Do you hear the chirp of modems? It means that the company is accustomed to receiving and transmitting data, often a big obstacle to information reporting, ACH, and other similar products. How receptive is your client to discussions about technology? Does the CEO have a PC monitor? Is there a CFO? These are all tips that will help you see either the ease or obstacles of fulfilling a cash management need.
"Unsell" the sweep lure by aggressively promoting sweeps. Nothing could be more damaging to a bank's revenue stream and retention strategy than senior managers who don't understand the role of sweep accounts in their product portfolio.
Sweeps don't "cannibalize" deposits, they generate fee income. Consider the client who may have $400,000 in balances, and requires $250,000 to offset charges. Your client knows he has idle balances, so use the "yellow pad" approach to show the balances he should keep to offset charges, the daily amount to be "swept" in any given month, the earnings rate times the swept amount and the monthly fees.
You will be surprised at how many clients will opt to leave things the way they are, so it makes sense to visit every client where his surplus exists, showing the pluses and minuses of sweeps, and "unselling" most of them on the idea. For those you do sell, then it's the right thing for that client; for those you don't, they'll never forget that you looked out for them.
As a retention strategy, you want them to have a ready answer for the Merrill Lynch or Prudential representative who follows you in: "Sorry, my bank explained all that to me, and we're fine the way we are."
Mr. LaMothe is a senior consultant with ActionSystems, a financial institutions consulting group based in Dallas.
