New Jersey community banker Anthony Abbate sees himself as a street fighter.
Dollar for dollar, Saddlebrook, N.J.-based Interchange State Bank is no match for the giants in its midst. But by relying on brains over brawn, Mr. Abbate bets the $490 million-asset bank can compete with the big players.
The banks' weapon: A customer information file wielded by a recently appointed sales manager who can pinpoint small businesses that are ripe for bank services.
"We use what I call a street-fighter strategy," said Mr. Abbate, chief executive of Interchange. "I'm going to make sure my customer base is my customer base."
Mr. Abbate is one of a growing number of community bankers who are retooling their sales strategies in the face of growing competition from peers, big banks, and nonbanks for small-business customers.
Increasingly, community bankers like Mr. Abbate realize they need more than their traditional hometown ties to remain competitive for entrepreneurs' business, and are trying to improve their sales effectiveness.
"As a community bank, I can't afford to go toe to toe with the big banks because I don't have the big marketing budgets," he said. "We have to market smarter, and the way to market smarter is to work on customers who have relationships with other banks and get that business."
"We're seeing a growing interest out there in selling and hiring people who know how to sell," said Diane Casey, national director for financial services company Grant Thornton.
Thomas Berdan, executive vice president of Southern Commerce Bank, Tampa, has watched competition for small-business clients pick up as the regional banks and nonbanks move in.
Small Business Administration-backed lending, for instance, has skyrocketed since the bank got involved in it almost seven years ago.
"Initially, there was only one other lender when we got involved in our marketplace," he said. "Now there are 20 to 25 lenders."
To distinguish itself from the mass of other lenders, the $42 million- asset bank - which focuses exclusively on small business - for three years has hit prospects with direct mail and has run testimonial advertisements in its marketplace, Mr. Berdan said. It also can tap an extensive referral network.
The testimonial advertisements have been imitated by Southern Commerce's competitors. The entrepreneurs in his ads have also been aggressively targeted by competitors, Mr. Berdan said.
"We've had seven or eight people in the ads and we've retained all but two of them," he said.
The bank also holds seminars as a lure for new business.
"We try to identify either a referral source or a customer fitting within the parameters of what we want," he said.
Community banker Ed Lett started knocking on prospects' doors around San Antonio in 1985 because his recently chartered bank couldn't afford advertising.
"The only way to get business was to go and start calling on people," said Mr. Lett, president and chief executive of $160 million-asset Security National Bank.
The bank started getting serious at the end of 1992, when its board voted to install an incentive program and committed more than $1 million to a computer system, Mr. Lett said.
"From that point we've been going full blast," he said. "We track everybody's calls and assign points to calls versus closings."
The bank has 24 loan officers on an incentive program, Mr. Lett said. One requested not to be a part of it after she failed a test for calling aggressiveness.
"She was very happy to be out of the program," Mr. Lett said. "But she left good money on the table."
Mr. Lett said he knows of no community bankers in his area who have taken the same steps to put in place a forceful sales culture. He has strong opinions about why.
"Bankers are afraid to get out from behind their desks," said Mr. Lett, who has more than 30 years of banking experience. "They're lazy."
Many bankers are reluctant to solicit business for fear that the entrepreneur might not pass muster with the underwriting department, he said.
"If I go out and go through all the work of getting you signed up as a customer, and then I find out it won't work out, telling you that isn't easy," he said.
