Organically Grown

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As credit unions race to community charters and to build branches, the banking industry already knows that's an expensive strategy for capturing new members/customers and, in turn, their business.

That's why many are focused on "organic" growth within their own branch networks from people who are already customers.

Two veterans of the process of organic growth shared some of their lessons learned and strategies developed for doing just that during BAI's Retail Delivery Show here. Les Dinkin, managing director with Novantas, New York, which specializes in sales revenue growth by improving selling effectiveness, said the branch network is pivotal to financial performance, noting that 80% of retail banking revenue is generated at the branch level-and so is 60% of the expense base at major banks.

Sales volume, he cautioned, is onlyh a partial measure of success. "You must also be mindful of market share," Dinkin said. "The opportunity and challenge is, how do we make the most of each interaction with prospects and customers?"

There are two keys to leveraging branch traffic for organic sales growth, according to Dinkin:

* Break out of the measurement trap. "Don't just measure results, rigorously monitor the causative front-line sales behaviors," he urged. "Level one is sales performance assessment. Level two is sales process/dialogue support tools."

"The most expensive sales resource in the network is the sales associate, but there is very little data on HOW they do it," he observed.

* Leverage what you learn. "Use the findings systematically, as opposed to episodically," Dinkin recommended. "Incorporate the findings into sales management, training and coaching, and use it to launch initiatives that include cross sales."

Seeking to further define why a bank branch on one corner can significantly outperform a branch on another corner, Novantas launched a study to identify the Top 100 branches in organic deposit growth nationally, a group it calls the T-100.

"The T-100 achieved a 22% compound annual growth in deposits between 2000 and 2004, double the 11% rate of nearby competitors," he said. "We then asked, 'Were there any differences in the branch sales experience that correlated with deposit growth differences?'"

According to Dinkin, not surprisingly the answer was "yes." By studying both the T-100 branches and their nearby competitors using onsite visits, the T-100 were much more active in managing the process and content of their sales dialogues, noted Dinkin. What it found was that those sales behavior disparities are prevalent across the industry, resulting in inconsistent branch sales growth.

"We found that competitors across the street from the Top 100 branches were all over the lot, and their performance reflected that," he said. "We found that of the top 100 branches, 80% greeted us within three minutes, compared to 35% of competitors. Ninety-five percent probed for our needs, compared with 75% of competitors. There were other differences in terms of the depth of the probing, asking for the sale and follow up."

How do leading banks arrive at that point? By using Six Sigma and the notion of "sales defect rates" that can be used to methodically improve branch sales performance. The sales experience includes the first impression, probing for needs, making the offer, and closing or following up, said Dinkin. "This applies to every channel," he observed.

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