Retail securities brokers develop their lead sources through a variety of means, including referrals from existing clients, personal and professional contacts, and cold calls. Bank brokers develop leads using all of these methods, but also have access to the motherlode of all lead sources: referrals of bank customers by branch employees.

This lead source is the reason many brokers have elected to set up shop in bank branches, as production based on these referrals can account for up to 70% of a typical bank broker's transactions.

Unlike wire houses, where brokers are responsible for generating virtually all of their leads themselves, the bank "owns" the client relationship when it is internally generated. The nature of the referrals and the cost associated with developing them suggest that bank brokerage firms would have well-developed mechanisms for the tracking of branch- generated leads. Despite the benefits such a system would provide to a firm's marketing efforts, surprisingly few bank brokerage programs have developed a system which allows for any type of corporate memory for tracking the most-promising prospects.

The issues related to this lack of corporate memory are easy to miss and present a classic marketing problem-how does a brokerage firm measure the amount of business that is lost due to internal inefficiency, competition, or customer inaction?

The problem, currently faced by most bank brokerages is straightforward. The branch staff refers a prospect to the broker responsible for a branch. The institution does not have contact with the prospect again unless the prospect becomes a client. The leads that are not closed immediately are kept by the broker in a lead file until they are classified as "dead." The institution is not able to track who these prospects are, where they are in the decision-making process, or why, if they are lost, the prospect may have elected to invest at another firm.

Simple prospect-tracking is an essential component to ensure that leads are worked effectively and that the prospect is receiving outstanding customer service. A contact-management data base application running on a server networked to one or more PCs would provide the institution with the tools necessary to record valuable information about the prospect and his or her experience with the broker.

There is a good fit between this distribution channel and the technology which allows for simple prospect-tracking.

Bank brokerages often call new customers to gauge satisfaction with their recent in-branch experience. The results of these surveys, not surprisingly, are generally positive; absent a pleasant experience, the customer is likely to have taken his or her business elsewhere.

Much more valuable to the firm is a survey of nonpurchasers. These programs allow firms to ascertain why a prospect did not invest at the firm and then to tailor training and continuing education programs to address issues which the results uncover. If a firm discovers it is losing most prospects to no-load mutual fund companies, it can help train its brokers to stress the advantages of professional advice during their presentations. Likewise, if the firm discovers that prospects are lost because they choose to stay in deposit products rather than investing, training can stress establishing a needs awareness in the prospects concerning the advantages of securities investments.

Turnover among retail brokers is traditionally high. Brokers may stay with one institution, but cover several different branches during a career. In addition, it can take several months to close securities prospects. By creating a mechanism that generates follow-up reminders at intervals of 30, 60, and 120 days, the bank can be assured that a prospective investor is being actively pursued, even if a branch is not receiving full-time coverage by a broker. A corporate memory which provides a list of all the open referrals provided by the branch during the previous year would enable a new broker to quickly focus on a group that may have several "warm" prospects..

Typically, bank brokerage firms employ one benchmark for measuring broker success-production. By examining the number of leads a broker receives and his or her closing ratio, bank brokerage management will be better able to gauge a broker's success. For example, a broker who receives an average of 40 referrals a month but only closes five is not as effective a salesperson as the broker who receives only 10 a month yet still manages to close five.

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