As banks strive to differentiate themselves in a crowded, competitive marketplace, many institutions are realizing that a customer-focused strategy is the surest way to win.
But the transition from a transaction-oriented to a sales-oriented organization is a tremendous challenge. Fortunately, information technology can make this transition easier by providing bank product retailers with a wealth of customer information, and by reducing the amount of nonproductive and nonselling activities that take up much of the traditional banker's time.
Successfully utilizing technology, however, is only half the battle. The bank's entire set of organizational capabilities needs to support the transition as well. Let's take a closer look at how these elements contribute to the transition process.
Information technology can aid in a bank's transition to a sales culture by providing rich data and information on its customers. The first step is to segment the customer base by behavior. This is an effective way to group and isolate customers because it provides clues to future financial needs and potential buying tendencies. Demographic segmentation is also useful in identifying profitable customer groups on which the institution should focus its selling efforts.
Customer information files are another neglected and often overlooked resource for generating sales leads. These files of exclusive, proprietary information on customers have been around for years - nearly every institution has some version. But to be useful, the customer information file must be complete and accurate. Far too often these records contain gaps in the full history of the customer-institution relationship - and that means potentially missed sales opportunities.
* At what stage is the customer in his or her life cycle?
* Is the customer more likely to buy products that offer financial planning and assistance for college or for retirement?
* What are the customer's credit obligations? Is he or she a strong candidate for refinancing a mortgage or taking out a second one?
* What is the customer's current automobile financing debt? Is he or she likely to respond to a preapproved credit line for a new car purchase?
Strong customer information files can capture this information accurately and provide it to retailers quickly.
Clearly, technology can have a profound effect on sales performance. Combining customer segmentation with enhanced customer information file data will provide sales bankers with specific customer targets, as well as a profile for each targeted group that identifies that segment's potential financial needs, based on buying triggers. Bank sales staffs can then take a proactive approach to initiating relationships, meeting with customers, and providing enhanced value? to them.
By reducing the time spent on nonproductive and nonselling activities, technology also frees up the banker to devote additional time to customer relationship building and sales.
Platform automation was the first big attempt to streamline the burdensome work flows and paper flows that have historically plagued bank branches. Information technology has been successful in making the new account and account maintenance functions less time-consuming by eliminating the need to manually fill out new account opening sheets and data entry forms.
Sales personnel can now open accounts directly on-line and get the necessary forms printed out directly at their desks. Instead of writing and typing out customer information, they can now talk to customers and suggest products to meet their needs.
Telephone and automated account information systems have also helped to eliminate clerical time. Banks have had a hard time separating the sales and servicing functions, particularly in the branch location. But the implementation of automated voice response systems and centralized customer service phone centers has allowed banks to separate these functions.
Used properly, these technologies are mutually beneficial. Customers can enjoy extended hours to obtain information and better service from bank representatives who have been trained in phone skills, product knowledge, and customer service.
Improving processes and centralizing operational and support activities can also have a dramatic effect on sales efforts at the branch level. In our client work, we have found that up to 30% to 40% of branch activities do not contribute to sales. Technology can play a big part in streamlining them. For example, one institution eliminated fully 35% of branch activity through automation and centralization. Instead of reducing staff, they refocused staff on selling programs and activities that resulted in a 20% increase in account balances - with no staff increases. Perhaps as importantly, removing the nonselling activities focused management and staff attention and effort on customer relationship development and selling.
Though it plays a pivotal role, technology alone cannot ensure success when an institution is attempting to establish a sales culture. As stated, its primary role is to give bankers additional time to sell products and provide the customer information necessary to develop new relationships and enhance old ones.
But there are other organizational capabilities that an institution must have in place to support the transition to a sales-oriented culture. Chief among them are:
* A strong management commitment to achieving and sustaining a branch sales culture.
* Strong, talented, well-trained people positioned in sales/retailing roles and supported by a well-designed sales incentive system.
* The integration of all products and services into a seamless delivery system - being able to provide one-stop shopping for a customer's many financial needs.
Once all these components are in alignment, the institution has indeed laid the groundwork to support successful retail banking initiatives.
Jeffrey A. Thompson is a managing consultant with Towers Perrin in Chicago.