Sales domination. That is today's opportunity for any bank in the annuity and mutual fund marketplace. Virtually every survey indicates that consumers, when given a choice, prefer to purchase insurance and investment products from their bank.
And banks -- both large and small -- are responding. Some aggressively, some in self defense. Some successfully, some not so successfully. Some for profit, some purely as a customer service.
Consumer demand has grown to such an extent that today many forward-thinking bank executives view investment products as core retail banking products.
But there is an inherent problem all banks face when entering the annuity and mutual fund sales arena.
They must find some way to fit the licensed sales representative, who usually is a hard-driving person with an entrepreneurial approach to the business, into the culture of the existing branch, which almost always is staffed with more passive, service-oriented employees. Otherwise, the program is doomed to failure.
Yes, platform people can be licensed and trained in these selling these products. Several banks have experienced success in selling annuities with their branch staff.
The mutual fund sale with its risk factor, however, is more complex. It requires better selling skills, and there are more compliance issues.
Last year, one of the largest banks in America concluded that a dedicated sales force was better than a platform approach. The bank tested both methods for two years and learned, among other things, that it grossly underestimated the real cost of using its platform staff to sell nontraditional products.
So, assuming the bank wants to be successful, it enters the annuity/mutual fund business with an experienced, licensed salesperson.
Welcome to the world of culture clash.
How to Handle It
Now what? Is there an answer to this problem? You bet. All you need to do is build an environment of mutual trust, mutual confidence, and mutual success. Easy to say; not so easy to do. But with a small amount of effort, it can be done.
How, you ask? By focusing on some simple rules for recruiting, compensating, and managing a sales force along with proper goal-setting and branch training.
The following guidelines will help you achieve full integration into your branch system and complete acceptance by the staff.
Let's start with recruiting. Defining a suitable profile for the type of sales professional you want is the first step. You want a team player with good selling skills.
Then, a battery of psychological and aptitude tests coupled with multiple interviews (normally four are recommended) and extensive reference checks will weed out the overly aggressive, overly entrepreneurial person before he or she is hired.
This screening process can cut personnel turnover in half, and goes a long way toward a better cultural fit.
Salary Plus Incentives
The compensation package plays a major role as well. We've all heard stories of the six-figure salesperson who drives up to the branch in a luxury automobile and wearing expensive clothes. That scenario generates resentment and erodes trust and confidence among the staff.
To help ensure a cultural fit, the compensation package should include a guaranteed salary plus incentives, rather than straight commission. Also, the incentive portion should be based not just on sales, but on the quality of business.
Quality-of-business objectives have the added benefit of reinforcing an appropriate level of customer service.
A system that requires administrative accuracy, favorable compliance reviews, persistence of the business written, a high level of new money, and cross-referrals to bank products as a condition for continued employment works best.
New money is important to every branch, and the key to getting it is with a thorough needs analysis. A good customer profile promotes cross-referrals to bank products (when appropriate) as well. Most bankers agree that nothing builds trust and confidence faster than demonstrating to bank employees that referrals are a two-way street.
With a quality-of-business system in place, the bank exercises dramatic control over the sales force whether they are employees of the bank or under the direction of a third-party marketer.
This control of the sales force is especially beneficial if the bank wants to sell proprietary funds, which, for a myriad of reasons, are not always emphasized by salespeople who were former stock brokers.
Weaving the goals for investment products into the fabric of your branch goal-setting system is another important step to achieving a good cultural fit.
Investment products should be added to the list of existing branch goals along with similar incentives, rewards, and recognition to the branch for employees' attainment.
This philosophy positions the investment representative as an ally in helping the branch achieve its goals.
Learning to Serve the Client
Training plays an important role in establishing a good cultural fit as well. It should focus on how the customer can benefit. Increased earnings and tax savings are the primary benefits, and support the customer service orientation of virtually all branch employees.
Investment representatives should be actively involved in the training of branch employees.
An often overlooked tool in building rapport is reporting the sales results to the referring employee. A brief review of the interview and a simple thank-you from the investment professional goes a long way toward continued branch support.
Feedback helps maintain good referrals and improve bad ones. Taking this one step further, salespeople should be encouraged to have bank employees periodically sit in on their referred appointments.
This first-hand observation of how concerned the investment counselor is with the financial health of the customer is invaluable.
Now comes sales management. Many bank programs assign 10 to 20 representatives or more to each sales manager.
With meetings and paperwork, it is not uncommon for the manager to see each salesperson one-on-one only once a month -- if that often. The result is having an independent contractor sit in a branch lobby doing his or her own thing.
A better approach is to increase the number of sales managers and reduce their administrative responsibilities. This enables them to manage the sales activities by spending essentially all of their time in the field.
In this structure, coaching becomes the sales managers' top priority -- sitting in on appointments, observing and ensuring that a needs-based selling technique is being used, and making sure that compliance procedures are strictly observed.
In a banking environment, nothing drives a wedge between the branch staff and the investment representative faster than customer complaints.
An additional benefit of true field sales management is that the manager is continuously in contact with branch employees. Formal training along with informal chats help the branch staff to better understand the investment program.
A well-managed investment program, staffed with the right people, can generate meaningful fee income for the bank, and will significantly enhance customer relationships.
Dome right, it can serve as a sales model for the rest of the bank. And by doing it right, you will avoid that destructive force known as cultural clash.