Rate of Sales Referrals By Branch Personnel Found Amazingly Low

Many bank investment sales programs are having trouble getting referrals from retail branch employees, and it's costing them business, some experts say.

In some cases, customer service representatives are not familiar with investment products or have no clear path for routing customer inquiries. At other banks, management struggles over who "owns" the customer relationship impede the flow of referrals.

These problems were underscored in a survey of 120 bankers by Omega Performance, a Sausalito, Calif.-based training company. The banks in the survey generated 4.5 to 8.5 referrals a month per branch, a level many of the bankers found discouragingly low.

Of those referrals, 40% on average led to sales of investment products.

Among the banks surveyed, revenue from investment product sales averaged $57 million a year. Though extra referrals could bring in more, only 10% of the banks had clear referral guidelines for retail employees, said Jay Cross, Omega's director of marketing.

"Banks need uniform internal guidelines about referrals to tell employees what to look for in a trust customer, or in an investment customer," Mr. Cross said.

"Banks have to understand that customers want to save and invest at the same time," he added.

Some bankers said they've gotten the message and are increasing the training given bank customer service representatives.

But others said good results have been slow in coming.

First Chicago Corp. found that referrals poured into investment departments during 1992 and 1993 but dwindled when the markets took a dive last year.

"We found that we had overestimated the amount of training we gave our people at the time," said Richard A. Davies, managing director of First Chicago Investment Management Co. "Bankers were directing traffic instead of actively referring."

When bank employees were pressed to answer customers' inquiries about investments, many were "still uncomfortable asking open-ended, probing questions like, 'How much money do you make?' " Mr. Davies said. This year, First Chicago is encouraging bank retail associates to make two or three referrals per month.

Not generating enough leads can affect more than a bank's sales revenue. Last year, at Chicago-based Cole Taylor Bank, some investment sales representatives quit when they didn't get enough referrals from the retail side, according to Richard D. White, executive vice president in charge of trust and retail investments.

"The resurgence of demand for bank deposits had made it very competitive, and instead of making referrals, they were selling the customers right into certificates of deposit," Mr. White said.

At Citizens Financial Group, Providence, R.I., referrals to investment reps jumped 25% in the last six months, said L. Peter Sheehan, president of the banking company's brokerage affiliate. He declined to give hard numbers.

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