Does your community bank have a culture that encourages selling at every level?

If the answer is no, you are probably in the majority but very much out of fashion. More important, your bank's ability to survive may be in doubt.

Many cutting-edge community banks in an effort to remain competitive with large, well-funded bank and nonbank competitors -- are transforming their operations so that the act of selling products and services becomes a guiding business principle.

This report describes how small banks across the United States are bringing a sales focus to their institutions, sometimes in the face of employee resistance. After reading these accounts, you should find that the term "sales culture," often shrouded in vagueness, is reducible to concrete measures.

Today, banks ranging from Brenton Banks, a $2 billion-asset banking company in Des Moines to Town and County Financial, a $53 million-asset bank in Dundee, Ky., are training branch employees to find any excuse to sell more products.

Witness the growing prevalence of tag lines, those sentences at the end of voice mail recordings that point out a new offering that the bank is currently promoting.

Even tellers, once evaluated solely on their ability to handle transactions at the window efficiently and accurately, are now expected to identify customer needs and make sales referrals -- all for extra compensation.

Some banks have even reshuffled their organization charts, hiring a top-level sales or marketing executive who reports directly to the chief executive officer and is given free rein over all operations.

"We have transformed things so that everybody in the organization thinks about the total needs of the customer,'' says Robert L. DeMeulenaere, chief executive officer of Brenton Banks.

As part of this effort, banks like South Umpqua Bank in Roseburg, Ore., are even turning their branches into stores places where a customer might collapse on a comfortable couch and learn more about a bank's offerings while sipping a latte or cappuccino. The goal, of course, is to increase sales opportunities by creating an environment a customer wants to spend some time in not just a place to make a quick transaction and run. (See accompanying article.)

Many banks trying to turbocharge their sales function have turned to nationwide consulting firms, including Cohen Brown, Action Systems, Omega Performance, and Stern Marketing for help. (See article below.) These firms, to varying degrees, specialize in everything from employee training to how to develop systems for tracking performance, to how to make branches more sales-focused.

For banks looking for a cheaper alternative, the Independent Community Bankers of America has its own program, called Expanding Customer Service. And some banks have even developed elements of sales culture on their own.

Though the sales culture movement has the aroma of faddishness about it, few deny its enduring importance to community banking. At a time when small banks and thrifts are feeling added pressure from a host of new competitors, including nationwide mortgage and credit card companies, bankers and analysts agree that any bank that wants to remain independent must master the least banklike of skills selling.

"This is clearly the direction that the industry is going in," says Joseph Roberto, an analyst with Keefe, Bruyette & Woods. "To stay in the game for the longer term, you have to do it."

That's what Mr. DeMeulenaere of Brenton Banks realized after being named president of his bank five years ago. Upon receiving the appointment, Mr. DeMeulenaere took a four-month hiatus from the grind of day-to-day management so he could attend conferences and visit cutting-edge institutions across the country to learn what they were up to.

"My job was to think strategically about the future direction of the bank" says Mr. DeMeulenaere, who was named chief executive two years ago. "I met with a lot of smart people, including a lot of nonbank companies."

This quest to think outside the box yielded 12 imperatives that Mr. DeMeulenaere began applying to the bank in the year following his return. One of them was the development of a sales culture. In 1996, the bank hired a sales manager, Perry Atwood, who in turn hired Cohen Brown Management Group, a company that Mr. Atwood had worked with while at Bank One Corp.

Today, the bank's emphasis on selling shows. It all starts with a three-minute questionnaire that branch employees spring on new customers. These "financial needs profiles" are designed to show product and service needs. All branch employees are also expected to refer customers to other areas of the bank, a habit that is rewarded with cross-selling bonuses.

Even voice mail recordings have tags that encourage the listener to consider a new offering.

The bank also has instituted a program of two weekly sales meeting. On Monday, sales goals are set for the week. On Friday, there is a debriefing in which results are measured.

"We call it 'Born on Monday, die on Friday,'" says Mr. DeMeulenaere.

Workers are required to make a certain number of cold calls to customers in a given week. Mr. DeMeulenaere, who attended 70 hours of Cohen Brown training, makes at least 75 calls to customers a year, mostly the bank's larger commercial clients.

Of course, it was inevitable that this obsession with sales would meet with dissension from some quarters.

"A number of bank presidents who grew up in the old school said, 'This is not for me,''' says Mr. DeMeulenaere. "They said, 'For 20 years, I have done my job well. Now the newest guy has expertise that is viewed as more important than my knowledge.' "

As a result, some of Brenton's employees, executives to lower-level workers, left the bank an outcome that Brenton's executives saw as inevitable and appropriate. "People will yield more to what is easy than to what is right," says Mr. Atwood. "You always have to have the right people in the right job." Looking back, Mr. DeMeuleanare says he wishes he had done a better job of preparing his employees "for how hard this all is."

Still, Brenton and other banks have made it all work, a task made easier by the creation of monetary incentives and other rewards.

At Town and Country Financial, Jon Lawson, the chief executive officer, has developed a wide-ranging system of incentives to get workers to sell more.

The bank uses a point system, allocating certain sums to certain products and services. If, for example, a teller makes a referral for a home equity loan, he or she would receive 25 points, or $25. The system has been computerized, making it easy to track who gets what.

"At first, we gave incentives only when a product sold," he says. "But now people get points whether the product is sold or not," says Mr. Lawson. "We are rewarding them for the time it took to talk to the customer and supplying the bank with a referral card."

Because many employees value time off as much as money, he revised the program to give paid days off for points. "When we did that, that was the difference between day and night," he says. "The program really took."

The catch is that base pay has been more or less frozen for many sales positions at the bank, Mr. Lawson says. As a result, "we lost some employees. The lower-performing, less outgoing sales people fired themselves. They could not handle the environment.''

David Hickman, the chief executive officer at United Bancorp, a $403 million-asset banking company in Tecumseh, Mich., took sales incentives a step further. Many employees who work in the company's commercial bank, mortgage origination, and trust and investment groups are paid strictly on commission. They make up 5% of the bank's work force.

The remaining 95% are eligible for the bank's Stakeholders Performance Plan, which rewards workers based on the bank's overall sales and profitability. Last year, the program, designed by Higgins and Associates, a Lincoln, Neb., consulting firm, paid the average worker a bonus equal to 10% of salary.

Bankers and consultants point out that instituting a sales culture is of little value if there is no way of tracking it. And it seems that everyone interviewed on this topic has his or her own yardsticks for measuring success.

Here are some of the measures that Martin Cohen, the chief executive officer and co-founder of Cohen Brown, recommends for gauging results.

Consumer loan volume per month.

Number of profitable services per household.

Number of product sales for new clients bases on a first meeting.

Number of referrals to various departments within bank.

Number of referrals that end up in closed sales.

Number of financial needs profiles of individual customers.

Many banks use some or all of these indicators to track the performance of their programs.

Still, many banks consider it an added challenge to track sales performance, given all the other numbers that any bank must follow.

"One of the things that we found early in the programs is that we were trying to do tracking in a manual mode and it didn't work out," says Karl Reinheimer, executive vice president at Ocean Federal Savings Bank, a $1.5 billion-asset thrift in Toms River, N.J.,

Ocean Federal solved the problem by purchasing Sales Desk, an off-the-shelf program designed by Bisys, which among other features help the banks track which employees are making particular referrals and sales. This knowledge, in turns, assists the bank is paying bonuses. "We can tell what has been opened or cross-sold and by whom," he says.

By tracking specific sales activity, the thrift saw the results of its effort to install a sales culture at the bank in recent years. For example, the number of teller referrals jumped from 158 in 1995 to 546 last year, says Jill Hewitt, Ocean Federal's director of marketing.

Robert N. Barsness, chief executive of Prior Lake State Bank in Minnesota and current president of the ICBA, has also witnessed a gradual transformation at his bank following the institution of sales techniques. Two years ago, he turned to the ICBA's sales program, which he chose because of its affordability compared to private consultants.

"It's hard to quantify the success of a sales culture," he says, pointing out the economy throughout the nation has helped the top-line performance at nonagricultural banks. "Still, if we hadn't taken the steps we had taken, we wouldn't be getting our share of the growth."

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