Jerry A. Katz began cobbling together a small-business sales culture at Huntington National Bank, Dublin, Ohio, four years ago.

Breaking from a tradition of waiting for the customer to come to the bank, he hired sales representatives who essentially worked out of their cars, calling on prospects where they worked.

The bank, a subsidiary of $20 billion-asset Huntington Bancshares in Columbus, now has 25 business-development officers prowling central Ohio for prospects - companies with sales of up to $10 million. Each officer is responsible for finding clients of a particular size - for example, with sales of $3 million to $5 million.

Mr. Katz, a Huntington vice president and district manager, said the effort has succeeded in gaining deposits and loans. But he's not sure how it holds up against those of his nonbank competitors.

"We're stuck in tradition," Mr. Katz said. Though banks "are making great strides, they're still babes in the woods."

Huntington's small-business sales effort rates pretty well against those of other banks, Mr. Katz says - 8 on a scale of 1 to 10. But against nonbanks, he rates it about a 6 or 7.

"I know I'm losing deals to Merrill Lynch," he said.

Such a damp self-assessment isn't rare in commercial banks today. More than 60% of major banks in a recent survey rated their front-line sales and sales management effectiveness a mere 6 on a 1-to-10 scale.

And more than a quarter of the respondents - small-business division managers of 43 of the 100 largest banks - said their own banks rate only 4 for effectiveness in small-business sales and sales management.

"Sales managers need to be held to a standard," said Barry Stern, executive vice president of Mohr Development, the Ridgefield, Conn., consulting firm that conducted the study.

Industry observers and officials were not surprised by the survey's results. The big banks are trying to change, but there is general agreement that they are a long way from overcoming entrenched corporate cultures and creating sales and relationship forces that can compare with those of other industries - including nonbank rivals.

Indeed, one consultant said banks may have been overly kind in their self-evaluations.

"If they define sales effectiveness as reaching the target customer with as many products as possible, 4 is a high number," said Charles Wendel, president of New York-based Financial Institutions Consulting. "Banks are not selling organizations. Bankers are guardians, as opposed to salespeople."

One thing that holds banks bank is that they don't pay sales forces by commission only, Mr. Katz said. He pinned that on banks' traditional conservatism.

Right now, Huntington National's business-development officers get base pay plus incentives.

"I'm not sure that we get the hungriest people," Mr. Katz said.

Most bankers imagine the sales force at Merrill Lynch & Co. as a pack of lean, commission-hungry predators plotting to snap up more banks' business.

"Contrast bankers to what I hear from friends who deal with brokerages like Merrill Lynch," Mr. Wendel said. "There you have guys who will literally be on the phone at 11 p.m. - because they get compensated."

But banks are looking beyond the Merrill Lynches and even the financial services business for sales models.

For example, Larry Kucinick, senior vice president at Boatmen's First National Bank in Kansas City, Mo., points to L.L. Bean as a model banks should emulate. The successful Maine clothing company combines direct mail and strong customer service to move merchandise.

And Mr. Katz said that other industries do better than banks at harnessing information and using it to target customers.

"If I were a salesman selling lumber to a lumberyard, I would know how much I have sold them before," Mr. Katz said. Similarly, he said, bank customers think he knows all about them - who they write their checks to, when they make deposits, what branches they use.

"But you know something? I don't know it," Mr. Katz said. "Is that something I should be doing? Definitely."

He added, however, that banks gotten better at using data to target customers, and are steadily improving.

Banks aren't blind to their shortcomings. Anecdotal evidence suggests that in the last 18 months many banks have been revamping their sales programs.

Take San Francisco-based Union Bank, a unit of Bank of Tokyo-Mitsubishi Ltd.

In 1994, $20 billion-asset Union Bank hired Donald W. Hance, a 20-year veteran of Wells Fargo & Co., as a regional manager. In November he became vice president and manager of small-business banking. Since then he has refocused and reorganized the bank's small-business sales force.

For example, last year Mr. Hance tiered customers by the size of their relationships with the bank.

Before he arrived, the same corps of small-business relationship managers dealt with all customers, no matter how big or small, he said.

Now, branch officers handle the "mass-market" customers - those who typically don't borrow, or who borrow less than $150,000. Sales targets and incentive pay have been established.

Relationship managers now concentrate on higher-end customers, those with loan relationships of $150,000 or more, Mr. Hance said.

Sales volume on the mass level - which represents about 75% of the bank's 75,000 small-business customers - picked up appreciably last year, he said. For example, the number of business checking accounts grew 10% to 103,000.

The bank is continuing to work on the cross-selling skills of its branch officers and its 120 relationship managers, Mr. Hance said.

"We have to be aggressive in going for more business, or someone else is going to get it," including entrepreneurs' personal accounts, he said.

"Right now we're at a six or a seven, but by the end of the year we should be a solid seven or eight," he said, rating the banks sales effort. He added that Union was probably a 4 or 5 before its reorganization.

Boatmen's First, a subsidiary of the $33 million Boatmen's Bancshares in St. Louis, is another bank that has changed it's approach. Mr. Kucinick dated the change to last year.

"We were always under the impression you could have commercial lenders and make them jacks of all trades," he said. "But that's not a great approach."

So the bank divided staff by skill sets. Those good at selling were made "hunters" who track down businesses; those with strong analytic skills were made "skinners" who manage portfolios. There is some overlap, depending on the market.

"We were getting some business, but we were missing some opportunities," Mr. Kucinick said. "Now our sphere has increased greatly."

Boatmen's First has what Mr. Kucinick called a "loosely defined" incentive program for small-business sales, but the bank is looking at refining it this year.

Before last year, Mr. Kucinick said, the bank's small-business sales effectiveness probably rated a 5. Now he's considerably expansive: He puts it at 9.

Banks "are late in the game, but we've got opportunities," he said. "Banks that aren't geared are going to have a tough time."

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