Viewpoints: Adapt Sales Strategy To The Reform Era

Deregulation has brought a whole new set of competitors to banking, including investment brokers and insurance companies that are luring banks' customers away by offering everything from checking accounts to home mortgages.

Though they may be new to banking, these competitors' sales prowess has always been the backbone of their success. And it is dawning on conventional bankers that their reactive approach to selling no longer works.

To compete with these newcomers, banks must reevaluate their own operations-oriented method of doing business and develop sales behaviors supported by tracking technology. Many banks are heavily dependent on direct mail. The bank "salespeople" wait for the marketing pieces to drive customers through the door. When the response rate is poor, low mailing volume is blamed.

The reality is that direct mail is overused in the financial services industry. New business results rest solely on the shoulders of the marketing department. There is no sales accountability on the part of the sales associates, whose real job should be to bring in business.

Banks traditionally measure overall numbers - growth in loans and deposits - and do not track performance on a personal level to see where sales are being generated. When business is good, all employees in sales positions are rewarded equally. For most bank employees, this is just fine, because they believe their responsibility is to manage risk, compliance, and detail issues - and not to sell.

When we treat sales producers equally and not based on their individual sales efforts, top producers lose their incentive to sell. If banks are to increase their sales, they must be able to measure and recognize sales performance. The goal in compensation management should be to treat everyone fairly but not necessarily equally - to pay for achieved performance.

Banks' sales tracking is often done manually or piecemeal. Reports generated from legacy systems and operational reporting tools are not capable of delivering the sales information needed for true sales management. Banks generally do not use automation software that can provide more timely, sales-critical information.

The mind-set in insurance and investment companies is quite different. Their strategy focuses heavily on setting sales goals and then attaining these goals. They depend on automated systems to provide accurate and fresh information. An investment broker with a mutual fund client will probably know when the client's bank CD is coming due before the bank's own employees are aware of it. A system that integrates sales activities, including customer contacts and a tickler system, will flag hot leads.

By comparing current and past data, managers can measure individual sales performance, and by projecting numbers into the future, they can set individual goals that tie back to overall goals. Once they find who is meeting or exceeding sales goals, management then can reward the right people.

Automation software also enables sales personnel to devise incentive plans for new hires and finding the best people - that is, only those with the necessary sales skills and sales behaviors - for these job openings. Banks would do well to learn from their nonbank competitors. One way they should do so is by making their employees accountable for their sales performance and supporting them with the best technology.

Financial institutions need technology that will provide an umbrella of sales management features - one system that will set goals, track progress, and provide crucial customer information.

Banking professionals still need the skills they have always had, but have to add sales know-how and technological savvy to their resumes. And they must adapt their sales practices and systems to the changing times. By hiring the right people, using the right tools, and demanding employee accountability, you will level out the playing field, maximize profitability, and build lasting relationships.Mr. Sherman is president of Transcend Systems Group, a Sioux Falls, S.D., developer and marketer of sales management technology.

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