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Commercial Sales Productivity

Commercial Sales Productivity

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Published by: Brazil offshore jobs on Jun 27, 2012
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01/11/2014

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1
April 2012
BY MICHAEL RICE, STEVE LEDFORD AND ROBERT GRIFFIN
A concerted eort will be needed to strengthen the sales unction in commercial bank-ing, which is still overly reliant on the individual eorts o relationship managers.
Although loan demand is rising in commercial banking, therestill is an urgent need or growth. Margins remain weak ina low-rate environment, and ee-based businesses are mostlyplodding along. How will players meet their prot goals or2012-2013?The answer largely comes down to winning marketshare. But or that to happen, a concerted eort will beneeded to strengthen the all-important sales unction, whichis still overly reliant on the individual eorts o relationshipmanagers. New organizational muscle will be needed tomeet the sales challenge.Future industry leaders will excel across our dimensionso sales productivity. These include the more amiliar territo-ries o process and execution, and extend into the emergingdomains o customer analytics and knowledge management.The rst two perormance actors still need work; the secondtwo merit aggressive attention.By systematically evaluating the commercial sales unction
Commercial Sales Productivity:Four Keys to Winning Market Share
 
 
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April 2012
and addressing key perormance issues, proactive banks cansharply lit the odds or sales growth. Conversely, banks thatloosely rely on ad hoc managerial best eorts in the eldmay wind up rustrated in pursuing their goals, oten not ullyunderstanding why.This issue has a direct bearing on one o the most prom-ising avenues or ee revenue growth in commercial bank-ing, which is small business treasury management. Roughlytwo-thirds o all companies with $1 million to $10 million oannual revenues use some sort o treasury management ser-vices, according to Greenwich Associates, yet much o thatbusiness is siphoned away by non-banks.From a sales perspective, one major reason is that manybanks remain stuck in trying to loosely adapt commercialbanking and branch banking conduits to serve small busi-nesses, without ully studying the unique requirements o themarket. As a result, small businesses are under-served andunder-sold.Such disconnects cannot be solved by conventionalsales management tactics. Simply demanding more output,or example, ignores larger organizational issues and canpush hard-working relationship managers into a pressurezone where client relationships are damaged. Alternatively,best-practice benchmarking tends to encourage mimicryinstead o addressing the bank’s unique sales issues, needsand opportunities.The winning bank must have an advantaged sales capa-bility that is tailored to its unique assets and capabilities,including sales culture, talent, brand and product set.
Barriers to sales Performance
There still is a strong tendency in commercial banking to viewsales largely as a question o individual talent. The bank withthe most bench strength will ultimately win, it is thought, andthis perspective comes quite easily to the many senior o-cers who reached their own levels o organizational successthrough individual sales achievements.You don’t have to look ar within the commercial bank,however, to nd examples o how collective sales perormanceis being held back by an ineective management ramework.Two sel-inhibiting actors seen at many commercial banksare under-estimating client potential and poor teamwork.
Under-estimating client potential.
Relationship managersand product sales specialists requently misjudge sales poten-tial with established clients. This tendency is especially preva-lent in the mid-market segment, where sales ocers routinelyunderestimate potential deposit balances and ee income bya actor o two-to-one or more.Part o the problem is a misconceptions that i clients arein a situation where short-term borrowings exceed liquidassets, then they necessarily have limited deposit potentialand cash management needs. Bank calling ocers reasonthat i a client is in a net borrowing position, cash will be usedto pay down debt.This, however, ignores the reality that companies willhold cash even i they have debt that could be paid down.The nancial crisis taught treasurers that market conditionscan change rapidly, putting a premium on maintaining bothliquidity and active credit acilities. The result is that many netborrowers still are holding onto signicant cash.Another trap is using a checklist approach to assesspotential client demand or non-credit services. I a companyis already using a broad range o cash management prod-ucts, the treasury management (TM) specialists may considerthe relationship ully served, whether or not there is strongproduct utilization. In such instances, the product sales check-list can be ull, yet client revenues can be alling well shorto potential.This is an example o how corporate capabilities (cus-tomer analytics, in this instance) can be widely useul to com-mercial bankers in the eld. A little high-level math illustratesthe potential. According to the U.S. Economic Census, totalsales o all U.S. companies are approximately $30 trillion.Federal Reserve data indicates that commercial deposits atU.S. nancial institutions are about $1 trillion, and most esti-mates o U.S. treasury management revenues range between$15 billion to $20 billion. On average, then, a mid-marketcompany with $50 million in annual sales would be expectedto hold at least $1 million in bank deposits and generate$250,000 or more in treasury management revenues. Ocourse, potential will vary by industry sector and other ac-tors, but overall, most mid-market relationships have morepotential than sales ocers realize.
Coordinating team sales.
Most banks deploy sales teams
“Our research identifed pre-sales call planning as a dierentiator in successul solution-basedselling. In our study o top-perorming relationship managers, we ound that they share acommon trait o superior planning and preparation, which in turn is a signifcant driver o topsales results that exceed the average by up to 150%.”
 
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Commercial Sales Productivity: Four Keys to Winning Market Share
Figure 1: The PEAK Diagnostic Approach for Commercial Sales Productivity 
By systematically evaluating the commercial sales function and addressing key performance issues,proactive banks can sharply lift the odds for sales growth.
to cover commercial clients and prospects, including rela-tionship managers and various product specialists. In manycases, however, the eectiveness o this approach is dimin-ished because the sales ocers don’t really unction as ateam — they coordinate, but do not collaborate.One reason is that banks introduce too much complexityinto the reerral system between relationship managers andproduct specialists. A product specialist such as a treasurymanagement ocer may work with eight to 10 relationshipmanagers, while a relationship manager might have to coor-dinate with 20 or more product specialists to access specialcapabilities required by the client.Lack o product knowledge is another barrier. Relationshipmanagers are usually lenders by training, and when askedabout unamiliar products, they may not always know whichspecialists to turn to, or how to get them productively involved.The act that RMs tend to talk about “bringing in” specialists inTM, capital markets and merchant services as needed impliesthat these players are not on the team’s starting roster.Here again, strong management is needed to sort throughthe issues. But even the most determined commercial banksstill will all short i they try to put out the sales managementres one by one.
four Keys to sales Productivity
Given these problems, executive management needs anobjective and act-based approach to look across the com-mercial bank and identiy the best opportunities to improvesales perormance. Novantas research and client work, orexample, has identied 31 success actors spread across theour domains o process, execution, analytics and knowl-edge (Figure 1).
Process
c-bk r
Behavior-Based Sales
•
Process (Pre- & Post-Sale)Client/Account Planning
•
Centers o Infuence &
•
Reerral ManagementPre-Call Planning
•
Sales Specialist
•
EngagementClient On-boarding/
•
FulllmentRelationship Reviews
•
Sales Force Automation
•
analytics
Lead Generation
Market Headroom
•
Client Segmentation
•
Prospect Prioritization
•
Pipeline Management
•
Won/Loss Analysis
•
Product Cros-sell
•
Predictive Reasoning
•
Technology Platorm
•
Automated Demand
•
Management
execution
oz a
Sales Structure &
•
Governance (Sales &Sales Support)Resource Deployment
•
(Coverage & Gearing)Precision Goal Setting
•
(LOB Level)Precision Goal Setting
•
(RM Level)Sales Metrics &
•
ScorecardsSales Incentives
•
Communication &
•
Meeting Structure
Knowledge
Continuous Learning
Talent — Recruiting
•
Talent — Coaching &
•
TrainingTalent — Perormance
•
EvaluationTalent — Retention
•
Knowledge
•
Management PlatormSales Collateral
•
ManagementContinuous Learning
•
Loops (Market,Clients, Competitors,Prospects)
Source: Novantas, LLC 

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