Meeting the challenge win and grow customers in commercial banking

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For more information contact: Richard Higham

Tel: +44 (0) 330 9000 800 or [email protected]

THE CHALLENGE

OF WINNING,

GROWING &

MANAGING

CUSTOMERS

IN COMMERCIAL & BUSINESS

BANKING

A Mercuri International White Paper Page 1 (4)

The challenge of customer growth

Bank Relationship Managers and Business

Development managers are looking for significant,

sustainable, profitable organic growth. Delivering this

profitable growth has never been easy and today is

even more demanding.

This paper looks at some of the specific challenges

facing bank RMs and BDMs.

It also indicates some of the ways businesses and

individuals can achieve the success they seek.

A series of tensions

It can be argued that the sales role in banks places

more demands on the professional than in virtually any

other sector. To achieve sustainable success and

satisfy the demands of multiple stakeholders is not

simple and is not easily achieved. It demands a careful

management of differing demands that are often in

tension and sometimes in conflict.

Growth or risk management?

Since the financial crisis there has been a radical review

of what effective, customer-centric selling should look

like in banks. There has been a recognition that some

of the old “product push” sales approaches needed to

change to a much more customer-centric approach.

Facing a government enquiry one major bank CEO

confessed “we allowed the sales culture to take over

from the risk culture.” On the face of it this was a

realistic and honest assessment. But I believe it goes to

the heart of the problem of misunderstanding what good

selling is in the banking sector. The problem of mis-

selling is not “selling”; it is “bad selling”.

Bad selling involved pushing bank-invented products at

customers with the focus on hitting quotas rather than

on meeting customer needs. It was driven by business

pressures reinforced by inappropriate performance

targets. Most bankers were receiving technical and risk

training with little or no development of their

professional and consultative selling skills.

Over recent years most training has had to focus on

compliance-driven topics to satisfy the regulators. One

global bank’s commercial division has had to spend in

excess of $20Mn a year on mandatory, regulatory-

driven training which has left less time and money for

developing the business growth strengths of their

people. Yet the challenge of generating growth in a flat

market while demonstrating customer-centricity is very

real.

Winning growing and keeping clients for bank solutions specialists Page 2 (5)

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Professional selling is the ally and not the adversary of

good risk management, (regulatory, reputational and

commercial). But it is not easy and it demands new

competences and effective leadership to manage these

tensions.

Bank success or customer

centricity?

There is no doubt that banking leaders see the

importance of being customer centric. Jean-Laurent

Bonnafé, chief executive at BNP interviewed by the

Financial Times said he wants to be remembered for

“client satisfaction: The winning banks are those that

can achieve confidence and trust.” Antonio Horta

Osario formerly of Santander and now CEO of Lloyds

Banking Group spoke at the Confederation of British

Industry (CBI) and recognised: “Issue-by-issue and

scandal-by-scandal the faith and trust in our industry

has been eroded, Why? Because I believe that many

banks lost sight of their core values and became

complacent, non-customer-focused and inefficient.”

Yet at the same time banking leaders need to deliver on

the numbers. Shareholders look for return on equity

and sustained growth. Governments demand higher

levels of lending and at the same time push for higher

retained capital. Capital needs to be used in the most

effective way.

In the face of this no wonder people are a bit confused.

I heard one sales leader ask a Head of Corporates in a

Town Hall Meeting: “So which do you want us to do –

deliver the right product mix or be customer centric,

deliver on product based sales campaigns or be

relationship focused?” Back came the answer: “yes!”

Solution providers are expected to deliver significant

growth, particularly in less capital-intensive ancillary

business but banks know this needs to be done in a

customer centric rather than a product-pushing way.

This recognition is now being backed up by the removal

of product targets from many RMs and a greatly

increased emphasis on behaviours in KPIs.

Transaction or relationship?

We run a highly successful programme for RMs called

“Relationship-based Financial Negotiating”. This was

recently rolled out to a group of asset finance specialists

whom the bank wanted to integrate more with their

commercial banking approach. One originator

complained “but you don’t understand… we’re

transactional. Relationships just don’t matter to us.” To

the relief of the facilitator his colleagues leapt on his

comment and a vigorous debate ensued. The outcome

was positive but it indicates the real tension between

relationship and transaction. We see it in other

programmes where Relationship Managers and product

partners have to work out which products to lead with.

They sometimes have to accept that though it might be

possible to sell a solution today it will be better to hold

back for now. This is really challenging when the

product partner needs the short term deal to hit her

target. How can it be right to walk away from the deal?

Who should call the shots? Good transactions make

good relationships but it’s tough in practice!

Global or local?

Many solutions cross not just divisions but geographies.

This is particularly true of services like trade finance and

cash pooling. Here the challenge is balancing global

and local priorities. A customer may be a top-tier

customer in one country but have a very low profile in

another. It may be in the customer’s (and the wider

bank’s) interest for high levels of service to be delivered

in both countries but local management could justifiably

argue that it is simply not profitable to serve the

customer in the second country. Some banks

overcome this by mandating that priority customers in

any one country automatically become priority

customers in other countries. Others choose to

compensate the second country for enhanced service

levels – either in actual or “wooden” dollars.

The problem of mis-selling is not “selling”; it is “bad selling”.

Sellers sometimes have to accept that though it might be possible to sell a solution today it may be better to hold back for now.

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A further challenge can come from agreeing

appropriate service levels agreements in both countries,

The customer needs to confirm what is required at both

ends of the transaction and it is important to check that

this is agreed not just by the head office but by the local

operating business. There must be clear understanding

about what to do if the operating business asks for

services which are not part of the global agreement with

the customer.

Direct or partners?

Most banking solutions are sold through multiple

channels. Independent solution providers sell both

directly to the customer and through brokers. One of

the challenges of selling through brokers is to ensure

the offering is being communicated accurately and

effectively to the client. One Mercuri project helped a

central European provider segment their brokers; delist

non-core brokers and then focus the required resources

on a reduced list of more effective brokers. Focus is all.

The challenge for bank-owned solution providers is

more complex. Some sales will be executed almost in

isolation from the relationship manager. Difficulties can

arise when the seller introduces the RM. Who “owns”

and leads the relationship? What happens as the RM

moves to the fore? At what point does cross-selling

start in earnest? This problem is of course mirrored

when the RM is in the lead position. The situation is

eased in this case because most cross-selling

processes assume the RM will lead. However, real

tensions can still exist between the long-term strategic

relationship and the short-term transaction.

The Mercuri 2012 Sales Excellence Survey (

http://www.mercuri.net/content/sales-excellence-survey-

2012 ) highlights team selling as one of the top four

differentiators. There is no question that the effective

selling of banking solutions will require enhanced levels

of team selling. This means facing challenges of virtual

tram leadership, the co-ordination of different selling

agendas and the integration of technical specialists

within selling teams.

New or existing?

Where will business growth come from? Most bankers

have relied on increasing business from existing

relationships. As in professional services, banks have

focussed on long term, stable relationships in which the

client is not expected to move and in which the

relationship (if well managed) will grow inexorably.

However both sectors are seeing change. Some of the

change is regulator-but some is market-led as

customers exercise a new independence. This means

that relying on continuation selling, referral selling and

extension selling alone will not be enough. There will

need to be more origination using both existing and new

products.

What’s to be done?

There is no question that the effective selling of banking solutions will require enhanced levels of team selling. This means facing challenges of virtual tram leadership, the co-ordination of different selling agendas and the integration of technical specialists within selling teams.


http://www.mercuri.net/content/sales-excellence-survey-2012

http://www.mercuri.net/content/sales-excellence-survey-2012


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These challenges and opportunities are real, significant

and difficult to address; but the prizes from addressing

them successfully are great.

Based on what we see banks working on effectively and

based on Mercuri’s strong but transferrable approaches

used in other sectors we highlight the following areas to

concentrate on:

Wide and strong business cases

All this is only worth doing if it will build sustainable

profitability. When forming the business case consider

not only share of today’s wallet but opportunity to grow

overall spend. Focus on the “white space”. Measure

the risk of not improving. How much profit is being “left

on the table”? What impact will this have on the bank

this year and beyond? What’s in it for all concerned?

Make the case clearly and convincingly.

Be clear about where you are

Make sure you understand and agree where your

people are before you start to make improvements.

Then make sure that what you are looking to improve

will really have a positive effect on your business. This

will save money, time and reputation. As one business

leader put it “We have based too many of our

development decisions on guesswork and individual

opinions. For the first time we are basing decisions on

data and agreement.”

Use what you’ve got

Many of the banks we work with already have good

tools and approaches in place. They do not always

need to develop something brand new but to make

better and more consistent use of the resources already

available. Only use the new when you need to but then

use it boldly.

Innovative delivery

Deliver development using innovative approaches that

make the most of peoples’ time. The use of approaches

such as blended learning, bite-size modules,

simulations, experiential learning and live case based

events make a big difference in optimising time and RoI.

Build implementation from the start

Implementation is particularly difficult for professional

firms for the reasons we have outlined in this paper.

This makes it all the more important that development

focuses on ensuring people do things differently. Plan

the implementation early on. It is much more cost-

effective and produces a much better result to build it in

rather than “retro-fit” it.

Consolidate and measure

Plan ways to ensure any changes become part of

business as usual.

Measure the change and wherever possible document

impact and Return on Investment.

Conclusions

We trust that this paper will have stimulated your

thinking – confirming some points and challenging you

to rethink in others. If this paper has resonated with you

then Mercuri International is well-positioned to debate,

design and deliver with you.

The hot topics Mercuri are being asked to address include:

Customer-centric selling: Moving from product-push to solutions.

Customer insight: Standing in the customer’s shoes

Sales leadership: Managing and coaching sales performance

Integrated relationship management

Relationship-based negotiating

Social Selling for bankers



www.mercuri.net



Richard Higham

Global Practice Leader

Financial & Professional Services

Mercuri International
