RM Best Practices: Measuring and Scaling

At most commercial banks, executives, regional managers and team leaders agree there is a wide array of talent among their relationship managers (RMs).  But is it really “talent” or is it “skill”? And are the skills measurable? Can the best practices of the best RMs be quantified and even leveraged across the broader RM universe?
PrecisionLender addressed this question during Bank Director’s recent Bank Board Training Forum in Nashville. Our answer was a resounding, “Yes.” 
The challenge banks face is not only identifying RM best practices but doing so quickly and turning those insights into value-added coaching for other bankers – at exactly the right moment. Rather than subjecting RMs to lengthy and infrequent sales training courses with content that may or may not be retained, banks should narrow their focus and surface just the right guidance at just the right time – when bankers are identifying opportunities and negotiating deals.

Reports galore, but where are the insights?

At the Bank Board Training Forum we asked board members and bank executives whether they receive more reports than they can consume. There was wide consensus that the current state is one of information overload, with many reports:
  1. Not reviewed
  2. Reviewed but not digested
  3. Digested but without any clear action steps to improve results.
Commercial banking reports typically show the outcome – production, balances, net interest margin, deposits – without shedding light on what drove the results. A case in point:  Most banks use some flavor of a production report, showing new money in a given time period across business lines, geographic markets, teams and RMs. These reports state the facts and enable banks to identify their top performers: e.g. “Banker #3 won twice as many deals last quarter as Banker #4.” 
But these reports lack one critical item: the behavioral data which led to the outcome. Did Banker #3:
  • Spend more time on the road with customers and prospects?  
  • Reach out proactively rather than waiting for the customer to identify the need?
  • Tailor the deal structure to meet the customer needs, perhaps offering a non-conventional amortization structure?  
  • Deliver term sheets more quickly?  
  • Identify customer sensitivities by presenting multiple alternatives?  
Between the bank’s CRM system and its pricing / profitability platform, many of these “behaviors” can be gleaned from the data.
Some banks contend that report distribution of RM rankings is enough to drive performance, especially among a competitive group of bankers. Still, without identifying the behaviors that drove success among top performers, even the most ambitious RMs may fall short.  


Time is of the essence

In today’s digital age, speed to market is essential. While most banks have capable analysts who can tie together disparate data sets and develop insightful analysis, banks no longer have the luxury of time to gather the data after quarter-end, form analysis and then distribute a report to RMs during the next department meeting. The question is: How can insights be gained quickly and how can those insights be used to coach bankers to a better outcome?
By arming bankers with user-friendly cloud-based resources that they view as help rather than a hindrance  – a powerful CRM tool, a best-in-class pricing and profitability platform, a valuable underwriting and onboarding system – banks can ensure high RM adoption. While RMs actively use these resources, behavioral data is collected passively. Without the hassle of additional data entry, data pertaining to the RM’s actions is captured and then used to coach other bankers.  

Example: Best Practices for Gaining Fees 

At any given bank, why do some RMs negotiate unused fees on virtually all committed revolvers, while others seldom achieve these fees? Here are a few of the best practices which can be gleaned from the data. Top RMs:
  • Present multiple options, including an uncommitted line and a right-sized line
  • Keep the fees reasonable, typically no more than a quarter point
  • Avoid an all-or-nothing mentality, negotiating a modest fee rather than no fee
  • Differentiate themselves from the competition by delivering quicker turnaround
As important as it is to quickly develop insights into best practices, it’s equally important to make those insights actionable, coaching bankers in the moment to drive improved performance. In this case, what form would that coaching take? When an RM begins exploring a low-usage committed line, the pricing and profitability platform would provide guidance, such as:
  • “I suggest you present three alternatives: a committed revolver with a 25 bp unused fee, an uncommitted line, and a reduced commitment of $X.”
  • “If the customer pushes back, I suggest you trim the fee to 18 bps.”
  • “If you’d like help with talking points, I suggest you reach out to your colleague, Banker #3, who has been particularly successful at negotiating unused fees.”
By providing bankers with helpful, cloud-based technology, utilizing that technology to quickly identify best practices, and delivering value-added coaching at just the right time – when it can be used to positively impact the outcome – banks can maximize their performance and turn “best practice” into “common practice”. 
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