By the usual measures, it was an extremely high bill.
Five consultants at Bain & Company had worked for just over a month on a project and had charged the client $500K for their services – an astronomical hourly rate.
The client went straight to the top, complaining to Bill Bain, the company founder. The client acknowledged that the consultants’ work had been a huge success – adding millions of dollars of income to the business. Still, $500K for a little over a month?
Bain’s response to the client was one bankers would do well to remember.
“I don’t sell consulting by the hour at a markup,” he said. “I sell profits at a deep, deep discount.”
Is your bank selling money at a markup? Or is it selling valuable financial solutions at a deep, deep discount?
Your answer to that question depends largely on how your bank approaches pricing. That’s the focus of our latest white paper, “Are You the Bank of Last Resort?”
A Bank of Last Resort is typically the bank in the market that customers turn to last, thinking the bank just might be desperate enough to undercut everyone else by an eighth or maybe even a quarter point.
On the other end are what we call Banks of First Resort. They’re the banks that customers turn to first, because they have a reputation for being smart and creative when it comes to financial solutions. Their relationship managers’ pricing conversations with customers are consultations, in which the RMs seek to understand the customer’s needs.
So are you the Bank of Last Resort? If so, this paper will help you understand that pricing isn’t about putting a rate on a commodity product. Pricing IS the product. This paper will show you importance of empowering your relationship managers and giving them the tools they need to create deals that work for the customer while also maximizing what the bank can earn.
If your answer was no, congrats! We still think you’ll find value in this paper, though. As a successful bank, you’re constantly looking for ways to improve your pricing process. You’ll find them in “Are You the Bank of Last Resort?”
About the Author
Jim Young, Director of Communications at PrecisionLender, is an award-winning writer with experience in a range of positions in media and marketing, from reporter to website editor to content marketer. Throughout his career has focused on the story – how to find it, how to understand it, and how best to share it with others. At PrecisionLender he manages the many ways in which the company shares its philosophy on banking and the power of relationships Jim graduated Phi Beta Kappa from Duke University and holds a masters degree in journalism from Columbia University.More Content by Jim Young