Riches in the Niches: The Case for Commercial RM Specialization

In this week's episode, Greg Martin, a business services officer for BB&T, shares his approach to developing his commercial book. He makes the case for pursuing industry specialization to find "the riches in the niches."


Helpful Links

Greg Martin (LinkedIn)

Greg Martin (The Entrepreneur's Banker articles)

The Pumpkin Plan: A Simple Strategy to Grow a Remarkable Business in Any Field (Mike Michalowicz)

Surge: Time the Marketplace, Ride the Wave of Consumer Demand, and Become Your Industry's Big Kahuna (Mike Michalowicz)

Podcast Transcription

Jim Young: Hi, and welcome to The Purposeful Banker, the podcast brought to you by Precision Lender, where we discuss the big topics of the minds of today's best bankers. I'm your host, Jim Young, Director of Content for Precision Lender, and I'm excited today to be joined by a banker from the front lines.

We talk a great deal on The Purposeful Banker about relationship managers, about how to empower them, about how important they are to the commercial bank, but this episode actually marks the first time we've had the chance to bring one on the show.
So we're joined today on location and at BankOnPurpose by Greg Martin, who is a Business Services Officer for BB&T. Greg, thanks for making the drive down from College Station to Austin for the conference, and thanks for coming on the show.
Greg Martin: Jim, it's my pleasure. I'm excited to be here.
Jim Young: All right, and you will definitely be able to tell Greg's excitement for banking in this podcast. There were a whole host of potential topics we could've explored, but we decided to focus on an idea around RM specialization, or as we put it in the title of this podcast, the riches and the niches.
So Greg, first question. I sent you a text asking you about potential topics, and you floated this one. Why is this one important to you?
Greg Martin: Well, Jim, I think that when I look at it as a commercial RM, I see what my entrepreneurs that I serve, what they do, and how they run their business, and I've really been challenged over the last couple years to think more like an entrepreneur and less like a banker. And that means when I went and talked and interviewed my very best clients, one of the things that kept coming up over and over and over again was that you need to define who your customer is. You need to know who you serve and the value that you bring to them, and you need to specialize. You need to be a niche provider.
Jim Young: All right. Well, let me first play a little bit devil's advocate here. What about the danger of limiting yourself? By going into a niche, are you cutting yourself off from a wider range of business, and maybe even in some cases, easier business to get?
Greg Martin: No. I think that that's a fair question. You obviously have to, again, just like entrepreneurs have to do, you have to assess the market that you're in. You have to be able to be willing to specialize and to take a little bit of risk, but you also understand that you realize the greater reward from that.
Now, having said that, it's also a function of realizing that not everyone in your portfolio is going to fit exactly in the sweet spot of your niche. You're going to have some that maybe have one or two characteristics. Really, I hope that the majority of your clients or your entrepreneurs have more than that, but there may be just one or two, and those are customers that are good customers of the bank, good entrepreneurs, and you want to serve them, but it's a function of when you focus on something and when you go to market to say that, "This is what sets me apart, this is what makes me special, and these are my people that make me smile and I bring the most value to."
I mean, at the end of the day, also, imagine being able to go to work and serve the people that make you smile the most, not the customers that when you see their number on your phone, you pretend you're in a meeting.
Jim Young: Of course. Greg never does that. He takes all calls.
Greg Martin: Of course. All work day.
Jim Young: All of them. But no, your point's really well-taken, and we talk about at Precision Lender about the whole thing of our money's as green as the next person's and we talk about how do you deal with the increasing commoditization of it. I'm guessing that this is one of the biggest ways you can fight back on that.
Greg Martin: That's correct. I read a book earlier this year called Pumpkin Plan by Mike Michalowicz. In Pumpkin Plan and then the followup book, Surge, he kind of lays out the thought process and why you want to do that. But if you think about it, have you ever been to a county fair and seen the big 2000 pound pumpkins?
Jim Young: Yeah.
Greg Martin: Well, those pumpkins, it starts with a seed, and it's a very specialized seed. It's a patented seed that one seed, one seed, is $750. One seed. I wish I would've developed that seed, so you plant that seed. You plant the prospect, your clients that you want to seek after, and then what you do, you nourish it. You have expertise. You know exactly the type of fertilizer. You know if there's weeds, you obviously block them out. So if there are other customers that don't fit your niche, you don't say that you don't serve them, but maybe there's someone else on your team that does enjoy servicing them so you don't focus on them.
Even within that plant that there are other pumpkins, those are cut off, as well. You pour all of your resources, all of your energy, all of your time, all of your expertise into that seed and by the end of the growing season, you can sit there and you can actually watch it grow. That's pretty powerful.
Jim Young: I have another sort of skeptic question on that in just a minute, but let's just say for right now, that okay, you've made your argument and I decide, "You know what? It's time for me to specialize." How do I go about figuring out where to specialize? We were talking off air. You're in College Station. You're not, I'm assuming, specializing in shipping loans, right? So how do you go about deciding the right area, one, that's going to be of interest to you and two, that there's going to be a big enough niche?
Greg Martin: Sure. This was actually a challenge that I had when I read Pumpkin Plan and Surge, because it was focused on finding an industry. It's easy. I mean, there are bankers that do that. There are some bankers that only serve medical.
Jim Young: Right.
Greg Martin: There's some bankers that only do commercial real estate. There are bankers that only do dealer floor plan loans. But if you look at those, at least in my experience, those are the ones that have been, because of the specialization, they have their clients chasing them or their prospects chasing them because they know that if I'm a government contractor in Washington DC, that I need to go see this particular banker because she knows my industry. She knows the risks. I don't have to educate her on my industry. She understands. She speaks the lingo, all of that.
So when you're going and doing that, you can niche yourself too much, so you have to be smart, okay? You have to understand your geographic restrictions. You have to understand what your bank likes to do as an RM. For example, if for whatever reason I worked for a bank and let's say that they didn't like shipping, then it would be pointless for me to drive down to the Board of Houston and start prospecting those clients, because I can't serve them.
Jim Young: Right.
Greg Martin: So you have to know your craft as a banker, just like the entrepreneurs that you serve have to know their craft. So, that's kind of the first thing that I would say, and to realize, again, that there are characteristics that you don't have to hit all of them. But can I maybe I share how I actually went through and came up with my perfect client or my niche?
Jim Young: Yeah, absolutely. Go for it.
Greg Martin: Okay. So at the beginning of this year, I went through and I made a list of all of the relationships I have, whether that be loan and deposit, loan only, deposit only, maybe a fee [inaudible 00:07:28] service only. I made a list of all of them. And if you have a really good relationship management tool, I don't know if you know of any of those that maybe can tell you what the ROE is of the relationship, or the revenue, that's kind of important to have, so I went and I pulled and I pulled what the bank said the revenue was for each one of those relationships. And then I listed them and I made a column, so name of the client, how much revenue. The next column was a smiley, a dash, or a frowny.
Jim Young: Okay.
Greg Martin: Smilies are the ones that I love. Smilies are my people. Those are the ones that when I give them advice, they actually take it. Dash is the, "Okay, yeah, Greg, hey, I want to hear your service and everything. I may take your advice. I may hear your input."
Frownies are, "I want the cheapest rate, the longest [inaudible 00:08:22], the highest loan of value. I don't want to pay a fee. I don't want to have a pre-payment penalty. I want the bank to pay all the closing costs." It's what can be called a hunk of meat relationship. Again, I'm not saying that those are bad, but to me, those are frownies. So I don't want to have a portfolio full of frownies.
Then, the next thing is that I went through and I said, "Okay. Well, what are the industries?" And then I had a positive or a negative for industries that I enjoy working with or industries that I'm knowledgeable on, but doesn't really get me jazzed up. And so I went through and I actually ranked them, and then scored them, one, two, three, four, and then circle all the ones that were fours and threes. And then I moved all of those to the top, and then I was like, "Okay. Well, what do these clients have in common?" That's how I formed the basis of what I call my happy client or my pumpkin.
Jim Young: Okay. And that client is an entrepreneur? I was thinking about this. That actually, in a way, opens you up across a ton of verticals, doesn't it, I mean, because Carl Ryden of Precision Lender is an entrepreneur, and we're talking commercial software. My old boss was an entrepreneur in email marketing. Another one was an entrepreneur in radio stations. So, am I right in saying that ... Well, you defined your niche as actually, I guess, more of a horizontal than a vertical one, right?
Greg Martin: That's correct, because again, there are only so many dentists in College Station, and I love working with dentists. I mean, some of my very best clients are dentists. But okay, if I did that, and let's say that there's 50 of them. I don't know. I probably should know that, but let's say there's 50, and let's say I'm the best RM dentist and I get 40 of them. Well, I can't grow my book on that.
Jim Young: Right, 'cause your total addressable market, right, is fairly limited in that situation.
Greg Martin: That's right. So that's where I'm challenging myself and I'm challenging bankers to realize that it's more about characteristics of it, and so that's where I've come to define myself and define my happy clients is one, they're members of EO, Entrepreneurs Organization, or something like that, that tells me that they are passionate readers and they want to grow their business and they are looking for a teammate, I.E. their banker, to be part of their circle of advisors that actually pours into them and makes them grow.
They're between 30 and 55 years old. They've got at least three years of experience in the business. The business is viable. It's profitable. It's got at least a million dollars of sales, and in the super, super sweet spot of everything would be in manufacturing, because that's one of the areas that I really enjoy. I like looking and I like talking about throughput and finding where the bottleneck is and discussing, okay, if we can change the bottleneck, what's it take to change that? Is that a layout, an equipment or manpower change?" If it is, how can I support that, but then where's it going to move to?
Again, all of my clients, all of my very best clients, all of my pumpkins, don't necessarily hit all of those characteristics, but if they can hit four out of the five, then heck yeah.
Jim Young: Yeah. So, let's say I picked one out in my area. It's healthcare or maybe it's hospital equipment or something like that, or depending on what market I'm in, it could be x-ray equipment. It could be whatever, but let's say I figured out that ... What do I do next, though? It's one thing to say, "This is going to be my vertical," but how do I have enough to offer in terms of value?
Greg Martin: Well, hopefully you have some of those pumpkins already in your portfolio, and you take them out to lunch, and you ask them, "What is it that banks do that one, make you mad, two, that you're happy?" You don't ask them about you individually, because you're their RM.
Jim Young: Sure.
Greg Martin: You're the one that gave them the loan for that building or for that piece of equipment. They're not, "You're the best. I love you." You ask them about our industry, and by doing that, they're going to say, "Well, I hate it when banks put holds on my checks 'cause I can't do that," okay? So I need to go talk and make sure that I talk with my operations and my teller folks to make sure that they don't place holds on it, or if they do, that they notify me so that the next day, I can remove the hold.
"I hate it when banks come along and they just demand that I have all these inventory reports and everything that I've got to submit." Okay. Well, maybe you're in an asset-based lending structure, so as you're going through, you talk them through risk profiles of that relationship, of that industry, of that business, and you say, "Okay. Well, maybe if you kept a little bit more cash on hand instead of paying yourself all the distributions at the end of the year, you kept more cash in your war chest, then maybe we could stop having that covenant that you've got to have quarterly inventory reports," or something. Again, you're asking about the industry, what does the industry do that they don't like, and then you fix it. That's number one.
Number two is you ask them what is it that brings value and where did they see their industry going, and then you need to start reading. If you're in the medical field, then you need to understand the implications of the ACA, if there are going to be any changes to that. You need to become a subject matter expert of something that has nothing to do with banking. I mean, congratulations, you're a banker. The cost of entry is you knowing your job and your bank. To bring value to them is that you need to know their business as much as they do. You need to understand their business and so you can anticipate their needs.
I mean, how cool would it be to be able to go to, let's say that you spend a lot of time with BB&T North Carolina, and tobacco was a big agricultural crop. How awesome would that be to be able to go and to understand that industry and to be able to say, "Okay, well here's how we can help you hedge it. Here's how we can help you get the most out of that yield, and we're going to structure our loans to match exactly your needs." That is the type of thing that is going to bring value, value beyond banking, but value that is going to make them your really happy clients.
Jim Young: Yeah. I got to imagine in that situation, tobacco or hog farming, various things in North Carolina, or nowadays, biotech. There's various things in the state of North Carolina. Here's a brief tourism board for it. But we always talk about how two to three basis points across the portfolio of a bank is an enormous number depending on the banks, which is a big number, but 2 to 3 to 10 to 15 basis points for a customer may not be that big of a deal if they're getting that value, right? At that point, when we talk about pricing loans and how to price them well, that becomes almost a secondary part of it, as long as you're in the ballpark, I would imagine, right? With these clients, you're okay.
Greg Martin: That's right, Jim. I love working with entrepreneurs that do not compete on price, and I want to be a banker that does not compete on price. Now, hear me out. You're exactly right. I've got to be in the ballpark. If the market is at 5%, I can't be at 7. Hey Greg, you're good and you're a lot of fun to hang out with, but you're not worth 200 basis points.
Jim Young: Right.
Greg Martin: I may be worth 5. I may be worth 10. But it's a function of if I can make things easy for my clients, if I make them convenient, but then if I also pour in and bring value beyond just a rate or a deposit account or some type of fee service, if I can bring value beyond that, then I'm building trust and while big deals may get shopped around to maybe some other bankers, most of the deals won't be, because they know Greg is going to treat them right. Greg's going to be fair. Greg knows my business, and if you want to go with another banker, great. Those quarterly updates that have talked about your industry and about you and how I've mapped out your strategy of where you want to be in 10 years and how I've helped you walk through that, good luck getting it from them, because all they are to you is rate.
Jim Young: So how is this working out for you? You've made a great case for it. How is this approach working out for you? Actually, you know what? Before I ask that, I want to go back to the pumpkin one one more time.
Greg Martin: Sure.
Jim Young: That one seed, what happens if that one seed has disease, you know what I mean? Is there danger of putting all your eggs in one basket, so to speak?
Greg Martin: Sure, and there can be, but again, I think that you've got to go back to what is it that makes you happy and makes you smile. For me, it was characteristics of the entrepreneur across a couple different industries. For a dealer finance lender, if all of a sudden, there was some type of change, a GM or Daimler Chrysler or Ford or whatever, well, all of a sudden, they said, "You know what? We want to get into the floor plan business more aggressive than we are," and then across the board, they're going to offer LIBOR minus 100 for their floor plans. Well, yeah, that dealer banker's kind of trouble.
Jim Young: Yeah.
Greg Martin: But what I am proposing and what I'm challenging other commercial RMs to be is that you've got to be broad enough. You can't niche yourself out of a job, but you also have to know and learn what it is that makes you happy, where you bring the most value, and through that, say, "Okay. Well, yeah, I'm going to walk through it. I'm going to protect myself."
There may be times ... I mean, there were really good commercial real estate lenders in 2006, '07, '08 and '09 that then had really good clients, but they were honest with the clients. They walked through it. They were their advocate when things were really tough with the credit committee, but you walk through that and you fight for them and you always put the entrepreneur first.
If you do that, then I have to believe that you're going to build a business that is sustainable. You're going to build a business that your pumpkins are going to be chasing you, and that's what, as a commercial RM, is so gratifying. I can't tell you. It means the world to me when I get an email saying, "Greg, I want to introduce you to Sam. Sam's in this industry. You've done such a great job with me. He needs your help. He needs you to talk to him about his strategy. He needs you to be a strategic banking partner, not just a bank."
Jim Young: So yeah. You kind of segued into it, then. I wanted to ask you, you've got this great framework put together, and you mentioned how you kind of shifted gears. How is it working out for you?
Greg Martin: It's been very well. This is something that I've really codified and implemented, like I said, within the last nine months or so. So I think that it's still in the infancy. I can point to three deals that I've specifically done with this that I know that I won because of this type of approach.
I've also gone with something that brings value to my pumpkins is a concept called profit first. Again, I'm a big fan of Mike Michalowicz, but I'm a certified profit first banker. There are two deals that I've won and another four deals that I'm talking with that are deposit only deals that I'm not winning those without me bringing value through either profit first or through me niching and to be able to have that.
So it's been really good. I don't know if it's a long-term, what's going to happen, but the way that I look at it is this is my sword, and I'm going to die on my sword. It's a hell of a lot more fun to do that than to wake up on January 1st, 2020 and just be like, "I had a great year in 2019." It literally starts all over again. If I'm going to go down, I'm going to go down swinging just like the entrepreneurs that I serve.
Jim Young: All right. Well, that's great stuff. Before I go into this closing, is there anything you want me to mention, the stuff you do on LinkedIn, 'cause you sort of mentioned ... I didn't know if you had a specific ... The Entrepreneur's Banker, is that a specific thing or do you just have that on your LinkedIn page?
Greg Martin: Right now, it's on LinkedIn. I hope to, by the end of this quarter, to have a live website where I'll be posting all the stuff, but right now, yeah, just go to Entrepreneur's Banker. I mean, it's wide open kimono. I told you what my goals are. I'll tell you what my quarterly progress is. I try to bring value. That would be awesome.
Jim Young: Gotcha. You're writing fairly regularly on LinkedIn, too, right?
Greg Martin: I post an article every Tuesday and then I have a video blog every Thursday.
Jim Young: Okay. They would follow you on your LinkedIn page?
Greg Martin: That's correct. That's correct.
Jim Young: All right. Greg has really thrown himself into this. I would direct you to LinkedIn. You can follow him on LinkedIn, and I'll have a link to his LinkedIn address, but it's Greg Martin BB&T. You look that up, and the Entrepreneur's Banker. He's posting an article a week about sort of his philosophy and approach to being a commercial RM, and he's also got a forum on LinkedIn, as well, for the Entrepreneur's Banker. Again, we'll have links to those in our show notes.
Greg, again, thanks so much for coming on, and hope you enjoy the rest of BankOnPurpose this year.
Greg Martin: I'm so looking forward to it.
Jim Young: Okay. That'll do it for this week's show. And now for a few friendly reminders. If you want to listen to more podcasts or check out more of our content, you can visit our resource page at or you can just head over to our homepage to learn more about the company behind the content.
Finally, if you like what you've been hearing, make sure to subscribe to the feed in iTunes, SoundCloud, Google Play, or Stitcher. We love to get ratings and feedback on any of those platforms. Until next time, this has been Jim Young for Greg Martin, and you've been listening to The Purposeful Banker.

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About the Author

Jim Young

Jim Young, Director of Content 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 Jim 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.

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