The Pain of Selling New Bank Products

Why is that banks sometimes struggle to sell new products? Where are the pain points in their processes? And what do they need to do differently to ensure that new products lead to new revenue streams? 

That's the focus of this week's Purposeful Banker episode. 

 

   

Helpful Links

Why Its So Hard To Sell New Products (HBR IdeaCast)

How to Sell New Products (Harvard Business Review)

Thomas Steenburgh (University of Virginia Darden School of Business)

The Story of Steve Jobs, Xerox, and Who Really Invented the Personal Computer (Newsweek)

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 on the minds of today's best bankers. I'm your host, Jim Young, Director of Communications at Precision Lender, joined again today by Dallas Wells, our EVP of Strategic Innovation.
 
Today's podcast is actually going to be based on another podcast. It's the HBR IdeaCast, and they had one titled Why It's so Hard to Sell New Products. We're going to take that discussion, which will be linked in our show notes, and spin it to a bank perspective.
 
Dallas, I always enjoy hearing stories about the misadventures of your youth, particularly from your days when you were in the trenches at a bank. Do you have any anecdotes about trying to sell new products, preferably ones that end up with you learning a painful but valuable lesson?
 
Dallas Wells: Yeah, I'm glad my misery provides you with entertainment, Jim. But of course I have stories for this. So, banks struggle with new products, and there's lots of reasons for that, which, actually, I think the story will probably touch on several of those. But anything that is as heavily regulated as the banking industry is, a new product is going to make a lot of people nervous and make a lot of people wonder is this really worth the effort? So, you're going to be facing a healthy amount of internal skepticism right out of the gate.
 
The first one that jumped to mind when you mentioned this was back in the early days of rolling out remote deposit capture. So, in the olden days of banking, which actually wasn't that long ago, if a commercial customer lived far away from the branch, they would have an employee, typically, who would drive deposits to the bank. So, whatever checks were collected that day, coin, currency, the whole thing, take the little deposit bag and drive it down to the drive through lane and drop it off with the teller, and that's how you made your deposits.
 
And so banks started rolling out remote deposit capture, and so this is where they would take a scanner, drop it off at their customer's office, and this is how most of these deposits happen now. They electronically deposit the checks, you know, run them through the scanner and now, we get pretty immediate credit for those.
 
The value proposition was pretty straightforward. You no longer have to have your employee drive down to the, you know, make a daily trip to the bank now to deposit stuff. You can just have them scan it in right there from their desk. So, you can imagine making that leap, which sounds fairly simple, thinking about it from the banking world, all the technical issues that go into it from some pretty clunky old legacy systems, then you're like, "Wait a second. I don't get a piece of paper. All I get is an actual image of their deposit," and then what the heck are we doing allowing them to keep the checks? What if they scan it in again? There's all these stories ... and now, they're keeping all of these checks that have people's account numbers, and there's the data security issues.
 
There were so many compliance issues and banks spent, typically, most banks spent literally years working through those things, kind of one by one to get comfortable with it, and frankly, waiting for the other guy in town to blink first and be the first one to roll it out, make sure that they don't get put in jail for it, and then you roll it out.
 
So, they finally get through that pain. I worked at a couple of banks that were doing this as a new endeavor. As we would finally get ready to roll it out, create all the sales material, train everybody on how to do it, launch it as a live new product, and it was crickets. The adoption was awful in the early days.
 
Some banks did really well with it, but the vast majority of them, that was the response they got. And so they would go back through and say, "Well, what's wrong with the product itself?" right? And there wasn't a problem with it. Despite how hard it ended up being for the banking industry to get that in place, technology was not that complicated, right? It was not a huge leap.
 
And what they realized, and what we realized was: We had always talked about products to the owners of a business, you know? If you're talking about that next $15 million real estate construction loan, you're talking to the owner. If you start talking about how the daily deposit of checks gets made, that's not his or her problem, right? There's not the business owner's issue. They have an office manager who's dealing with that.
 
So, the entire sales process needed to be different, and the people who were selling it in the bank needed to approach it differently. Even after all the work to get the product ironed out, the sales process itself needed a whole lot more work.
 
Jim Young: Yeah, and this podcast, they focus really on that sales process more so than the product one. But I think it really is one that is ... There's a layer of difficulty added for banks because generally speaking, if I'm a consumer and you bring me a new product, I'm skeptical because I'm saying "How will this make my life better?" But as you sort of outline, when you're a bank and you bring out a new product, there's a level of "Could this possibly make my life a lot worse?", right? You were talking about the security issues, all that sort of stuff. So, why would I want to do this when all this risk is a potential risk is involved is is something that has to be addressed often in sales conversations for the bank.
 
The good news, or maybe it's not really good news, is that Dallas, you are far from alone in struggling with the selling of new products. They start off the Ideacast with a really kind of sobering story about Xerox and Apple. Can you give us a little bit of a recap of that?
 
Dallas Wells: Yeah. So, the abridged version is ... This is the famous or infamous maybe story of Steve Jobs and some of the apple executives going to basically do a tour of the Xerox facilities, and they saw some engineers there working on a GUI, a graphical user interface is what they called it. Basically, it was the modern version of how you interact with a computer. It was a point and click mouse and basically a desktop from which you could operate a computer. Te short version of the story is that Xerox had created all kinds of things like this and couldn't sell them. They could not figure out how to actually sell the stuff, and they actually abandoned that technology just as Apple was ... I'll use my air quotes that you can't see on a podcast, is they were borrowing that idea to make a giant leap with their line of personal computers and really kick off the start of the home computing universe, right and the start of that market.
 
One of the big leaps there was an easier way for the average Joe to interact with a computer, and they used Xerox's technology that they just finally said, "You know, there's no value here. We can't squeeze a dollar out of it. We're abandoning it." And what the article talks about is the Xerox was, it wasn't that they had a bad sales force. They were actually really good at selling, but they were really good at selling the stuff they already made. So, they could sell the heck out of printers and copiers. The computer stuff was a different audience. It was a different sort of product. It was a new thing. They couldn't get salespeople who were feeding their families with commissions from selling copiers to worry about selling a graphical user interface computer. They had great product innovation, they had a great sales team, and they couldn't marry the two together.
 
Jim Young: Yeah. And we know where the rest of that went for Xerox. We talked a little bit about similar pains that banks feel. Is there something similar in that sort of thing where an institution has come up with a cutting edge financial solution and then essentially got beat with their own weapon, so to speak?
 
Dallas Wells: Well, I think that's why you see a lot of banks actually rolling out a lot of the new digital stuff under a separate umbrella. So, you see like a, Goldman Sachs has the whole Marcus thing, which is a digital direct-to-consumer line of banking products. You see that in several of the big banks where they're doing things kind of off to the side a little bit.
 
I think a lot of what they're doing is they're trying to separate it from the existing core business and making sure that on one side they don't kind of cannibalize their own business unnecessarily. You know, there's this cash cow of the way we do things today, and that was sort of what Xerox struggled with was, "We made a lot of money doing what we're doing. We can't distract ourselves from that."
 
I think you see a lot of banks saying, "Hey, we're still making a lot of money doing sort of the analog version of banking. Let's not remove any of that generation before it's necessary. But we also can't ignore the future. So, what's a way where we can kind of try to do both?
 
So you have people who are focused on the new stuff, and you have people who can focus on the legacy business and generating profits from it, and then over time, there's a slow transition between those two, but you don't force it on yourself before the time is right. So, I think you see little pockets of that happening in lots of different ways, where it's a whole separate umbrella, a separate branding, or it's a separate group within the bank that they kind of set aside and say, "Okay, you do the new stuff and don't be distracted by the old stuff," and vice versa for everyone else.
 
Jim Young: Right. Well, that's sort of the general context of it. The rest of this, we're going to talk really more about sort of the tactics and again, how you set up the sales aspect of this. There's the product development part, and then there's frequently is ... They outline it as the breakdown is the sales part of it. And that's a really interesting question. The podcast guest, Tom Steenburgh, who's a dean at UVA's Darden School of Business. He wrote an article for Harvard Business Review called How To Sell New Products, and that sort of was the basis of their podcast.
 
He asked, "Why are we so willing to go through research and trial and error and product development phase, but then we don't do that in the sales phase?"
 
So, I'll put that question to you, Dallas. You were kind of just outlining a little bit of like with Goldman, sort of this ... And you see it a lot now with these labs and these innovation labs and that sort of thing where it's clearly they're doing this. They're tinkering around trying to figure out products, et cetera. Why isn't there something like that for sales?
 
Dallas Wells: That's an interesting challenge, and it's one we're actually struggling with a little bit here at Precision Lender. Not struggling with the working through, which is, you know, we've got a couple of new products that were in the process of rolling out, and the products are largely built, right? The technical part of building it is what everybody thinks of and developing a new product.
 
And the part where to now is the part that everybody, the temptation is to rush through it. You know, we're excited and we have this new product everybody wants. There's potential revenue out there, right? Everybody's excited to jump in and start, and it's like, "Well, wait a second. How do we talk about this? Who do we talk to?" right? "Is this the same buyer that buys the existing stuff that we have?' All the way down to simple things like, "Well, how do we show it on the screen? Who can do a demo? Who's built a PowerPoint slide for it," right? The things like that that have to get done.
 
And so banks have processes for all of that just like we do, right? There's teams that own those things and that can build that process, but I think the temptation is to try to build it to perfection, and it's because it's touching your customers, right? You can sort of tinker with the product inside the four walls and kick it around, and then you can show it to each other,, and if it's ugly, that's okay. The only way to really perfect a sales process is you got to put together what you think is pretty close and then you've got to do the scary part. You got to show it to somebody. You got to actually pitch it in the room and kind of then nervously watched their reaction to it, right?
 
This thing that we've spent a bunch of money and a bunch of time building and it's our baby and we're so proud of it, what if they hate it, and what if the way we go about describing it is all wrong and we killed the sale before it ever has a chance to even have the chance?
 
I think that's what banks do. They try to either over-bake it or they don't put any planning at all around it, and they just sort of add is as, "Hey, here's a new product. The existing sales force can handle it, and then we move on to the next thing." There's a middle ground there where you have to do sort of a minimum viable product and a minimum viable process, right? And you have to test the waters with both of those a little bit and see what works and then build on that, kind of follow the value.
 
Jim Young: It almost almost makes you wish you had sort of, you know, you had the beta testing for your product, right? You put it out there, you send it to the clients, you see how they like it, you to get some feedback and results. It's really kind of hard to do that with sales. We've got a beta test by a sales pitch on this group here.
 
Dallas Wells: Yeah, exactly. You kinda have to do a soft launch. You basically have to say, "All right, this isn't the real launch, but this is the one where you have to figure out is this the right way to talk about it." And what you will inevitably find is that you were wrong, right? Your expectation of what was going to be the right way to describe it, you're dead wrong, right? And so you need to make some adjustments before you've rolled it out at scale.
 
Jim Young: Yeah. But I think the next question I'm going to ask may get to part of another part of the problem here because Steenburgh, and he's a ... Actually, formerly worked at Xerox, so he's not coming from an ivory tower. He knows of what he speaks. But his comment here, I mean, I found myself, to be honest, kind of rolling my eyes at him a little bit because he says you've got to get salespeople to shift from performance mindset to a learning growth mindset. That sounds wonderful in theory, but there's always those pesky sales targets and incentive plans, right? That's what I'm wondering too, if what you just described as sort of soft launch, put it out there, MVP, see what happens, how do you reconcile that with I got numbers to make every quarter?
 
Dallas Wells: Yeah. That's where management and those managing the sales process have to be really cautious about that because you can make a mistake in either extreme, right? You can sort of over-incentivize the new thing and so then your salespeople ...
 
One of the other things to talk about is how hard it is to sell new products. It takes more meetings, more interactions, more discussion. It's just slower and harder, and so if you put too much incentive around the new stuff, you're going to slow people down, and you're going to miss the other numbers, right, which are probably going to be the bulk of your performance.
 
One of the things he talks about is stepping into this, right? You'll put some goals around the new stuff in the first year or the first quarter, whatever it may be, but they're low, right? And so you tiptoe into these over time, and you slowly step into this, or you have to totally separate it like we talked about with Marcus, where it has to be an entirely separate endeavor with different people leading it so that you don't have that distraction or the misalignment of time versus kind of what you really need output-wise. So, it's a delicate balance, but it's when you have to give some thought to. What you can't do is what ends up happening most of the time, which is it just gets tacked onto the product list, right? It's just existing sales force, existing processes. You just add this to the list and expect it to work and it just doesn't.
 
Jim Young: Yeah. You mentioned about the Steenburgh says that with these sort of things you do, it takes more time. You need more meetings and more face to face meetings. I'm wondering, Dallas, how do you reconcile that with this all-digital, all-the-time, convenient sort of remote aspect to banking, which makes a ton of sense, but it certainly is not what Steinberg's describing, in terms of the sales process here.
 
Dallas Wells: No, and I think you really have to view this phase of things as part of the product development, right? Even if the technical aspects are done of building the new product, of putting it all together, it's not really done and ready to ship until you've done some of this face to face kind of stuff. And with new digital consumer products, it's almost like a workshop thing where you have to get some people in a room, see how they interact with it, see what things happen that you don't expect.
 
You know, that's one of the first things I learned about software, coming to work at precision lender is it is sometimes surprising how people actually use the thing that you built. You have an expected path they will take, and sometimes you're like, "Holy cow. I never expected them to come at it from that direction." And I think that's what he means by you have to do it in person. You have to kind of watch them struggle with those things and see what context they're coming from, see what questions they ask. Sometimes you just ... It is an expense. It slows you down. But again, it's an important part of getting it right, and for that product to truly be ready, you have to have gone through it, watched the reaction to it, and adjust accordingly.
 
Jim Young: Another thing he mentions, and this one hit home for me from a few different angles. He says, and basically the way I paraphrased it was, "Don't confuse interest with sales progress." I know I have been guilty of this on both ends, basically. I have been that customer where someone has come and demoed something for me, and I'm like, "Wow, that is really cool. That is really neat stuff. That's awesome. You guys got a great product here." I'm not about to buy that product. Not even remote. Either I'm not authorized or I have no particular interest in adding it, but man, that is really cool.
 
Behind the curtains, I think we've done that sometimes too. We've gone into a bank, and we thought we just killed it with a demo. "These guys loved it!" Or for me, with content, again, it's people just love our stuff but they aren't t either going to buy, not in a position to buy, that sort of thing.
 
And what he's basically saying is, is if I got it right, is is basically you got to get to the right people still. I mean, it still comes down to that. In particular, with a new product, people ... A lot of times, there's that wow factor, right? But it's all about finding the right person, and in this situation, that right person, right, Dallas, as I mentioned, as you mentioned before, may not be the person you're used to dealing with.
 
Dallas Wells: That's exactly right. And I think the way you described it is good, which is we actually had to learn to stop asking our sales teams, "Hey, how'd the pitch go? Did they like it?" because the answer was always, "Oh yeah. They really liked it." That's not the right question. The question is are they going to buy and are they the person they can buy, right, because that's a different outcome. We would get some of the same thing. It was almost like a voyeurism, right, or there's somebody at the bank who's like, "That's really cool how you guys have solved that problem." It has nothing to do with what I'm actually doing, right? I'm not a user of your product, but that's really slick.
 
And sometimes, if you're not careful, you can end up doing 10 demos because they think it's cool and none of them are buying. They're just, you know, they're window shopping at best. I think the same thing can happen with some of the new bank products that are being rolled out, especially some of the ones that are commercial-focused. That's part of what they talk about in this podcast is especially with some of your lower performing salespeople, you give them a new product and they get really feature happy, and they get really excited about it, and so they want to go demo it to anybody who's willing to sit still long enough to actually see what you're talking about instead of doing the usual sales process, right, and kind of pre-qualifying them for that discussion. Are they the right person? Is this actually something that solves a problem they have because you'll get people who will listen to your demos, especially if it's the cool new thing or will listen to your product pitch, right?
 
Yeah, that's interesting. Not for me, but I'll listen and kind of give you some false buying signals along the way because it's cool. It's interesting. It's new. So, I think you do have to be cautious about that, and it does come back to kind of measuring the right things and asking the right questions.
 
Jim Young: This is really a interesting podcast. I would urge people to listen to it because I was kind of going through and coming up with a very long list of questions, just really interesting stuff. That's just a long way of saying I'm going to cut a couple of these out here and in the interest of time. But I want to get to this one.
 
Towards the end the host of the podcast kind of jokingly says, "It sounds like you need a sales force for your sales force," and then Steenburgh comes back and says basically like you need a therapist for your sales force.
 
But it does seem like that's sort of the case, right? I mean, a lot of things we've described here are maybe not counter-intuitive, but it's definitely a different direction and we've talked about different incentives and different target audience, et cetera.
 
So, how do sales managers go about selling their people on the value of selling the new product?
 
Dallas Wells: It always comes back to sort of the human element of it. Our new chief product officer and I were actually talking this morning about these new products we're working on and he said, "You know, at my last company, the sales teams really pushed back against new stuff because it was ..." They knew there was new numbers attached to them, there was new expectations, and it was never traded out for anything. It was just sort of layered on top. And so what they would do is they would put up all of these roadblocks. "Well, if I'm going to sell it, I'm going to need these 10 things to be to get that done." And so you'd work your way down the checklist, and then lo and behold, there's another five things after that so that they just kept pushing of this launch date as long as possible.
 
There is some selling there to your sales force. It's how you position it to them, and it always comes back to sort of like anything sales-related is what's in it for the human being on the other side of the table? So to your sales staff, how does this help them do their jobs? If you're rolling out a new product, it can't just be a new set of expectations and more cracking of the whip. It has to be is this valuable to you, does it help you move along conversations, does it help you get to new deals that you wouldn't otherwise otherwise get to, and what can we do to support you in that?
 
That's very much selling and some therapy too, but I think it's just being conscious of those things on the front end instead of, you know, we get this very siloed behavior where you have a new product team or an innovation lab or whatever the bank may be calling it, and they build this thing and then they throw it over the wall to the sales team and then they run back to the beginning of the conveyor belt and they start building the next thing. And the sales team's just sitting there with this stuff flying over the wall, and they're like, "I don't care." This is not helping me. In fact, it's just making my job harder." You have to close that loop, and you have to sell the sales team on how it's useful to them and be thoughtful in how you put together that actual process. And do your homework so that you can actually reap some of the rewards of all that front end work.
 
Jim Young: I guess that that would be the final thing is that the rewards, if you do this, are worth it. I mean, I think Apple's doing pretty well with their little company out there in California.
 
Dallas Wells: Yeah, I think they'll be okay.
 
Jim Young: All right. That'll do it for this week's show. 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 precisionlender.com, or you can just go to our homepage to learn more about the company behind the content.
 
Finally, if you like what you've been hearing, please 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 Dallas Wells. You've been listening to The Purposeful Banker.

 


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About the Author

Jim Young

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.

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