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Jim Marous articles always get our attention here at PrecisionLender, but a recent one really caught our eye.
It was titled: “Banks Desperately Need a Relationship Based Selling Strategy.”
Wait, don’t banks already have a relationship-based selling strategy? Hasn’t this ground already been covered, ad nauseam?
Perhaps, but as Dallas Wells explained in a recent episode of the Purposeful Banker podcast, that ground has shifted dramatically in recent years. Commercial banks that want to deliver a customer experience that differentiates them from the competition must adjust accordingly.
We’ve taken excerpts from that podcast conversation between Wells, PrecisionLender’s EVP of Banking Strategies, and show host Jim Young, and split them into a two-part blog post.
In today’s post you’ll get answers to these questions:
- If banks aren't using a relationship-based approach to selling, what are they actually doing?
- How do you deliver a personal approach to a large number of commercial clients?
- Why some banks continue to have the wrong focus with their offerings.
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4 Questions Your RMs Should Ask About Their Relationships ›› |
What Does Relationship-Based Banking Mean?
Jim: Let’s start with an obvious question: Don't banks already have a relationship based selling strategy?
Dallas: If you ask them, every bank in the world would probably say, "Of course we do. We're a relationship based bank." Only a very few niche players wouldn't say that. We talked about this in a recent blog post about cross-selling. Banks talk a good game about relationship banking, until you dig in and ask, "Well, how do you do that?" Then they don't always have a satisfactory answer other than just the platitudes like, "We really know our customers."
That’s kind of the classic scenario - especially amongst community banks – in which somebody comes in the lobby, we know their names and we know who their kids are, and we understand them. We know them because we're members of their local community.
I have a couple of issues with that scenario.
First, a very small subset of your customers come through your lobbies, even in a small community bank. How many of those come in often enough that your tellers and your staff there know them by name and know their kids’ names? Five hundred maybe? Out of how many thousands of customers do you have? And check the profitability of those 500 customers. Those five hundred are not necessarily your top five hundred. In fact, the heavy users of your branch network may be near the bottom.
Second, knowing your customer's name and what their kids’ names are is very different from knowing what you need to know - the real details of their financial lives. What is likely to be the next thing they're going to need, and how can you best help them with that? How can you provide them real value there?
I think relationship based banking is one of those phrases that gets thrown out too often. Bankers keep saying that word but I'm not sure they know what it means to really cover the relationship of their customers.
How Do You Stay Personal While Scaling Up?
Jim: But we're also being repeatedly told that the human touch is critical in the sales process, and that customers expect a relationship with their banker. How do you reconcile that need to go beyond the five hundred or so people that are familiar faces, with the need to still have an approach that’s personal?
Dallas: What customers are looking for is a little more depth to the personalization. They don't want for you just to say, "Hey, Jim, how's it going today?" They don't want just that level of personalization. They want personalized offers.
Back up just a step and think about how consumers – not just retail banking customers, but commercial borrowers as well - are used to being able to get everything personalized in their life. If they want to shop, they go to Amazon, and what they see on Amazon will be very different than what I see on Amazon. It's all customized based on prior purchases and prior browsing history and what else they've searched for, even other places on the internet. It's a very customized view of the world.
The same is true for the television you want to watch through Netflix and the music you want to listen to through Spotify. Even typing a search into Google is different depending on who you are, what else you've searched for, where you are in the world, et cetera.
Personalized doesn't mean there's somebody there who knows your name. It's a much deeper than that. It's based on everything that we can know about you.
It's the technology and the person working together, so you can have a deeper conversation than, "Hey, Jim, how's the weather?" You can talk instead about that person's prior purchases: "Hey, I see that you came in and opened a checking account six months ago. How's that going?"
Banks have struggled with simple things like that, but it’s where relationship banking needs to head.
Whose Needs Are Your Offers Meeting?
Jim: I would imagine it would be anticipatory, as well. Something like: “Hey, the markets have shifted this way. It might be a time for you to consider doing this or changing this strategy.”
Dallas: It's the financial equivalent of “Shoppers who bought this also bought this, or who looked at this also looked at this.” It's the association of things and predicting what's next. Unfortunately, the way a lot of bank systems are designed is overly simplified and uses these customer-based averages that are more about the bank’s needs than the customer’s needs. So, you get conversations like this: “Hey, "You only have three products, we'd love to get you to five, so how about you open a credit card?"
Maybe they don't need a dang credit card, you know? Instead, it should be based on that customer's profile. What are they likely to need next, and let's talk about that.
Think about if you are a bank and you could get to the point where you go to your commercial customer and you say, "Look, you've got this $500,000 revolving line. Based on your business growth, and the seasonal trends we typically see in your industry, we think that might need to be higher. We're going to increase that to a million bucks unless you say not to."
That is a personalized level of service that is much different than, "Hey, Jim, how's the weather, you want to go play golf on Friday?" That may be great. You may still want to go play golf, but these discussions are anticipatory and they're based on what we know about you, not on the bank’s needs.
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