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Peak Performance Consulting Group® is a preferred provider of StaffSmart® workforce optimization solutions from Demos Solutions. The following article by Adam Isler of Demos captures our thoughts on how banks need to adjust their measurement of sales activity as they embrace a sales culture. This article was originally published in Tom Brown’s Bankstocks.com.
Retail Bank Profitability: The Sales Productivity Challenge
Since the 1980s, when retail banking began to be deregulated, many banks have worked aggressively to move from passive “order taking” cultures to “sales cultures” in which staff actively seeks new prospects and cross-sales opportunities among existing clientele.
There are many different ways to carry out these new sales strategies. They range from broadly aimed free checking offers from banks like Commerce, Washington Mutual, and Charter One, who aim to open as many new accounts as possible, to relationship-oriented “trusted financial advisor” approaches by banks like JPMorgan Chase (“the right relationship is everything”) and Citibank (“Live richly”). These banks attempt to fully leverage each relationship with target customer segments.
Regardless of the approach, the industry has seen a shift in recent years away from branch investment in tellers and support staff, to “pro-active,” outbound selling efforts. In addition, investment has risen in sales processes, sales training, and sales coaching, as well as in IT tools to support the larger sales staff.
Measure and Manage Sales Activity
In our work with many of these institutions, we often find gaps in measurement and management of the effectiveness of these types of activities. While many banks have established protocols governing how much of this work staff are meant to do, few have put in place measures of how much is actually being done. None, that we are aware of, has any measure of the impact of these efforts on customer retention, acquisition, or relationship-deepening. That’s remarkable when you consider the size of these banks’ investments over the last couple of decades. Banks need to put the right success measurements in place to ensure the value of their investments in sales.
In pilot programs we’ve conducted in bank branches, we’ve measured the time staff actually spends on “pro-active” sales activities, and compared it to the sales time allocated. The results (see chart) are surprising.
Very few of the branches were using a meaningful portion of the time that was allocated. Bank A used, on average, about half the time that had been provided; branches of Bank B used less than a third of the available time.
What are the reasons for this? When we interview branch sales people, we hear a range of different answers, but the four most common are:
- I don’t have time for these phone calls – I’m too busy taking care of service requests from customers walking into the branch.
- My customers don’t like to be bothered by me calling.
- The leads provided by the marketing department weren’t any good (wrong phone number, the customer had no interest).
- Customers aren’t reachable during the hours when we’re calling.
Clearly, there’s an opportunity here to better leverage these sales resources. Happily, many bank managements seem to know this. A number have asked us questions about their investments in developing their sales cultures.
Retail Metrics
While most banks measure their sales success in terms of balance growth or revenue growth, few look at basic retail metrics like sales per person. The chart below illustrates the challenge. At fifteen banks that we studied, the actual sales per salesperson per day ranged between a low of 1 and a high of 2.7, with an average of 1.7 (without regard for account size or quality).
Now, if you consider that the average account sale takes about half an hour to 45 minutes to perform, it becomes clear that that only about an hour to an hour and a half a day is being spent on sales fulfillment by the average sales person in a bank branch – out of a total of seven paid hours a day. Of course the averages do hide the high performers. Some branches open as many as seven accounts per person per day. But what does that say about the branches that are bringing the bank’s average down from 7 to 2?
Another note of caution on these productivity measures: pay attention to relative versus absolute measures. For example, some banks focus on improving their cross-sell at the time of initial account opening. Instead of just selling a checking account, they meet a wider range of customer needs with, say, a package of checking and a savings or money market account and a credit card or overdraft line of credit. In such a bank, the sales per person per day metric above would leap to about 6 accounts. That’s a strong showing. Then again, from the perspective of how much of the salesperson’s time is spent on selling, there’s still lots of room for improvement. To improve sales productivity, banks must develop the ability to balance and define the relationship between measures of sales results and sales activity. Interestingly, sales productivity and capacity management have become among the biggest growth areas among banking strategists over the last year, with more and more banks attempting to measure how sales time is spent.
Targeting Sales Efforts
Many banks have developed or purchased sophisticated customer segmentation models that allow them to target their marketing at the customers and prospects that will be most apt to respond to their offers.
Given the amount of time banks’ branch sales staff are dedicating to proactive customer calling, another, simpler segmentation tool suggests itself as well. Some banks have begun to question the value of making branch staff phone customers and have suggested using phone centers instead. This is particularly true in product-oriented banks. (We’ve all received calls from telemarketers selling bank credit cards.) The best banks look at their customer transaction histories to segment their customers into those who prefer to do business through alternate channels (like the phone) and those who prefer the personal contact of their local branch staff. In this way they can match the customers’ preferences and improve the productivity of their selling efforts.
The Bottom Line
Banks have wisely invested in improving their sales
ability but many have not yet learned how to measure and
manage the productivity of those sales investments. To
improve shareholder value as well as improve their
employees’ prospects, banks must now develop more robust
capabilities in the area of sales productivity measurement
and management.
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