Back to Basics: The Branch, Part Three

FINANCIAL INSTITUTIONS CONSULTING, INC.
http://www.ficinc.com/

January 2, 2008

TODAY'S TOPIC: BACK TO BASICS: THE BRANCH, PART THREE
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By Charles B. Wendel

Executive summary: While implementing the branch sales transformation process described in the previous two newsletters can result in improved branch performance, few banks follow anything like this approach. Why? Management fails to stand up to branch excuses for poor performance and resists the type of detailed approach required to make the branch into a selling platform. Why? Read below.

Our two previous newsletters (December 5, December 19) outlined our eight-step approach for improving branch-based selling. The newsletters drew several reader comments that we paraphrase below and address.

COMMENT: "Our branch personnel are very young. They lack experience in sales and in even more critical areas such as compliance. We cannot expect them to sell."

Fair enough. Many branches operate with inexperienced branch personnel or with personnel that seem to be just passing through on the way to their next assignment. This situation requires that the bank operate with firm job redefinition and strong and consistent processes; nuances need to be avoided. To some degree, the branch needs to be viewed as if it were a factory with bank personnel playing well-defined but different roles on the assembly line.

What tasks do you want the branch leaders to perform? What tasks can be centralized or moved out of the branch to free up branch time? With few to no exceptions, the same tasks should be required of the same positions (for example, manager, platform banker, and teller) across the branch system.

If it is unrealistic to expect the young branch manager to sell, then he/she needs to be supplemented with one or more sales specialists. The sales specialist needs to serve as both a salesperson and a mentor to one or more branches.

We have also heard from bankers who state that they have older and more mature branch managers rather than young ones. However, these branch managers also fail to sell; they are also set in their ways and are unlikely to change. Asking these customer service experts to become sales specialists borders on looking for a miracle. Again, a specialist sales force may be necessary to gain a sales lift. However, adding personnel is expensive and needs to be cost justified. Throwing more personnel at the situation is often an expensive mistake.

We stress the need to look at the personnel implications of assessing your branches' staff. Too many branches are operating with the wrong people in leadership positions. Increasingly, at least in the slowing U.S. marketplace, paying a branch manager's compensation for account maintenance activities cannot be justified. If the branch manager cannot act as chief sales officer, that person may have to be replaced.

COMMENT: "When you write about the impediments that branch managers face, you give them an excuse not to sell."

Unfortunately, many impediments to sales do exist within the branch, and, too often, senior management seems unaware of the practical roadblocks its employees face. It is fair to expect the branch manager to perform, but only if processes and procedures have been streamlined to the extent possible. The advent of Know Your Customer regulations and what appears to be more paperwork each year ties down the branch. First, top management should make certain they have simplified and standardized processes and, then, they need to communicate priorities. When we speak to branch managers, many really are unsure of what is expected of them. What they do know is that compliance failures can get them fired while sales failures will not.

Banks that have effectively addressed the process issues and still get complaints from their managers have a different problem. Again, staff upgrading may be the solution. Obviously, changing staff brings its own set of issues. We have even heard bankers say that they would rather keep the mediocre staff they have than lose them and, then, have to find new personnel. That approach is at best foolish and shortsighted.

Remarkably, we have even seen cases in which top retail management joins branch management in using compliance and similar requirements as an excuse for mediocre branch performance. If top management cannot develop approaches for increasing sales time and effectiveness despite the roadblocks that exist, then perhaps they and not branch management merit replacement.

COMMENT: "Branch personnel are not used to selling. We are focusing on increasing our sales training in 2008."

Sales training will only succeed if it is part of a multiple step approach such as we described in earlier newsletters. Training needs to be offered once internal job and external customer priorities are set. It is the tail, not the dog. At a minimum, revised incentives need to be considered along with training. But, incentives and training alone will not result in long-term cultural change.

Final Thoughts

Transforming the branch into a selling machine takes time and, no doubt about it, is hard work. The piecemeal approach of a training session here or an incentive there is easier and often results in a short-term lift in sales. But, that lift is followed by a fall, as sales energy is redirected into more comfortable or "urgent" areas. 2008 will be a very challenging year for the banking industry in many ways. Allowing the branch to underperform (and no doubt about it many banks are doing just that) seems indefensible.

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QUOTE OF THE WEEK

"We should have known better."

---Richard Kovacevich, Chairman of Wells Fargo, quoted in the December 27th, 2007 Wall Street Journal on the bank's approach to subprime lending

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ABOUT US

FIC is a strategy consulting firm addressing issues related to growth and profitability for financial services clients. We emphasize practical, bottom-line results for your company. For more information about our consulting services or if you have questions or comments, please e-mail info@ficinc.com.

Financial Institutions Consulting
324 Silver Spring Road
Ridgefield, Connecticut 06877
Telephone: 203-431-8330

Email: SME_Newsletter@ficinc.com
URL: http://www.ficinc.com
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