Are you Open to Change?

One of the things that can keep you from going away is an openness to change.
— Doug McMillon, CEO & President of Walmart

Almost everywhere I turn, successful CEOs from a wide variety of fields are spouting the same advice: If your business or organization is going to survive, you’ve got to be willing to change.

That calls for innovation. Read more

A Rising Rate Environment Isn’t All Bad!

Just four months after the Federal Reserve raised the target interest rate to above the rate of inflation, interest rates were hiked again. With three more rate hikes projected next year and more talk of a bear market mid-2019, the strong economic tailwinds that have made bank growth relatively easy seem to be subsiding.  As we’ve seen before, in a rising rate environment, the volume of deals declines as demand declines. Read more

LinkedIn Tips

5 Steps to Leverage LinkedIn as a Warm Introduction Tool

CPAs, real estate brokers, and customers are a great source of referrals, but LinkedIn is a powerful tool that can help you create more quality introductions. A lot more!

Leverage LinkedInFor 17 years now of working with banks and bankers around the country.  One thing I’ve come to realize specifically about commercial lenders and relationship managers is that most aren’t utilizing LinkedIn anywhere near to the level they could.  The primary reason for this is that they don’t have a simple plan to follow that will help them better leverage this powerful tool.  I promise you if you take a little time each week, like me, you will be amazed at how you’re able to unlock the power that LinkedIn offers to create quality, targeted warm introductions. Read more

Culture Gets “Lip Service” In Most Banks

Culture Gets “Lip Service” In Most Banks

Conceptually, most banking executives have a pretty good understanding of their bank’s culture. At least conceptually! Maybe you’d describe your bank’s culture as feeling very much like a “family” where employees care for each other and have each other’s backs. Often, I’ll have banking executives refer to their bank’s culture as a “community bank culture” and while these are both accurate descriptions, they’re also very limited descriptions of their bank’s culture.

Authors of Diagnosing and Changing Organizational Culture, Kim S. Cameron and Robert Quinn have this to say about what truly forms an organization’s culture: “The reason organizational culture was ignored as an important factor in accounting for organizational performance is that it refers to the taken-for-granted values, underlying assumptions, expectations, collective memories, and definitions present in an organization.  It represents “how things are around here.  It reflects the prevailing ideology that people carry inside their heads.  It conveys a sense of identity to employees, provides unwritten, and often, unspoken guidelines for how to get along in the organization, and enhances the stability of the social system that they experience.”

The truth is, most of what actually forms a bank’s culture is taken-for-granted assumptions, unwritten and often unspoken guidelines for shaping employee behaviors. Wow! In such a highly-commoditized industry like banking, why would you ever allow one of the rare things that do differentiate one bank from another to be left in such a conceptual framework of understanding?

Starbucks Culture Is Very Clearly Defined

How is it that we can go into a Starbucks in any state — be it in a hotel lobby, airport or retail shopping center — and have the identical customer experience? How did they do that? Certainly, wasn’t luck! The reality is that Starbucks culture was designed and built over time to align with the founder’s vision for the brand. The culture is exactly the type of culture needed to attract and retain Starbucks loyal customers. It’s also the culture needed to differentiate Starbucks from its competitors.

Many executives don’t have the depth of understanding about what actually forms an organization’s culture. They also don’t realize there are four distinctly different types of cultures that exist in companies today:

The Clan Culture: This is a very family-like culture.

The Hierarchy Culture: This is a traditional corporate culture.

The Market Culture: This is a culture able to respond to changing market conditions.

The Adhocracy Culture: This is a culture that supports innovation.

Within each of these four types of cultures, there are a number of distinctly different behaviors. Every bank has employee behaviors that fall within each of these four different types of cultures.

Culture Trumps Strategy Every Time!

The fact is any competitor in your market can easily and quickly replicate your product mix and marketing strategies. So that’s not going to give you a competitive advantage. Clearly, service levels do differ among banks however the fact that three out of four bankers refer to themselves as “a relationship bank” only serves to further commoditize the industry.

One of the few things your competitors can’t readily replicate is your culture! That alone makes it something worth serious attention. The following are a couple examples of how we’ve helped banks define their current and ideal cultures. Once these have been defined, a bank has a clear roadmap of how the organization needs to evolve. On-boarding, performance management, and incentive compensation structures can all be evolved to help a bank preserve the part of their culture that has gotten them to their current level of success while making the changes needed to better ensure the bank’s success in the future. The same holds true for banks acquiring or merging.

Well-known brands like Disney, Southwest Airlines, Harley Davidson, Ritz Carlton and Starbucks know exactly how important their cultures are to their positioning in the market and their ability to attract and retain loyal customers.

Isn’t it time banks start taking steps to define and align their cultures too?
 

Leveraging Your Expertise

In November’s edition of The Evolutionary Banker, I addressed a few trends that are changing the ways in which business owners and corporate decision-makers are making buy decisions. It’s imperative we understand these trends so we can adapt accordingly. One of the takeaways from November’s blog was that decision-makers are looking for their vendors and service providers to have more knowledge and expertise in their industry and with their types of businesses. The value proposition of today’s “generalist” salesperson continues to decline. The same holds true for the generalist relationship manager. Having a little knowledge about a lot of industries practically ensures you’ll position yourself as a commodity in the market.

In this edition of The Evolutionary Banker, I’ll walk you through the process of evaluating your professional and personal background in a way that will help you to better leverage your collective body of knowledge and professional expertise such that it will help you to focus your 2018 business development activities.

The process I will lay out for you is exactly the process I went through personally in 1999 when I transitioned from being a generalist business trainer, coach, consultant to one who developed deep industry expertise such that I am a sales culture expert for banks.

Now the value of “positioning” yourself and your bank as having industry expertise applies regardless whether your bank is in a rural market or a metropolitan market. However, what does differ is the execution of the strategy.

In rural markets, we coach relationship managers to tailor their presentation so that they highlight their years of experience and expertise with businesses similar to the business they’re calling on. As you meet with business owners in different types of businesses, your story has to change in order to highlight your expertise working with businesses similar to the one you’re calling on. That’s what “positioning” means — to consciously and ethically shape perceptions.

A quick but related side note, too many bankers call on businesses in different industries and say the very same things and represent their bank in identical ways. I call that “pin-the-tail-on-the-donkey” positioning. The relationship manager is hoping to hit the bulls-eye and say something that he or she hopes will resonate as unique with the prospect. Given that 3 out of 4 bankers present themselves in an identical way, the approach used by most RMs has the opposite effect of achieving differentiation — it positions them as a commodity.  

Back to the discussion of execution… in metropolitan markets, we’re seeing more and more relationship managers focus their outbound business development activities on one or two niches/segments as a means of boosting their productivity.

Our goal of my three recommendations below is to help you establish your market “sweet-spot.” Your sweet-spot is defined as that segment of the market where your talents, expertise, experience, track-record, and contacts are highly desirable and highly valued. Aligning all of these “assets” will make your business development activities far more productive in 2018. The following are the steps and evaluation process necessary to determine your sweet-spot:

#1. Realize you’ve already developed industry-specific knowledge: As a result of being a relationship manager for ten or twenty years or more, you have naturally developed deeper pockets of industry-specific knowledge based on the business you’ve conducted in the past.

Questions to help you assess your existing expertise include:

  • Are there certain industries where you’re naturally more comfortable talking to those types of business owners and decision makers?
  • Are there industries where you have a deeper knowledge of the industry, and a greater grasp of industry jargon and acronyms?
  • In what two or three industries have you done more business than other industries?
  • What industry concentrations exist in your existing portfolio?

These may represent industries that would be fruitful to focus on in 2018. But more analysis and reflection are required.

#2. Evaluate your upbringing: Without even realizing it, we may have been exposed to and learned about certain businesses either through our parents or the various jobs you may have held growing up. For example, if one of your parents was a doctor, likely you were exposed to numerous discussions throughout your childhood related to the medical field and being a doctor. If your market has a fair number of medical groups and hospitals, your upbringing will be very useful when calling on doctors, medical groups, and hospitals. If your parents owned an auto-parts business, likely you learned a lot about the automotive industry growing up. If your bank has banked companies in the automotive industry, the knowledge and stories you were exposed to growing up will be extremely useful when calling on automotive-related businesses in 2018.

Questions to help you assess your upbringing include:

  • What profession were/are your parents in?
  • What professions interested you growing up?
  • What were or are your hobbies?

These questions can help you assess whether or not any knowledge gained while growing up may be of use and leverage as you strive to determine your sweet-spot for 2018.

#3. In which industries do you have the most contacts? We say frequently in the Sales Honing Academy, “like fish, business people swim in schools.” We recommend assessing your database of contacts to determine where you have concentrations of contacts in the same industry. These concentrations of contacts represent an excellent and completely overlooked source of referrals and warm introductions. I recommend organizing all of your contacts by industry type. For example, group all of the doctors you know together, likewise list all of the contractors you know in another list. Keep working your way through your database until you get everyone (customers, colleagues, vendors, salespeople, friends and even family members) segmented by industry type.

Currently, your contacts are likely listed in alphabetical order. This makes them easy to find, but not easy to leverage. That’s a huge distinction. When you take the time to classify your contacts by industry type, your marketing productivity and the value you’re able to provide others will skyrocket.

The question you want to ask yourself when assessing your database is: In which two or three industries do I have the most industry contacts?

To summarize:

The world is changing. What we did in the past to be successful, likely isn’t going to sustain our success in the future. Knowing this, we need to start the process of changing the ways in which we market and sell the services offered by our bank. Your prospects and customers are looking for more knowledge, advice, and counsel from their vendors and service providers. Let’s make sure we adapt to the times! The recommendations above will move you a long way towards leveraging your experience, expertise, and your contacts.

Behind On Your 2017 Sales Goals?

Behind On Your 2017 Sales Goals?
Here’s what to do to salvage your year.

With Labor Day and the end of summer just around the corner, a sickening feeling is beginning to develop in the pit of their stomachs for a large percentage of relationship managers.

Do you know that feeling? The feeling of being behind in your 2017 production. Possibly way behind.

Lisa and I hear this every year at the end of summer. “My production seemed to be on track coming into June and my pipeline was pretty strong. A couple deals I thought were going to happen didn’t. And a couple other deals I was counting on aren’t going to happen until next year. Now I am way behind on my production goals.”

We’ve all been there. We all hate those sleepless nights, tossing and turning wondering where we’re going to find a few deals that will close quickly so we can salvage our year. And the pressure only gets worse as we move into September and the year marches on.

Here are five actions you can take immediately to salvage your year:

  1. Adjust your priorities – In order to find deals that have a possibility of closing this year, you must adjust your priorities from trying to develop new relationships to cultivating existing relationships. The probability of meeting with a prospective new customer for the first time in September and having that prospect turn into a new customer this year is remote. It can happen, but it is unlikely. In the time you have weekly to devote to business development, a disproportionate amount of time must be dedicated to reconnecting with those prospects you’ve already met.
  2. Leverage existing relationshipsMake a list of every prospect you’ve met with or spoken to in the past 18 months, but haven’t talked to or met with in the past two months. Consider even going back 24 months. You already have some type of relationship with these people…that’s what you need to build on and leverage if your hopes are to pull out a decent 2017. Leveraging existing relationships holds a much greater probability for new business this year, than initial prospect calls with new prospects. Remember, the business you close today is the by-product of your collective activities over the past 12 to 24 months. The relationships you initiate today are more likely to become closed transactions 12 to 24 months in the future. If it’s September and you’re behind on your production, at least 75% of your calling activities need to be focused on cultivating existing relationships.
  3. Don’t overlook turn-downs and lost deals – Circumstances change. Sometimes we forget that. Review every deal you turned down or lost to another bank in the past 18 months. Make a list of those borrowers and give them a call to check in and see how things are coming. With a reasonably high degree of frequency, the lenders and RMs we coach uncover a borrower whom they had written off where circumstances had changed and they were able to close a piece of new business. That happened with an RM last week where he called a borrower that “decided to go with another bank.” Well, the borrower didn’t switch banks as represented and, in addition, their circumstances had changed. Making them much more receptive to the structure offered by our client and the RM picked up a new $500,000 relationship. At this time of the year, you can’t afford to limit your possibilities as to where new business can come from. Turn-downs and lost deals represent another source of new business in 2017.
  4. Make more calls and schedule more appointments – When it’s September and you’re behind in your production, it is imperative you increase the number of phone calls made and appointments set every week. Again, the bulk of your time is spent calling prospects where you already have a relationship and trying to schedule an appointment where it makes sense to do so. You must be willing to suspend judgment and simply “make the call” when you’re looking for new business opportunities.
  5. Block time in your calendar – Most RMs make sales calls in between all of their other work as opposed to blocking time in their calendar to make phone calls. This lack of consistency in an RMs calling efforts creates a lack of consistency in their pipeline. It’s just that simple. Let me say that again…weak, inconsistent calling efforts usually create weak, inconsistent pipelines and mediocre production. One of the first disciplines Lisa and I develop with our coaching clients is how to develop a disciplined calling effort which starts with having a disciplined calendar and systematic time and priority management process. Hint: A “to-do” list is not what we’re talking about here. We recommend blocking at least one hour, four days a week (Tuesday through Friday) dedicated to calling prospects. And it needs to be the 1st task or project completed of your day. Period! By blocking the first hour of your day, you ensure the likelihood of actually doing the work. When we don’t schedule calling time or try to fit it in later in the day, the chances are much greater than you won’t make the calls. In fact, most RMs in this situation are behind in their production in large part because they haven’t made enough quality calls throughout the year.

In summary, a lot of business can get closed in the last four months of the year. If you are behind on your 2017 production, then a disciplined calling effort that is focused on prospects you’ve already met with or given proposals to is required through the remainder of the year. Even if all these efforts don’t translate into closed deals in 2017, your efforts will ensure a much stronger pipeline going into 2018 which also isn’t a bad thing.

If I can help you end 2017 on a stronger note, please don’t hesitate to give me a call at 760-720-9270.

Best of luck,

Learn Why More of Your Lenders Don’t Meet Their Annual Sales Goals

So let’s jump in and get to the heart of why more lenders don’t meet or exceed their annual sales goals. 

The #1 Reason

The #1 reason a substantial percentage of your lenders don’t hit their sales goals is because they are overly reliant on third party referrals as the primary source of their deal flow.  Said another way, they are too dependent on the actions of others for their new business opportunities.  In any given year, if the quality and quantity of referrals is good, a lender likely will hit or come close to hitting their annual goals.  If the flow or quality of referrals isn’t good that year, a lender likely will fall well short of their sales goals.  At the end of the day, luck more than anything else often is the determining factor in sales goal attainment.  Why would any lender WANT to rely on “luck” and the actions of others for something as important as hitting or exceeding their annual sales goal?  That makes no sense!

Now, there are a minority of lenders who have established great relationships with great referrals sources.  These relationships have been established over decades with referral sources that have a considerable transaction volume.  And for these lenders, every year they get plopped into a steady stream of high quality deals and as a result, meet or exceed their annual sales goals.  These lenders are the envy of every other lender in the bank and why wouldn’t they be?  They didn’t have to invest the months and years “developing a relationship” with the company owner or executive.  They didn’t have to establish their credibility or expertise with the company owner because they established that credibility and expertise with the referral source. As a result, the lender is able to leverage the relationship and credibility of the referral source and literally is dropped into an already underway transaction.  And hear me, this is great!!! 

But the scenario I described isn’t what a majority of lenders experience and it is the fundamental “strategy” most every lenders and relationship banker utilizes to source new deals.  By and large, the referrals that lenders solicit come from two primary sources, commercial real estate brokers and CPAs.  Certainly existing customers, attorneys and the occasional insurance broker provide lenders with referrals on occasion.  However, the majority of referrals come from commercial real estate brokers and CPAs and every banker is soliciting the same brokers and CPAs for referrals.

The Consequences of Being Too Dependent

#1. No Control – Let’s start with the obvious.  Your annual production rests in large part on the efforts of others, your referral sources.  That should make you very uncomfortable because you have little if any control over your destiny. 

#2. Poor Quality – You have little control over the quality of referrals you receive.  How many dozens of times were you delighted to receive a referral from a referral source only to find out upon meeting with the company owner, they were un-bankable?  Or maybe worse, you got their financials, found that they were “marginal” but because your pipeline was lite, you presented the credit and the deal was turned down.  So not only did you waste three plus hours driving and meeting with the prospect, you wasted another six to ten hours of the bank’s resources spreading financials and having the deal worked on by your underwriters.  Now imagine the drain on bank resources every week when lenders are working on low quality, marginal deals.

#3. Stiff Competition – Not that this happens all the time, but a lot of the time a lender is being referred into a deal that is being “shopped” where other institutions are also bidding on the deal.  This happens frequently with real estate deals.  Good news, you get a shot at a new piece of business.  Bad news, you’re going to give up net interest and non-interest income.

#4.   Margin Pressure – There are trade-offs for not having to invest the time necessary to develop and source your own deals and the trade-off is a loss of net and non-interest income.  Bidding wars create margin pressure pure and simple.

#5. Limited Differentiation – Because no time was spent developing a relationship with the lender and your bank, no loyalty or “relationship capital” was created.  Because you leveraged the relationship of your referral source, there was little if any time for you to get to know the vision, goals, and challenges of the customer.  The by-product of being “dropped-into” an existing transaction is that you positioned yourself as a commodity.  You had no time to differentiate yourself or your bank or to add value and because of that, typically pricing is the primary way we differentiate one supplier from another when all things are equal.

I’m going to reiterate what I said previously; there is nothing wrong or inherently bad about soliciting referrals from real estate brokers and CPAs as a strategy.  However, there are many other highly effective and newer ways to “attract” high quality new business.  AND, there are so many simple strategies lenders and relationship bankers can use to hone the quality of referrals they receive from their existing referral sources.    

success2Is Your Bank Ready To Hone Your Sales Strategies and Processes?

The only reason more of your lenders and relationship bankers aren’t meeting or exceeding their annual sales goals is their business development and sales strategies need honing!  You have good people, smart people!  They have the knowledge and experience, however, they’re using the same, tired one or two strategies to pursue business that every other banker is using.  The entire psychology of selling has changed as a result of the internet and social media.  Your lenders and relationship bankers haven’t changed…in two or three decades and that’s why more of them aren’t meeting or exceeding their annual sales goals. 

This could change…

“By implementing the tools and coaching provided by Ray and Lisa, I have hit my annual sales goals by July with a disciplined strategy of working smarter, not harder.”

Kyle C. Maguire
Vice President & Relationship Manager
American Business Bank

Here’s to your sales honing success!

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