Your Car Isn’t Thirty Years Old, Why Are Your Lenders Utilizing Marketing Strategies That Are?

4It’s probably a safe bet that the car you’re currently driving wasn’t made in 1987.  In the past 30 years, cars have improved a lot.  Fuel efficiency, emission reduction, technological advancements and safety features have improved dramatically.

However, when it comes to how lenders market and sell bank products and services, there has been little if any change over the past thirty years.  Let’s examine various trends that support the need for banks and lenders to evolve their thinking and strategies as it relates to marketing.

#1.  Technology Continues to Devalue the Role of the Sales Person

It’s like this in every highly commoditized industry.  Customers have grown very comfortable doing their own product and company research and making their own buying decision without the need for interacting with a sales person.  Cars, appliances, furniture, insurance policies and thousands of other commodity products can be purchased from the convenience of our homes.  And with services like Amazon Prime, your purchases arrive often within 18 to 24 hours.  The cold hard fact is that the internet, massive advancements in data mining, credit scoring and loan processing technologies continues to devalue the role of sales people.  Simply said, lenders like branches are becoming obsolete.

5Now, we’re not saying that there won’t be a role for lenders in the future of banking.  But we are saying that if steps aren’t taken adjust to this trend, customers will continue to favor pricing as the primary differentiator when all other factors are similar.  Part of the solution to combat this trend is to take steps to increase the value your lenders are able to deliver to customers by increasing their knowledge and expertise.  Lenders must become more knowledgeable on a much broader array of subjects beyond lending.  Developing niche industry expertise is one powerful way to raise the value you’re able to provide your customers as well as improve their ability to differentiate themselves from your competitors.

#2.  Your Competitors Are No Longer Just Banks

Online lending platforms are growing rapidly and gobbling market share at a feverish clip.  Your competitors are no longer the other 15 to 20 banks in your market.  Recent research documents that C&I lending tanked from a 9.0% annual rate in Q2 of 2016 to only 3.5% in Q3.  While the pending election likely played a factor is that decrease, the fact remains that nonbank lending sources are capturing your market share at an alarming rate.  These online lending platforms are growing in their sophistication as well as increasing the loan size they’re able to facilitate.

6To provide a bit more context to this issue, eCommerce has been steadily growing over the past five years. Total transaction volume hit $327 billion in 2016, up from $202 billion in 2011. More brick-and-mortar-focused retailers are stepping up their online game and increasing the percentage of their sales that come from online channels, and Web-only retailers have been growing at an impressive clip, too.  Retailers have spent these years honing the shopping experience on their websites. But just when they thought they knew their consumers, things are changing again.

One of the biggest impediments to changing and evolving with the times is the herd mentality or “group think” that exists in companies.  As an industry we must place a high value on and encourage divergent and disruptive ideas.  Senior executives who have been in banking thirty and forty years must tap into the insights that younger bank employees have to offer.  When was the last time your bank conducted an employee engagement survey or any type of survey?  It’s short-sighted to believe that financial performance means your bank is running smoothly.  Employees are an incredible untapped resource that can help your bank evolve and improve in order to stay relevant and competitive.  The ability to embrace change is giving certain banks a true competitive advantage.  The inability to change or to be in denial about the need to change is becoming more and more risky.  

#3 Not Changing Is Riskier Than Changing

7The rise of social media is shaking up things in surprising ways across the board. The emergence of mobile as a major shopping channel is putting new power into consumers’ hands. Customers expect to use all channels as though they are a single experience, requiring tight integration across those channels. And big data now makes it possible to gain deeper insight into consumers more than has ever before.  Other industries such as airlines, hospitality and retailers have been utilizing big data to drive tailored product and service offerings and revenues for over twenty years.  With few exceptions, the banking industry has only recently (within the last five years) started venturing into the world of big data and data mining.  Regional, business and community banks must explore these new technologies as they represent significant cost and time savings which translates into faster response times.

What does this mean for banks? Everything. It means the competition, which has already been fierce, won’t get any easier. It means there’s a huge opportunity to capture new market share—and a substantial risk of losing customers and market share to banks who can’t execute effective strategies that address social, mobile, and big data in addition to increasing the value proposition offered to business owners and corporate decision makers .

8#4. Changing Business-to-Business (B2B) Sales Trends

The era of selling in which we’ve long operated is dying. Significant shifts in the business-to-business (B2B) buying process have transformed selling as we know it. No longer will the “jack-of-all, master-of-none” shotgun marketing approach and a bloated database of COIs be enough for lenders to succeed.  One of your weightiest responsibilities as CEO, President or EVP of Commercial or Branch banking will be not only planning for the future but also anticipating it. 

The following are a couple of the sales trends affecting B2B sales.  Your bank and lenders need to understand these and begin to implement new strategies if you intend to remain competitive in the next three to five years:

  • Decision Makers Want More.  Competitive rates, responsiveness and excellent customer service used to provide companies with a competitive advantage.  That’s no longer the case.  These attributes are now a given and the bare minimum to compete.  Touting these to prospects no longer differentiates you from your competitors, it commoditizes you.  Your lenders must say and do things differently going forward if you hope to set your bank apart from your competitors.  Simply said, business owners and corporate decision makers are starting to look for “authorities” and “specialists” to provide a higher caliber of advisory services beyond the ability to facilitate a loan transaction.  The value proposition of the “generalist” is declining quickly.  Having a little knowledge on many different industries insures you’re positioned as a commodity.
  • It’s Only Getting Tougher To Get In Front of Decision Makers  If your lenders are having difficulty gaining access to decision-makers now, beware. It’s only going to get tougher to gain access to these key people in the foreseeable future. Time constraints mean prospects and customers are showing less interest in attending traditional face-to-face meetings with lenders. In addition, the buying process at many organizations is being standardized through the use of requests for proposals (RFPs) virtually making a “personal relationship” with key executives nearly impossible.  Customers are also increasingly choosing to use technology to manage purchase transactions rather than working with sales people directly. In fact, Gartner estimates that by 2020, customers will manage 85 percent of their purchasing transactions without talking to a human. 

Lenders will have to utilize new and unique ways to get their name in front of decision makers while positioning themselves as an authority.  Those opportunities do exist through writing articles, giving presentations and by raising your visibility and authority in market niches that play to the individual strengths of each lender.

The world of banking and sales does not change in a vacuum. There are signs of this change all around us.  Astute bank executives decipher these signs and adapt instead of clinging to what worked in the past but will no longer be successful in the future.  

Banks can no longer afford to rely primarily on the traditional COI referrals from real estate brokers, CPAs, insurance brokers and attorney for deal flow as they have for the past thirty years.  Telling customers your customer service is what sets you apart as most banks websites still tout only serves to commoditize your bank and the industry.  Ten years ago the claim was effective, today it’s just noise.

Extinction is what happens when an organism, organization or industry clings to what worked in the past beyond the point of needing to adapt. Many companies in every industry will face extinction over the next five years, but those that adapt will thrive in this new and evolving business and sales environment.

Ray Adler and his partner Lisa Bashor are transformational leaders in the banking industry.  With over 17 years and over 100 banks as clients, Ray and Lisa bring deep industry experience and valuable insights that help banks leaders, managers and employees adapt and break from tradition marketing and sales strategies.  The #1 reason banks engage Ray and Lisa is to help them develop and implement strategic, choreographed out-bound marketing and sales programs that work in conjunction with and greatly enhance a bank’s existing in-bound marketing efforts.

To learn about developing an out-bound marketing and sales program in your bank, contact Ray Adler at 760-720-9270 or email at ray@btigrowthadvisors.com

Ray Adler

Ray Adler
CEO & President
BTI Growth Advisors, Inc.
760-720-9270
BtiGrowthAdvisors.com
SalesHoningAcademy.com