Traditionally, banking has focused heavily on responding
to customers and prospects in an effort to fulfill their needs. This reactive
model grew out of the concept of the bank branch as the primary source of leads
and business development opportunities. A customer or prospect would wander
into the branch and a Customer Service Representative (CSR) would provide the
ideal or optimal solution. Even dealing with small to midsize businesses,
bankers were generally reactive as opposed to proactive.
In the world of commercial banking, the traditional
Commercial Real Estate (CRE), bankers were similarly reactive. When a builder
or developer had a project or a “deal” they chased it down and did their best
to convert it to a sale. Those bankers focusing on the Commercial and
Industrial (C&I) market, on the other hand, had to be much more
relationship-oriented to develop and retain customers. Today, these skills are
in great demand.
Over the last two decades, the world has changed. For a variety of reasons, including the rise
of electronic banking and intense pressure from non-traditional bank (e.g.,
Ally, ING, Schwab) and non-bank (e.g., Costco, Walmart, AAA) competitors, consumers
and businesses have a lot of alternatives to banks with bricks and mortar in
their community. These competitors, along with the huge money center banks, can
offer customers products and technology that would create a competitive
challenge for any community bank.
bankers who are traditionally product-focused fail to recognize that, with
small and midsize businesses, relationship can almost always trump products.”
Since community banks will never be able to outperform
their large competitors based on branches or products, the one way that they
can most effectively compete is by providing service and creating
relationships. To further corroborate this notion, all one has to do is listen
to the feedback that my colleagues receive every day. My firm’s primary
business is commercial relationship building. In that context we make over 5,000
appointments each year for bankers to meet with business owners and CFOs who
might be actively seeking or at least open to a new banking relationship. We
usually get feedback from the decision-makers as to what their issues or
concerns are regarding their current bank. The overwhelming majority express
disappointment in a relationship that is either nonexistent or not very good.
helping our bank clients build commercial relationships for the last 20 years,
we have found that the key to building business relationships is understanding
that they are fundamentally similar to personal relationships. Specifically,
they must be earned and are not automatically created, even when the bank is
already doing business with a customer. Often bankers who are traditionally
product-focused fail to recognize that, with small and midsize businesses,
relationship can almost always trump products. Business relationships, like
marriages, require constant nurturing and attention and taking them for granted
often heralds the beginning of the end in both contexts.
have identified seven stages in commercial relationship building which reflect
the same dynamics that are characteristic of a personal relationship:
each stage, there tare actical approaches that can enhance and accelerate the
process. Here are two pieces of tactical
advice that will go a long way in building and deepening relationships:
After meeting with a customer or prospect,
and especially after the first meeting, send the person with whom you met an
email picking up on some part of the conversation related to either their
business or their personal life. For instance, if they share with you that they
like to take their family skiing to Maine, find an article on the Web that
might pertain to one of the major Maine ski resorts expansion. This simple act
speaks volumes about you in that a) you listened, b) they are important to you,
not based on your words but rather on your actions.
In every meeting with the customer or
prospect or a referral source for that matter you should be “planting a seed”. This could be to bring in a new product to an
existing customer or to move the sales process along for a prospect. Obviously,
it is imperative that the “planted seed” is memorialized somewhere, in a CRM
system, on a manila folder or in a Daytimer (in descending order of
desirability), so that you can act on it in the following meeting or
conversation. As is the case in the prior example, this this also speaks to your
ability to listen and your commitment to follow up, both of which can be
important differentiators when compared to the great unwashed masses
represented by your competitors.
On Friday, January 24th,I will be
making a presentation of this topic at NEFMA’s Winter Conference in Woodstock,
VT. In that presentation I will be
expanding upon the brief coverage that this article has provided and will share
with the attendees more tactical approaches to help bankers create, deepen and
expand relationships with customers, prospects and referral sources.
The interactive presentation will be at 1 PM, leaving
plenty of time to get home for dinner.
Ted Rosen is president of Expert
Business Development, LLC, based in Bala Cynwyd, PA and is a frequent presenter
at banking conferences. The firm helps community and regional banks develop and
expand commercial relationships and is a member of NEFMA.