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With the help of acquisitions and a red hot economy, many of North America's largest banks have posted excellent growth and earnings over the past several years. Within these numbers are statistics and anecdotal evidence that suggest a more disturbing trend: North America's biggest banks are being outsold.

In most major consumer and business to business product categories, and particularly among high value clients, the largest banks are losing market share to nonbank competitors, and even to smaller banks. According to the most recent ABA consumer study by the Gallup Organization, both purchase of investments and insurance from banks and customer loyalty among high value clients are declining.

Despite the largest banking organizations spending millions of dollars for sophisticated data warehouses, new delivery channels and sales training, shopper and client satisfaction studies by RSM McGladrey and other firms that monitor sales effectiveness nationally demonstrate that sales effectiveness is improving at only a handful of major banks.

Why are the banks with the greatest resources to invest in sales management achieving such a low return on their investment? Simple. There's no FOCUS or ACCOUNTABILITY to their investment.

Focus and Accountability Begin at the Top
The breakdown in focus and accountability begins at the top where the senior executives of the largest banking organizations make decisions about sales far removed from the field and without a practical understanding of the dynamics that drive successful selling. Sales management is simple, but it's never "easy" because it requires the time, focus and proactive leadership of senior managers and development of an integrated sales management infrastructure that will provide sustainable gains in sales.

In the absence of focused sales leadership at the top, sales unit managers are often let off the hook for poor sales production, for failure to adhere to the bank's sales process, or for failure to develop their salespeople as long as they meet their "financials." This just doesn't happen in other industries in which managing sales process, developing key personnel, and generating revenue are viewed as the principal accountabilities of line managers.

The Thirteen Most Common Mistakes in Big Bank Selling
After twenty years plus of sales consulting to banking organizations of all sizes, we see a pattern in the mistakes in sales management made by the largest banking organizations. These mistakes, mistakes typically avoided by nonbank and small bank competitors, explain why the largest banks are being outsold.

1. OVERRELIANCE ON TECHNOLOGY.
The larger and more "high tech" the bank, the more likely we find the belief that sales occur by "immaculate conception" through preprogramed sales automation or sales management software. This belief seems to foster the notion that with access to technology there is no need for a banker to get his or her hands dirty with selling or coaching.

As a result, MCIF's, sales reporting, and contact management programs are barely being used in bank selling or coaching, and the sales features in platform automation are often viewed by salespeople as a hindrance to personal selling. Many bankers are using these new technological tools as time-sapping toys for overanalyzing their sales opportunities and as excuses for avoiding one to one selling and coaching. The real objective in utilizing technology in sales management should be more focused live interaction between salespeople and their customers and supervisors.

2. AVOIDANCE OF ACCOUNTABILITY.
In the largest banks, there is seldom one strong sales leader responsible for each line of business. This void in leadership leads to committee decision-making and to outsourcing of both sales initiatives and the accountability for their success. As a result, there is no ownership within the bank for increased sales production or for management of a preferred way of selling, the cornerstone of successful nonbank sales organizations.

3. POOR INTEGRATION OF SALES FUNCTIONS.
Virtually all large banks have established processes for each functional area of sales management ranging from recruiting, training and coaching to goals, measures, appraisal, and rewards, yet most are dissatisfied with the way in which these functions are reinforcing to each other. The larger the organization, the more likely it is that these functions are politicized and work at odds with each other.

4. SUBSTITUTING THE "TRENDY" FOR THE BASICS.
In recent years, most of the largest banks have become enamored with sophisticated segmentation schemes, computer based training, new channels of delivery, culture and service quality initiatives, and local market management. In the face of lean staffing, the combined impact of these initiatives has been to divert the focus of line managers away from more basic revenue generating activity. Improvement in selling requires a substantial commitment to a sustainable management process and to live skill building practice and field coaching.

5. RELIANCE ON NUMBERS OVER PROCESS.
The best sales organizations in the world all have one thing in common. They place adherence to their preferred sales process on the same level of importance as numbers, knowing that if they work the process well the numbers will be there. In contrast, most large banks reward short term profitability at the expense of sales process thus sending a message to all managers that process doesn't count.

Banking is one of the few industries in which managers aren't appraised and rewarded for coaching and development of their personnel. How can salespeople get better without being observed and given constructive feedback on their behavior?

6. PASSIVE RECRUITING.
In conducting sales management training at large banks, I'm always struck by the reluctance of line sales managers to make clear demands for performance. The usual rationale is that stating clear expectations will cause some employees to leave, and that they'll be difficult to replace. This rationale is totally unheard of in other industries where sales managers actively recruit top performers themselves and weed out nonperformers fast so they can meet their revenue goals.

7. DISTORTING SALES WITH ACQUISITIONS.
For many large banks, acquisitions hide their weakness in same store sales resulting in less commitment to sales. More important, the promise of "we'll leave you alone" to merger partners virtually always leads to weak sales expectations for acquired companies at the very time the acquiring institution most needs to generate revenue to recover the acquiring bank's investment. The longer the acquired bank operates independent of the acquiring bank's preferred way of selling, the more difficult it is to ever to jumpstart a higher flow of recurring revenue or to establish a unified sales culture.

8. MICROMANAGING SALES ACTIVITY.
The largest banks have measures, reports and charts for every sales activity to the point that salespeople have too many conflicting priorities and lose their focus on their most important sales opportunities. A good example of this phenomenon is the overemphasis on call activity in bank call programs. Other industries have found that managing call objectives and strategies weekly prior to the calls actually begin made has a much more positive impact on production than reporting every completed activity of selling.

9. FOCUSING ON THE WRONG CLIENTS AND PROSPECTS.
Every bank in the country knows that the top 3-5% of their customers contribute most of their profit. The largest banks just can't seem to reach consensus on who these customers are and what to do with them. Unlike many smaller organizations that have used simple dollars under management and potential for development models developed by firms such as Raddon Financial Group to create high value customer portfolios, the largest banks have typically outsmarted themselves by adhering to current profitability, even in the absence of good profitability data. As a result, a sales unit's best salesperson is often assigned full-time responsibility for retaining and developing a portfolio that has little potential for development.

10. SELLING IN "SILOS".
The more dedicated sales units a bank has, the less likely it is that a customer's relationship will be managed in its entirety by one sales unit, or that unified sales goals will be established for the relationship. Nonbank competitors are much better at setting relationships goals and team selling their high value relationships.

11. ROLLING OUT "ONE SHOT" SALES INITIATIVES.
Unlike the best sales organizations in other industries which tend to invest in substantial sales training processes that produce real mastery of selling, the largest banks tend to roll out their sales initiatives to thousands of employees at one time in one shot programs with little or no follow-up. Our small and midsize clients tend to develop extended sales skill mastery certification and field coaching programs to extend and certify mastery of fundamental selling skills.

12. NOT "SELLING" THE SALES PROCESS.
In many large organizations, the most competent sales leaders are often far removed from the sales force which is a barrier to modeling of best practices and to selling the bank's preferred sales process, the sales mission, and what achieving the mission means for frontline employees. They need to be selling their mission and their expectations to sales unit managers forcefully in quarterly sales accountability meetings.

13. BUYING SALES WITH INCENTIVES.
The biggest mistake of all made by many large banking groups may be their attempts to buy sales culture by using sales incentives as a substitute for good supervision and good sales process. For sales positions with varied accountabilities, goal achievement has proven to be a stronger, more sustainable performance driver than sales incentives.

While sales commissions are a powerful driver of success for many types of selling which provide clear sales task, the most successful sales organizations are moving toward performance bonuses and stock options for sales leadership positions, toward a balanced scorecard bonus approach to incentives for most sales positions to reward profit contribution and client portfolio development, and toward more use of recognition programs to extend their budgets. Incentive compensation works in moving behavior, but at too high a cost if it's merely a substitute for good supervision.

Selling Smarter Will Improve Shareholder Value
With their unrelenting emphasis on ownership and accountability that drives their continuing sales focus and their active recruiting of salespeople who can sell, nonbanks are simply outperforming the large banking groups one on one in the trenches.

Community banks and credit unions are outselling many of their large bank competitors and sustaining customer loyalty with true portfolio management of their best customers and with proactive, "hands on" coaching and direction of their employees by their senior managers.

The impact of poor selling at large banks on shareholder value goes well beyond simple losses in market share and share of wallet. Selling to the wrong prospects and clients and the inability to justify higher pricing with differentiated value through personal selling results in lower profit margins. There's also a huge daily opportunity cost in lost revenue associated with failing to leverage existing sales contacts. Conversely, since shareholders and stock analysts monitor and value a bank's sales effectiveness, selling smarter ultimately translates into higher shareholder value

. The largest banks have huge competitive advantages over their nonbank and small bank competitors in terms of resources, customer base, and product mix. Yet, with regard to sales, these banks will always be underperforming with regard to their potential shareholder value unless they get serious about FOCUS and ACCOUNTABILITY for sales. Sales has to be a managed process.

About the Author Jim Schneider, president and CEO of Schneider Sales Management, Inc., Englewood, Colorado, is one of the pioneers of sales management and sales training for the financial services industries. Between June 30, 1998 and June 30, 1999 Schneider clients increased their pre-tax net income per FTE by 27% on average compared to the banking industry norm of 6% for the same period.
Author of The Feel of Success in Selling by Prentice-Hall, Schneider either created or popularized many of the sales practices that are now an every day part of bank sales culture, including cross-sale ratios and profitability based performance measures, personal banker and client portfolio management, sales cycle mapping, objective-based coaching, balanced scorecard compensation, sales skill certification, and competency based salesperson selection testing.

Schneider Sales Management, Inc. is currently conducting a national research project with the University of Colorado Business School on the traits of top performing salespeople in banking. To participate in the research and receive the final report on best practices in recruiting, call Schneider Sales Management, Inc. direct at (303) 221-4511.

Schneider Sales Management Inc.
5340 S Quebec Street, Suite 265N
Greenwood Village, Colorado 80111
Phone: (303)221-4511
Fax: (303)221-4650
Email: info@schneidersales.com

Copyright 2006, Schneider Sales Management, Inc.
All Rights Reserved

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