Commercial Sales Productivity

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1April 2012

BY MICHAEL RICE, STEVE LEDFORD AND ROBERT GRIFFIN

A concerted eort will be needed to strengthen the sales unction in commercial bank-

ing, which is still overly reliant on the individual eorts o relationship managers.

Although loan demand is rising in commercial banking, there

still is an urgent need or growth. Margins remain weak in

a low-rate environment, and ee-based businesses are mostly

plodding along. How will players meet their prot goals or

2012-2013?

The answer largely comes down to winning market

share. But or that to happen, a concerted eort will be

needed to strengthen the all-important sales unction, which

is still overly reliant on the individual eorts o relationship

managers. New organizational muscle will be needed to

meet the sales challenge.

Future industry leaders will excel across our dimensions

o sales productivity. These include the more amiliar territo-

ries o process and execution, and extend into the emerging

domains o customer analytics and knowledge management.

The rst two perormance actors still need work; the second

two merit aggressive attention.

By systematically evaluating the commercial sales unction

Commercial Sales Productivity:

Four Keys to Winning Market Share


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2April 2012

and addressing key perormance issues, proactive banks can

sharply lit the odds or sales growth. Conversely, banks that

loosely rely on ad hoc managerial best eorts in the eld

may wind up rustrated in pursuing their goals, oten not ully

understanding why.

This issue has a direct bearing on one o the most prom-

ising avenues or ee revenue growth in commercial bank-

ing, which is small business treasury management. Roughly

two-thirds o all companies with $1 million to $10 million o

annual revenues use some sort o treasury management ser-vices, according to Greenwich Associates, yet much o that

business is siphoned away by non-banks.

From a sales perspective, one major reason is that many

banks remain stuck in trying to loosely adapt commercial

banking and branch banking conduits to serve small busi-

nesses, without ully studying the unique requirements o the

market. As a result, small businesses are under-served and

under-sold.

Such disconnects cannot be solved by conventional

sales management tactics. Simply demanding more output,

or example, ignores larger organizational issues and can

push hard-working relationship managers into a pressurezone where client relationships are damaged. Alternatively,

best-practice benchmarking tends to encourage mimicry

instead o addressing the banks unique sales issues, needs

and opportunities.

The winning bank must have an advantaged sales capa-

bility that is tailored to its unique assets and capabilities,

including sales culture, talent, brand and product set.

Barriers to sales PerformanceThere still is a strong tendency in commercial banking to view

sales largely as a question o individual talent. The bank with

the most bench strength will ultimately win, it is thought, and

this perspective comes quite easily to the many senior o-

cers who reached their own levels o organizational success

through individual sales achievements.

You dont have to look ar within the commercial bank,

however, to nd examples o how collective sales perormance

is being held back by an ineective management ramework.

Two sel-inhibiting actors seen at many commercial banks

are under-estimating client potential and poor teamwork.

Under-estimating client potential. Relationship managers

and product sales specialists requently misjudge sales poten-

tial with established clients. This tendency is especially preva-

lent in the mid-market segment, where sales ocers routinely

underestimate potential deposit balances and ee income by

a actor o two-to-one or more.

Part o the problem is a misconceptions that i clients are

in a situation where short-term borrowings exceed liquid

assets, then they necessarily have limited deposit potential

and cash management needs. Bank calling ocers reasonthat i a client is in a net borrowing position, cash will be used

to pay down debt.

This, however, ignores the reality that companies will

hold cash even i they have debt that could be paid down.

The nancial crisis taught treasurers that market conditions

can change rapidly, putting a premium on maintaining both

liquidity and active credit acilities. The result is that many net

borrowers still are holding onto signicant cash.

Another trap is using a checklist approach to assess

potential client demand or non-credit services. I a company

is already using a broad range o cash management prod-

ucts, the treasury management (TM) specialists may considerthe relationship ully served, whether or not there is strong

product utilization. In such instances, the product sales check-

list can be ull, yet client revenues can be alling well short

o potential.

This is an example o how corporate capabilities (cus-

tomer analytics, in this instance) can be widely useul to com-

mercial bankers in the eld. A little high-level math illustrates

the potential. According to the U.S. Economic Census, total

sales o all U.S. companies are approximately $30 trillion.

Federal Reserve data indicates that commercial deposits at

U.S. nancial institutions are about $1 trillion, and most esti-

mates o U.S. treasury management revenues range between

$15 billion to $20 billion. On average, then, a mid-market

company with $50 million in annual sales would be expected

to hold at least $1 million in bank deposits and generate

$250,000 or more in treasury management revenues. O

course, potential will vary by industry sector and other ac-

tors, but overall, most mid-market relationships have more

potential than sales ocers realize.

Coordinating team sales. Most banks deploy sales teams

Our research identifed pre-sales call planning as a dierentiator in successul solution-based

selling. In our study o top-perorming relationship managers, we ound that they share a

common trait o superior planning and preparation, which in turn is a signifcant driver o top

sales results that exceed the average by up to 150%.


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Commercial Sales Productivity: Four Keys to Winning Market Share

Figure 1: The PEAK Diagnostic Approach for Commercial Sales Productivity

By systematically evaluating the commercial sales function and addressing key performance issues,proactive banks can sharply lift the odds for sales growth.

to cover commercial clients and prospects, including rela-

tionship managers and various product specialists. In many

cases, however, the eectiveness o this approach is dimin-

ished because the sales ocers dont really unction as a

team they coordinate, but do not collaborate.One reason is that banks introduce too much complexity

into the reerral system between relationship managers and

product specialists. A product specialist such as a treasury

management ocer may work with eight to 10 relationship

managers, while a relationship manager might have to coor-

dinate with 20 or more product specialists to access special

capabilities required by the client.

Lack o product knowledge is another barrier. Relationship

managers are usually lenders by training, and when asked

about unamiliar products, they may not always know which

specialists to turn to, or how to get them productively involved.

The act that RMs tend to talk about bringing in specialists in

TM, capital markets and merchant services as needed implies

that these players are not on the teams starting roster.

Here again, strong management is needed to sort through

the issues. But even the most determined commercial banksstill will all short i they try to put out the sales management

res one by one.

four Keys to sales ProductivityGiven these problems, executive management needs an

objective and act-based approach to look across the com-

mercial bank and identiy the best opportunities to improve

sales perormance. Novantas research and client work, or

example, has identied 31 success actors spread across the

our domains o process, execution, analytics and knowl-

edge (Figure 1).

Processc-bk r

Behavior-Based Sales

Process (Pre- & Post-Sale)

Client/Account Planning

Centers o Infuence &Reerral Management

Pre-Call Planning

Sales SpecialistEngagement

Client On-boarding/Fulllment

Relationship Reviews

Sales Force Automation

analyticsLead Generation

Market Headroom

Client Segmentation

Prospect Prioritization

Pipeline Management

Won/Loss Analysis

Product Cros-sell

Predictive Reasoning

Technology Platorm

Automated DemandManagement

executionoz a

Sales Structure &

Governance (Sales &Sales Support)

Resource Deployment(Coverage & Gearing)

Precision Goal Setting(LOB Level)

Precision Goal Setting(RM Level)

Sales Metrics &Scorecards

Sales Incentives

Communication &Meeting Structure

KnowledgeContinuous Learning

Talent Recruiting

Talent Coaching &Training

Talent PerormanceEvaluation

Talent Retention

KnowledgeManagement Platorm

Sales CollateralManagement

Continuous LearningLoops (Market,Clients, Competitors,Prospects)

Source: Novantas, LLC


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4April 2012

Process. What are the right steps in serving the customer?

To interact eectively with the customer, the commercial bank-

ing sales organization needs prociency in eight major areas.

Strengths in a ew areas, or example, onboarding and sales

orce automation, can quickly be oset by weaknesses else-where, or example, reerrals and specialist engagement.

That is why the major perormance gaps need to be rigor-

ously identied and resolved.

For example, our research identied pre-sales call plan-

ning as a dierentiator in successul solution-based selling. In

our study o top-perorming relationship managers, we ound

that they share a common trait o superior planning and prep-

aration, which in turn is a signicant driver o top sales results

that exceed the average by up to 2X.

There are important nuances in capitalizing on such

insights, reinorcing the need or careul evaluation. Oten

banks have a viable pre-sales call planning ramework inplace, or instance, but bankers are not yet using it eciently

and consistently.

Execution. What is the best way to organize and man-

age our eorts? In mobilizing the sales eort, there are seven

essentials, including sales orce structure and governance,

resource deployment, individual sales goals or relationship

managers, and sales metrics/perormance management.

Our strong view is that organizational structure should be

shaped by the analytics that drive resource deployment and

dene sales goals. The key to success is leveraging under-

lying market revenue potential to determine stang levels,

sales management coverage requirements and individual RM

sales goals.

Today, roughly hal o the major commercial banks still

use an ad hoc approach to determine stang levels and sales

goals. Otentimes, critical decisions about stang deployment

are based on outdated stang models that do not account

or market changes and underlying market potential. Such

models tend to get passed along over the years with outdated

assumptions and practices still embedded, with increasingly

signicant consequences or successive users.

All markets are not created equal in terms o revenue

potential, and both the RM stang model and the sales goal

structure need to refect this reality. The best way to bolster

sales execution is through a centralized unction that lever-

ages an analytic measure o sales potential by market to drivemanagement decision-making.

Importantly, this is not a one-time exercise, given that mar-

ket potential fuctuates over time based on macro-economic

and market-specic actors. It is critical that the bank main-

tains a standing ability to periodically assess its sales deploy-

ment and sales goals model to ensure proper market align-

ment and protable sales perormance.

Analytics. What analytic support is needed or decisions?

Novantas research has identied nine critical capabilities

linked to sales analytics and sales lead generation. These

include prospect prioritization, pipeline management and

product cross-sell analysis. Such analytics should play a cen-tral role in determining lead generation and sales targeting

activities. Sales productivity critically depends on a robust

sales lead generation program, which includes both a quanti-

tative assessment o prospect revenue potential and a qualita-

tive assessment o client relationship potential and value.

Sales analytics provide a distinct sales productivity advan-

tage in an increasingly competitive marketplace. Despite the

acknowledged value, ew commercial banks have taken the

necessary steps to harness the benets. For example, banks

oten struggle to dene the right data inputs and calculations

or prospect prioritization. A urther diculty is balancing

analytically-derived guidance with RM input and eedback.Leading institutions have adopted an integrated approach

to lead generation that includes a eedback loop rom rela-

tionship managers. This allows RMs to play an active role in

balancing analytically dened prospect priorities with eld-

based relationship knowledge. In addition, a robust center-o-

infuence (COI) reerral program will provide valuable local

insight to help fesh out the RM eedback loop.

Knowledge. How do we keep track o stang dynamics

and valuable learnings rom market trends and past experi-

ences? The knowledge category includes the sales capabilities

related to talent (recruiting, training/coaching, perormance

management and retention), as well as critical items related to

the management o the sales organizations collective learn-

ings and inormation (e.g. knowledge management).

The knowledge management (KM) capability is gener-

ally organized into our distinct categories benchmarking,

industry data & trends, competitive intelligence and portolio

data. Much depends on how the inormation is organized

and maintained internally, and whether it can be distilled into

a usable tool set or the sales team.

Sales analytics provide a distinct sales

productivity advantage in an increasingly

competitive marketplace. Despite the

acknowledged value, ew commercialbanks have taken the necessary steps to

harness the benefts.


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Commercial Sales Productivity: Four Keys to Winning Market Share

Organizations have varying levels o success with KM.

Though the benets are universally acknowledged, there have

been wide variations in the commitment o resources to the

development and ongoing maintenance o a KM capability.

This is especially true o the benchmarking category.

Today banks have access to a signicant amount o nan-

cial data on clients and prospects. The data is oten collected

as part o the credit approval process and is maintained as

part o a rigorous and continuous risk management process.

When managed correctly, this data represents a signicant

sales asset, and it directly addresses the expressed desire oclients to receive more value-added inormation rom relation-

ship managers as part o the sales process.

Many banks have attempted to harness this inormation,

but most eorts have been limited to product-level data. To

unlock the ull benets o KM, the bank needs to be able to

provide relationship managers with quick and easy access to

reliable industry nancial perormance metrics.

A banker calling on construction-related companies in

a territory, or example, ideally should have trend inorma-

tion or that peer group, something that piques client inter-

est, enhances credibility and acilitates conversations. Such

knowledge provides a distinct advantage over the course othe sales cycle.

the road aheadAs executives consider the possibilities to improve sales pro-

ductivity in commercial banking, three management chal-

lenges likely will surace at many institutions.

One challenge is organizational resistance, mostly rom

high-perorming relationship managers who perceive a loss

o autonomy as more standardized practices and tools are

rolled out company wide. Even senior executives may not

be convinced o the need or broader sales productivity ini-

tiatives, looking back on their personal histories. Suce to

say that executive management needs an enlightened attitude

and an empathetic ability to usher valuable-yet-reluctant sta-

ers through the changes.

A second challenge is building a vision, logical sequence

and time horizon or organizational change. True transorma-

tions in sales productivity entail a multi-year journey. There

is a continuing obligation to identiy quick wins that bolster

current-year results, o course, but sales productivity initiatives

need to be pursued cohesively within the context o a larger

organizational journey.

A third challenge is building new organizational skills. A

centralized client analytics group, or example, will require

the right stang to succeed. Commercial banks may need to

reach beyond their institutional (and even industry) borders

to build the right stang nucleus or their customer analytics

and knowledge management groups. There also is a systems

development implication, both in compiling inormation and

in distributing pertinent ndings or usage in the eld.

Such challenges are well worth broaching in the currentera o uneven growth and restrained margins. Ultimately, the

commercial banks that address all our o the major actors

in sales productivity process, execution, analytics, knowl-

edge will not only are better in the near term but also

solidly position themselves or long-term growth.

Michael Rice and Steve Ledford are Partners and Robert Griffin is a Principal

in the Chicago office of Novantas LLC, a management consultancy.

...Banks that address all our o the major actors in sales productivity process, execution,

analytics, knowledge will not only are better in the near term but also solidly position

themselves or long-term growth.

Commercial Sales Productivity

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