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7/31/2019 Commercial Sales Productivity
1/5
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
7/31/2019 Commercial Sales Productivity
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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%.
7/31/2019 Commercial Sales Productivity
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3
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
7/31/2019 Commercial Sales Productivity
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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.
7/31/2019 Commercial Sales Productivity
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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.