Building Sustainability in Highly Competitive Markets

Transcription

1 Building Sustainability in Highly Competitive Markets Building a Brand in Business Banking Buck Bierly, INC. October

2 Building Sustainability, Building Your Brand We are assuming... Your bank is active with the businesses in your community You have a team of Bankers who support the business owners in your community This is the story... The Focus of your Business Banking Team. 2

3 Building Sustainability, Building Your Brand Building Strong Business Banking Relationships has 3 Outcomes... Building Sustainable Top-Line Growth Building Sustainable Credit Quality Building Sustainable Margins 3

4 Building Sustainability WHAT S THE ENVIRONMENT 4

5 Building Sustainability, Building Scalability If Building Market Share, Wallet Share, or Your Brand involves any of these... Acquiring Banks Acquiring New Client Relationships Acquiring More Wallet Share from Existing Relationships How scalable are your processes? 5

6 A Question for a Sustainable Brand and Sustainable Growth Will the current processes scale to build a consistent, differentiated Client Experience across a growing footprint and over time? 6

7 Build Market Share, Build Wallet Share Growth and Scalability What does it take to scale in the Business Banking sector? A defined and articulated process (think credit and sales) Building accountability on using the processes Giving Team Members the How-To s to get comfortable with the processes Note: You can t scale vapor 7

8 Retention, Expansion and Acquisition All of these require a focus on relationships and most Business Owners are still looking for a relationship of some type. 8

9 But, not all Relationships are the Same What the Business Owner is looking for varies

10 The Ability to Scale Relationships Professional Practice: 10-years, $600,000 in sales DDA MMA Internet Banking Line of Credit Business Equipment Loan/Lease SEP Liability Insurance Employee Relationships DDA MMA Owner Short-Term/Long-Term Investments Retirement Planning/Retirement Plan Mortgage HELOC Term Life Insurance Total: 8 Total: 7 65% of the Relationship 10

11 The Ability to Scale Relationships Business Services: 15-years, $3,500,000 in sales DDA MMA Business Web-Based Banking/Cash Management Line of Credit Equipment Loan/Lease Commercial Mortgage 401(k) Liability Insurance Key Man Insurance, Buy/Sell Agreement DDA MMA Web-Based Banking Investments Owner Retirement Planning/Retirement Plan Jumbo Mortgage HELOC Life Insurance Total: 9 Total: 8 65% of the Relationship 11

12 The Ability to Scale Relationships Professional Practice: 18-years, $9,500,000 in sales Business DDA/Cash Management MMA Line of Credit, Acquisition Financing Equipment Loan/Lease Commercial Mortgage Merchant Account 401(k) Liability Insurance Key Man Insurance, Buy/Sell Agreement DDA MMA Web-Based Banking Private Banking Partners(s) Investment Management Retirement Planning/Retirement Plan Jumbo Mortgage HELOC Life Insurance Total: 9 Total: 9 65% of the Relationship 12

13 Building Sustainability THE MARKET CONTINUES TO CHANGE 13

14 A Changing Banking Environment 1. High Performing Business Banks are requiring increased discipline on resources and segmentation to drive sustainability 85-90% of profits driven by 10% of clients. These High Value companies require high touch, distinctive value-added. Low Value companies need good, cost effective service that instills loyalty but does not over serve 2. Strategic options are on the minds of Business Owners More than 30% of small and mid-sized firms are considering adding to staff, CAPEX investment, a merger, acquisition, or sale of the business in the next 24 to 36 months... they are thinking 2 to 5 years ahead. Few RMs are initiating conversations with Business Owners early enough to identify these opportunities... they are focusing on this year s product goals (not the 2 to 5 year view of the Business Owner) Greenwich Associates, July

15 A Changing Banking Environment 3. Advice remains a critical need for many Business Owners, an opportunity for Banks to win or retain relationships by building business acumen 50% of banks are providing advice [added-value] and that advice is typically a thinly veiled product sell. 50% of Business Owners state that their Banker hasn t brought them an unsolicited idea in a decade 15

16 A Resource for Advice, How s it Working? Resources Most Often Relied on for Advice on Addressing Business Issues Resource Business Banking Commercial Banking Internal Management Team 66% 63% Peer at Another Company 20% 23% Outside Consultant 17% 22% My Insurance Broker 11% 13% Accountant 16% 11% Commercial Banker 10% 4% Lawyer 3% 3% Investment Banker 2% 1% Other 9% 6% Greenwich Market Pulse, July

17 Where do Business Owners Look for Support? 17

18 My Business is Changing... How Can You Help?

19 A Different Conversation... Optimizing Changes [1.] Understand the Business Plan, the Business Objectives and the Business Operations that are changing or may change... now or in the future [2.] Understand the Financial Management Processes that are changing or may change... now or in the future [3.] Bring unsolicited Ideas to the Table... before the Decision Maker asks! (Unsolicited Ideas for now or in the future) 19

20 But, not all Relationships are the Same A Scalable Relationship Process: Manage the Focus

21 Scaling Business Relationships and Business Markets WHAT TO DO... A CHECKLIST 21

22 Increasing Market Share and Wallet Share Keeping it simple... Don t lose your most profitable clients. Lock down your undersold clients. Acquire the prospects that build sustainable revenue (and a sustainable brand). Undoable in today s environment? 22

23 The Key Drivers As Simple as Possible... Consistent Execution of a Client Experience Consistent Execution is driven by the articulation and consistent execution of sales and sales leadership processes But, what are we Consistently Executing? 23

24 A Few Definitions Top-Performing Business Bankers use 3 strategies A Transaction Strategy (responding to an opportunity) A Market Strategy (allocating their limited time to the right Clients, Prospects and COIs; proactively managing their time toward the best lead sources ) A Relationship Strategy ( strategically developing their relationship with significant clients, prospects and COIs) 24

25 Increasing Market Share and Wallet Share (The Checklist) An Articulated Market Development Process An Articulated Relationship Development Process Vertically Aligned Messaging of the Priorities (led by the Executive Suite) Vertical Accountability for Executing the Articulated Processes (led by the Executive Suite) Coaching Team Members on building strong business relationships (Focused by the Executive Suite) This... is what we re executing. 25

26 1. A Defined Market Development Process A Market Development Process focuses on 4 sets of Relationships. Retention Relationships (the top 10% based on metrics) Expansion Relationships (significant expansion opportunities within 18 months) Acquisition Relationships (matches a credit and profit profile) COI Relationships (the 3 rd parties who already know those above) 26

27 The Market Development Process 50% Reactive Transactions 50% Proactive Leads Lead Generation Qualifying Proposal Internal Sale External Sale Balancing the Proactive and Reactive Activity within Your Market. Closed Transaction Relationship Building 27

28 2. A Defined Relationship Development Process Sustainable growth in revenue is built with proactive relationship development. Never lose a Retention Relationship. Get in front of opportunities in Expansion Relationships. Be consistent pursuing Acquisition Relationships. Stay in front of the Right COIs. 28

29 Where do You Stand? Make a Choice. Resources Most Often Relied on for Advice on Addressing Business Issues Resource Business Banking Commercial Banking Internal Management Team 66% 63% Peer at Another Company 20% 23% Outside Consultant 17% 22% My Insurance Broker 11% 13% Accountant 16% 11% Commercial Banker 10% 4% Lawyer 3% 3% Investment Banker 2% 1% Other 9% 6% Greenwich Market Pulse, July

30 Changing the Conversation [1.] Understand the Business Plan, the Business Objectives and the Business Operations that are changing or may change... now or in the future [2.] Understand the Financial Management Processes that are changing or may change... now or in the future [3.] Bring unsolicited Ideas to the Table... before the Decision Maker asks! (Unsolicited Ideas for now or in the future) 30

31 Building a Different Relationship Business Acumen is bringing Business Issue Insights and Unsolicited Financial Ideas to the table A significant differentiator in a competitive marketplace Highly effective in proactive situations Product Acumen is important in reactive situations Less of a differentiator in proactive situations 31

32 Build a Default Value Proposition Use a Default Value Proposition... Until you see their Value Driver

33 3. Vertically Aligned Messaging of the Priorities (led by the Executive Suite) Sustainability is led by Messaging the Priorities. What are the most important things your Commercial Team does every week? Reduce the messaging to no more than 5 priorities. Re-establish the Priorities every week (from the CEO on down). 33

34 Vertically Aligned Messaging of the Priorities 1. Prioritizing the Messages Have you prioritized the messages? Are you staying on the prioritized messages? 2. Adjusting the Behaviors Have you assessed the skill sets? Have you built a coaching plan? Are you formally coaching? 3. Adjusting the Infrastructure Does it support the messaging you re delivering? Does it support the behaviors you want? 34

35 4. Vertical Accountability for Executing the Articulated Processes Every Week (led by the Executive Suite) Consistent Execution means continually prioritizing the Messages... Monday Morning Sales Meetings 35

36 5. Coaching Team Members on Building Strong Business Relationships Continually growing the right Behaviors Scheduled, Twice-a-Month, One-on-One Coaching 36

37 Increasing Market Share and Wallet Share (The Checklist) An Articulated Market Development Process An Articulated Relationship Development Process Vertically Aligned Messaging of the Priorities (led by the Executive Suite) Vertical Accountability for Executing the Articulated Processes (led by the Executive Suite) Coaching Team Members on building strong business relationships (focused by the E-Suite) This... is what you scale. 37

38 Building Sustainability... Scaling Optimized Processes 38

39 More Details than you Probably Want APPENDIX 39

40 A Look at Q and 2014 THE MARKET REMAINS HIGHLY COMPETITIVE 40

41 Key Trends Optimism of Business Executives is growing But, many are still in a wait and see view on economy Credit environment has become highly liquid Pricing and willingness to lend remain highly competitive Structure is getting highly aggressive Ease of doing business is an issue for all banks Banks are becoming more difficult to do business with Documentation, know your customer, complying with regulations, etc. Greenwich Associates, May

42 Key Trends Pressure on bank leadership teams to grow Creates questions about market sizing and opportunity Forces expansion into new markets and industry verticals Focus on strategic resource allocations to drive growth Looking for the Right People... a different type of talent Need to focus on High Value companies Banks are increasingly focused on optimizing their sales and service models Greenwich Associates, May

43 Key Trends New Client Acquisition is getting more difficult Few bankers are consistently prospecting effectively and creating memorable calls Cutting through the clutter ; what is the distinctive value proposition? COIs are important, but bankers need to distinguish in other ways Greenwich Associates, May

44 Key Trends: Q Business Executives are looking for long-term partners that can provide advice Crafting solutions linking personal and company goals several years out Business Executives are looking for long-term partners that can provide advice Crafting solutions linking personal and company goals several years out Greenwich Associates, May

45 Large Banks Score Well Below Everybody Else The gap between large and small banks is widest on the attitudes: will stand by us in tough times, effectively meets our credit needs and has competitively priced service charges. $100K-<$10MM 90% Q: Please indicate how strongly you agree or disagree with each statement. My primary bank % Agree Strongly 80% 70% 60% 50% 40% 30% 20% 10% 0% 79% 70% 74% 65% 53% 51% -6% +5% 76% 73% 41% 78% 66% 64% 65% 47% +6% 54% +5% +5% 62% 29% +4% 57% 44% 44% 22% +5% 62% 50% +3% 52% 40% 29% 24% Is responsive Is easy to do Appreciates Gets things Is financially Effectively Will stand by Has Has to requests or business with our business right the first stable meets credit us in tough competitively competitive questions time needs times priced service rates and fees charges on loans Small Business Rolling 4 Quarter Data = arrows denote change since previous year 1Q2012-4Q % -5% Small Banks (Assets <$1B) Medium Banks (Assets $1B- $50B) Large Banks (Assets >$50B) 45

46 Focusing on Change... Nature or Nurture?

47 The Key to Providing More Advice The Key Element for effective Advice : Focus on what is changing in the Business and the Business Owner s Life (Focus on Business Acumen) 1. What s changing in the Business Owner s industry? 2. How may that change his/her Business Plan, Business Objectives in the next 12, 24, 36 months? 3. How will the changing Business Objectives change the Business Operations? 4. How will changing the Business Operations change the Financial Processes within the Business [Receivables, Payables, managing the Cash Position]? 5. Looking at the Financial Products sitting on top of the Financial Processes anticipate which of those processes are not optimal for what may change in the next 12, 24 and 36 months. 6. Build a conversation with the Decision Maker around steps 1 through 5! 47

48 Defining Your Target Relationship Profile Manufacturers Wholesalers Distributors High Appeal Industries Architect, Engineering and Business Service Firms Law Practices Accounting Firms Insurance Brokers or Firms Large General Contractors Medical, Dental and Health Practices Ag-Related Businesses Limited Appeal Industries Real Estate Investment Low-End Retail Restaurants Mini-Warehouses/Carwashes Landscaping Service or Gas Stations Used Car Dealerships Real Estate Investment Low-End Retail Restaurants 48

49 Define Your Target Relationship Profile Business Characteristics In business over 3 years Sales revenue between $1,000,000 and $25,000,000 Employing more than 5 people Location within footprint Privately held with experienced management team Borrowing needs greater than $250,000 Profitable (Net Profit After Tax) for the last 2 years Leverage (Debt-to-Worth) less than 3 to 1 Deposit balances average more than $50,000 Using or needing 5 or more business banking/consumer banking product categories 49