Current market dynamics undoubtedly have created a new set of obstacles for financial institutions in meeting or surpassing commercial revenue targets. Banks are now challenged by selling into an economy plagued with deteriorated industries and sub-segments that are experiencing financial difficulty. In addition, with banks repurposing relationship managers (RMs) and diverting their efforts to primarily portfolio management during the COVID-19 pandemic, frontline sales resources have become not only constrained but truly consumed in servicing and monitoring activities. These two issues have challenged banks to capitalize on any sales momentum and create real sales inertia.
Even with an effective sales methodology and highly trained team in place, banks will struggle to scale sales methodology and grow revenue without data and analytics. Put another way, while banks might experience short-term growth, they will struggle to find long-term success given the absence of a focused, cost-effective, and scalable process aimed at the ideal, targeted customer.
Where historical, data-less methods miss the mark
Historical methods for selling are largely ineffective in today's environment. Commercial banking sales have historically been rooted in selling through relationships and networking with Centers of influence (e.g., accountants or attorneys, etc.). In today's climate, this is challenging because there is often not a methodical plan to expand, repopulate, curate, and filter the network on an ongoing basis to ensure ample and effective referrals. The financial results prove this out with historically low win rates, sporadic cross-sale success, and in many cases heightened levels of sales personnel attrition.
Without a standardized methodology, banks are generally unable to unlock the magnitude of their organization. Without a methodology, sales efforts are not repeatable and must be reinvented with each new sale, proving both costly and ineffective in business development. Without scalability, as banks grow inorganically, these challenges become compounded and further complicate growth.
Banks have historically failed to leverage their disparate data sources—even when owned by the bank—to drive the methodology and optimize execution of sales plans. With data typically stored in disparate data houses in multiple non-integrated systems, it has become nearly impossible for bankers to identify and prioritize relationships in a meaningful way.
Because of the lack of coordination around data, banks typically fail to effectively, easily, and accurately align product revenue, whether interest or fee income, to an individual borrower or relationship. Without a clear understanding of the 360-degree profitability view, it becomes challenging to plan and segment holistic, high opportunity sales calls through proper segmentation and targeted sales activities.
Why is this important? Now more than ever, a new scalable method is required to effectively identify, pursue, and sell to targeted existing and new prospective clients that offer high levels of probability for new opportunities within optimal, performing industry segments.
A data-driven sales model is the key to scalability
West Monroe's perspective is that scalability is a sought-after state of operations and provides the foundation for rapid, cost-effective growth. At the core of scalability is repeatability and the ease with which results may be reproduced as bank operations change and adapt to varying conditions. Scalability is often made possible through technology enablement while leveraging automation.
While banks have explored scalability through technology and tools such as loan origination systems, base level CRM systems, and integrated third-party tools to automate the credit underwriting and scoring processes, this alone does not create scalability. Scalability is also built upon standardization, streamlined policies and procedures, and is evident through repeatability made possible by simplicity.
Organizations that are scalable benefit from economies of scale and process greater volumes with fewer resources. This increases net profits as the direct result of top line revenue growth while reducing operating expenses. A bank's DnA must be embedded within sales effectives to drive support and insight through the intersection of sales methodology and technology, all of which leads to greater scalability and accelerated growth.
In our view, banks should operate through a delivery model that leverages data and analytics, provides scalability, and identifies the following: advanced customer segmentation, early-stage opportunity identification, early detection of significant cross sell opportunities, and pre-defined sales targets supported by actionable and tactical workplans.
With the right tool, banks also can unify the RM sales management process and drive user adoption and experience to accelerate success and drive both sales accountability and transparency through customized automated dashboards and reporting. With this approach, banks can begin managing RM sales activity in ways that create scalable, sustainable sales success and ultimately achieve higher than market growth rates.