|
Is your bank losing commercial clients because your menu of products and services doesn’t include a solid list of revenue producing ancillary products? Services like credit card processing, payroll processing, integrated 401K administration, and electronic check processing have evolved from “would be nice” to “must have” for today’s bank. Today’s commercial banking list of products and services needs to be complete in order to compete.
Answer these questions to find out if I can help you optimize your
ancillary product menu:
1. Have you lost any commercial clients
because other banks had better packages of products and services to offer the client?
Large, national banks are using ancillary products
as loss leaders to secure relationships. For example, one
national bank advertises free Premium Payroll for a year if a business
switches it’s DDA and loan services to theirs. Banks are also offering
package pricing that appears to reduce fees based on multiple products
and services. If a smaller bank does not have the menu to compete,
it could lose accounts to larger banks who employ these pricing
and bundling strategies.
2. Have you been unable to pry away a
client from a competitor because the client used a variety of
non-traditional banking products and services, even though the
banking and loan products made more sense with you?
This is
the “offensive” spin on the product menu. Small banks are finding
that it is becoming more difficult to acquire new commercial
clients who take advantage of a bundled service. The banking
and loan products could make sense, but if the small bank doesn’t
have an answer to the question, “What do I do with my 401K admin
and payroll?” then you don’t get the relationship.
3. Do you
have an ongoing, revenue sharing relationship with a credit
card processor, payroll processor, 401K administrator, and check
processor resulting in lifetime invested residuals?
If a community
bank desires to offer these ancillary products, then it should
be structured in a way that generates residual based income
vested in favor of the bank, not just referral bonuses. Vested
means over the life of the account and with a net present cash
value if the bank or vendor is sold.
4. Is this revenue governed
by a contract that protects the revenue for the bank forever?
The agreement that governs these vendor relationships is key
to protecting the revenue for the life of the relationship and
beyond. There is very specific, court tested language that successfully
accomplishes this goal.
5. How often do you try and think of
ways to make your customers more loyal?
Offering a menu of ancillary
products and services to your clients creates “hooks” in the
relationship. Planting these hooks prolongs the life of the
relationship, making a portfolio much more “sticky.”
6. Has
your staff been trained on how to up-sell ancillary products
to prospective and existing clients?
Many smaller banks that
do not have full time sales training departments or positions,
do not train the frontline staff on how to effectively sell
these ancillary products. It is not as easy as sticking a brochure
on a counter or doing a statement stuffer. There are a set of
proven inter-personal techniques that generate leads and new
business for ancillary products. A bank should expect to get
much more than just new business and “low hanging fruit” if
the frontline staff is effectively trained on selling.
7. Have
you struggled with how to implement an ancillary product commission
structure, training program, support model, and marketing program?
As this effort is somewhat new within a community bank model,
many decisions on how to effectively implement such a program
tend to be “good guesses.” There are proven strategies in terms
of compensation for frontline employees, objectives, and support.
Why guess?
8. Do you track the number of ancillary products
and services for each customer?
Business intelligence is the
essential feedback loop that shows the bank leadership the throughput
of these ancillary products and effectively establishes cause
and effect
relationships to revenue and retention stats.
9. Do you use
this information as a tool to help under-performing branches
improve?
This business intelligence should be used in real time
to evaluate the performance of a branch or individual within
a branch. Then, targeted training programs are employed to fill
in any gaps that are identified.
10. Have you calculated the
increased multiple that your portfolio of clients would be worth
if your retention was higher, revenue per client was higher,
and there were more “hooks” into the portfolio?
As a community
bank moves towards a transaction, the multiple can vary based
on several different criteria. Revenue per relationship and
retention stats are two very important numbers when determining
a sell side multiple. Small improvements in these numbers can
yield large increases in multiple and net proceeds across a
portfolio.
The question needs to be asked, are you doing everything within
reason to affect these ratios? In a liquidity event, what would
it mean to have these numbers at the very high end of the range?
I am not a middle man. I do not take part in the on-going revenue.
I help banks integrate these ancillary product menus across all
functions. From negotiating with a preferred vendor to sourcing
a new one, I can help you construct your product menu so that it
maximizes long term contractually protected revenue for the bank.
My sales implementation plan is proven over multiple implementations.
I have worked with national, public companies and single location
startups. Bank portfolios are changing. Are you ready? |
