ABA Marketing Conference
SHARPEN YOUR SMALL BUSINESS FOCUS
PRACTICAL TOOLS TODIFFERENTIATE YOUR BANK
Susan Brown-Monforte, Senior Vice PresidentMarketing Group Manager, California Bank & Trust ($10B), San Diego, CA
Buck Bierly, PresidentMZ BIERLY CONSULTING, INC. Malvern, PA
2
A Definition or Two
• Defining Small Business*• Small Business: Businesses with less than $10,000,000 in Sales• Business Banking: $10,000,000 to $25,000,000 in Sales
• Defining Sustainability• Sustainable Top Line Revenue Growth in Segment• Sustainable Profitability in Segment• Sustainable Asset Quality in Segment
• Wallet Share• Capture 65% of the Relationship (“Relationship” includes both the
Business and Consumer Opportunities)
• Relationship Manager (RM)• Branch Manager• Business Banker (< $10,000,000 segment)• Small Business Representative
* Not Effective for the < $750,000 Business
3
Building SUSTAINABLE GROWTHin a Crowded Market
1. If the economy remains in a slow recovery, loan demand will remain “tepid” as Business Owners use “retained earnings” for capital expenditures and look for “efficiencies” in their operational processes
2. The industry’s continued “reduced dependence” on investor real estate lending will create increased competition for well run operating businesses
3. “Re-pricing” loans will become a constant as Banks use pricing to build market share or to survive
4. Liquidity continues to be important; low cost deposits remain key
5. Revenue replacement is still a critical issue, replacing lost fee business
6. The acquisition [and then expansion] of new clients remains a focus
7. Successful “Business Development” Processes will focus on “differentiation” in the market. (Bank and RM differentiation!)
4
A Changing Environment. . . with Opportunities
1. Banks require increased discipline on resources and segmentation to drive profit growth:• 85-90% of profits driven by 10% of clients• “High Value” companies (high profit accounts) require high touch,
distinctive service• “Low Value” companies require good cost effective service that instills
loyalty but does not over-serve
2. Advice remains a critical need, a notable opportunity remains for banks to successfully differentiate and win/retain business acting as a partner.• Only half of banks provided “advice” and that the advice currently
provided is typically a thinly veiled product sell.
Data from Greenwich Associates, June 2012
5
A Changing Environment. . . with Opportunities
3. Strategic options are on the minds of business owners.• More than 30% of small firms are considering a merger,
acquisition, or sale of the business in the next 24 to 36 months.• RMs must initiate dialogues with business owners early to
identify M&A financing, and wealth management opportunities.
4. About 16% of firms are actively seeking a new Treasury provider.• Flawless execution on delivery and demonstrating value are
critical
Data from Greenwich Associates, June 2012
6
Building Relationships, Growing Recurring Revenue
Business Owner
DDA DDA
MMA MMA
Internet Banking Short-Term/Long-Term Investments
Line of Credit Retirement Planning/Retirement Plan
Equipment Loan/Lease Mortgage
SEP HELOC
Liability Insurance Term Life Insurance
Employee Relationships
Total: 8 Total: 7
Professional Practice: 10-years, $800,000 in sales 65% of the “Relationship”
7
Building Relationships, Growing Recurring Revenue
Business OwnerDDA DDA
MMA MMA
Web-Based Banking/Cash Management Web-Based Banking
Line of Credit Investments
Equipment Loan/Lease Retirement Planning/Retirement Plan
Commercial Mortgage Jumbo Mortgage
401(k) HELOC
Liability Insurance Life Insurance
Key Man Insurance, Buy/Sell Agreement
Total: 9 Total: 8
Business Services: 15-years, $3,500,000 in sales 60% of the “Relationship”
8
Building Relationships, Growing Recurring Revenue
Business Partners(s)DDA/Cash Management DDA
MMA MMA
Line of Credit, Acquisition Financing Web-Based Banking
Equipment Loan/Lease Private Banking
Commercial Mortgage Investment Management
Merchant Account Retirement Planning/Retirement Plan
401(k) Jumbo Mortgage
Liability Insurance HELOC
Key Man Insurance, Buy/Sell Agreement Life Insurance
Total: 9 Total: 9
Professional Practice: 18-years, $8,500,000 in sales 60% of the “Relationship”
9
What is the Brand you are Building?
The Focus prior to the Recession
“Excellent customer service. . .”
“Highly responsive to opportunities and requests”
“Faster turnaround than our competitors”
“Give you what you ask for. . .”
Today, these are some aspect of a “brand” that your competitors are already focused on. These are now the price of entry, not a “differentiator”
10
Adding Value is not a Concept
In a highly competitive (or re-pricing) environment...
• What value is your RM adding?
• As a “Line of Business”, does the Sales Team have a “Plan” for Adding Value?
Every thing has changed, in Today’s Environment. . .
Sales Team Leaders and RMs need clear direction and on-going guidance
This study correlates skills with “Customer Satisfaction” and with the likelihood a Business Owner would
refer you to other Business Owners.
Data from the Corporate Executive Board
11
Business Owners and “Value Added” Skills
12
Data from the Corporate Executive Board
Business Owners and “Value Added” Skills
Business Acumen
The Questions that drive results and
satisfaction.
13
Data from the Corporate Executive Board
Business Owners and “Business Acumen”
The Key Questions that drive
satisfaction.
14
Data from the Corporate Executive Board
Business Owners and “Business Acumen”
Business Acumen
Relationship Development
Strategies that drive satisfaction.
15
Data from the Corporate Executive Board
Business Owners and “Business Acumen”
Business Acumen
16
Data from the Corporate Executive Board
Business Owners, Business Acumen andUncovering Financial Opportunities
Business Acumen Leads to Financial Opportunities More
Effectively
17
Data from the Corporate Executive Board
Business Owners, Business Acumen andUncovering Financial Opportunities
Business Acumen Leads to Financial Opportunities More
Effectively
18
Adding Value: Business Acumen vs. Product Acumen
• Business Acumen* is bringing Business Issue Insights and Unsolicited Financial Ideas to the table. It is a significant “differentiator” in a competitive marketplace and is highly effective in proactive situations
• Product Acumen is important in reactive situations. It is less of a differentiator in proactive situations
* Business Acumen is Conversational Competence in Business Issues; it is not the same as a “Business or Industry Expert”. Business Acumen, as we are discussing it, is Conversational Competence around “Industry and Business Issues”.
19
Levels of Relationship and Relationship Development
1. Not all Decision Makers want the same level of relationship with an RM.2. Not all RM can build all levels of relationship with a Decision Maker.
Business Acumen
Product Acumen
20
Levels of Relationship and Relationship Development
Level 3: Providing a High Level of SupportWhat gets you to Level 3 is the Client’s understanding that you are providing more “financial ideas” than your competitors are providing.
Identifying opportunities to support the short-term, mid-term and long-term business objectives of a decision maker is a well established method for building Level 3 relationships.
Putting together a team of Business Partners, presenting an overview of a Client or Prospect’s current and future plans and looking for ways to help them get to where they want to go. . . before they request your ideas gets you closer to this level.
Many banks are capable of doing this but few do it consistently.
21
Levels of Relationship and Relationship Development
Level 4: Focusing on Business IssuesThe Level 4 Relationship is focused on business Issues. Clients know that you provide better service and support than competitors; what they see now is that you understand their industry, trends within their industry, and “business issues” those trends are creating for their businesses.
At Level 4, you generate ideas for addressing more than explicit financial needs; you focus on topics like efficiency, productivity and market strategies. At Level 4 you provide [1] industry and business insights that help Business Owners see mid-term/long-term issues more clearly, [2] on-going education, [3] “benchmarking” of business/financial operations.
22
Changing the Conversation toward Business Acumen
1. Where are you banking?2. What products are you using?3. How are they priced and structured?4. What 2 things do you wish your bank was
doing but they’re not?5. Can I have a copy of your statements to
put together an offer of how we would handle your banking relationship?
Where are the Business Issues here? These questions focus on products; comparing your products with a competitor’s. These
questions demonstrate product acumen!!
Consider these Questions. . .
2
23
These questions align with a Business Owner’s Business Strategy, Business Plan, Business
Objectives, Business Operations. These questions demonstrate business acumen!!
Use this Question Set to Demonstrate Business Acumen and Building
Relationship Momentum.
2
Changing the Conversation toward Business Acumen
1. Keys to success affect current and future decisions.
3. Industry trends, business changes in next 3 years.
2. Industry trends affecting the business today.
4. Current and future changes force changes in current and future business operations.
5. Current and future changes in business operations force changes in current and future financial operations.
6. Changing financial operations create changes in the financial needs and then an evaluation of the solutions currently in place.
24
Changing the Conversation toward Business Acumen
25
Relationship Development Process Overview
26
Relationship Development Process Overview
Three Sources of Business. . .
Three Steps:Identify, Plan, Execute
Market Management Process
Relationship Development Process
Face-to-Face Meeting Process
27
Sustainable Performance is Driven by Leadership
High Performing Sales Leaders . . .1. Provide “Targets” to Team Members and
2. Keep a focus on the quality of the calls made on those Targeted Businesses
28
The Market Management Process “proactively” focuses on 3 sources of leads. . . Customers, Prospects and COIs .
Sustainable growth in top-line revenue (and asset quality) is driven by developing leads with “targeted” relationships within these lead sources. Typically. . .
1. Retention Relationships (Key Customers)2. Expansion Relationships (High Potential Customers)3. Acquisition Relationships (Key Prospects)4. Current and Prospective COIs
The Market Management Process
Identify the Right Targets
Target Industries Limited Appeal Industries Distributors Transportation Businesses
Law Practices Trade Contractors
Architect, Engineering, and Business Service Firms Real Estate or Construction Businesses
Financial Service Providers Retail
Insurance Brokers or Firms C-Stores and Gas Stations
Wholesalers Used Car Dealerships
Medical, Dental, and Health Practices Restaurants
Accounting Firms Farming
Manufacturers Mini-warehouses
Retail Trade
Define the industries you want more business from.
Identify the Right Targets
Business Characteristics In business over 3 years
Sales revenue between $750,000 and $10,000,000
Employing more than 5 people
Plant located within 10 miles of a branch location
Privately held
Experienced management team
Borrowing needs greater than $100,000
Satisfactory commercial borrowing-track record
Profitable (Net Profit After Tax) for at least two consecutive years
Tangible Net Worth greater than $250,000
Leverage (Debt-to-Worth) less than 4 to 1
Deposit balances average more than $50,000
Using or needing 5 or more business banking products
Define the businesses you want more business from.
31
These questions align with a Business Owner’s Business Strategy, Business Plan, Business
Objectives, Business Operations. These questions demonstrate business acumen!!
Use this Question Set to Demonstrate Business Acumen and Building
Relationship Momentum.
2
Defining the Conversation with the Business Owner
32
A Model for a Marketing and Sales Partnership
So, this what sales teams need. . .
This is where theMarketing Partnership
is both Key and Necessaryfor Sustainability
A Model for a Marketing and Sales Partnership
33
PRACTICAL TOOLS TODIFFERENTIATE YOUR BANK
Susan Brown-Monforte, Senior Vice PresidentMarketing Group Manager, California Bank & Trust ($10B), San Diego, CA
34
Segmentation
Segmentation 101
What is it?Segmentation is the process of defining and subdividing a large homogenous market into clearly identifiable segments based on similar needs, behaviors, or characteristics.
How do you build it?It depends on the business objective a company is trying to answer. The initial discovery process determines the approach used and it centers on answering two main questions:
How will you take action? How will you measure success?
How does it add value?Segmentation is a tool companies use to solve specific business problems. For example:
“If I develop a new product…What will the demand for the product be? Who is most likely to buy it? Where do I find them? And how do I speak to them?”
“Where should I place my TV and Online ads in order to best reach my intended audience?”
35
CB&T Business Segmentation Exercise
Why It Was Important
Gain better understanding of customer base
Identify and align opportunities for growth within organization – expansion and acquisition
Calculate opportunity for any geography, trade area or market
Transition from a product focus to a segment focus
Support relationship emphasis versus transaction emphasis
Optimize sales and marketing efforts
Help inform other decisions
36
CB&T Business Segmentation Exercise
The Process
1. C-Suite Sponsorship2. Selecting the Right Partner3. Understand the Goals & Objectives4. Receive Data & Audit it5. Match the CB&T data to our Universe of Businesses6. Append everything we know about each Business7. Create ‘Buckets’ & segments (with known, measureable, &
implementable metrics)8. Add the Descriptors (operational metrics)9. Apply the segmentation to CB&T’s ‘universe’10. Deliver results and continue with implementation plan
37
CB&T Business Segmentation Exercise
Segments were defined with known, measureable, & implementable metrics Type of business (SIC code) Size of the business (small, medium, large, etc)
Segments were described by CB&T operational metrics SVA (Shareholder Value Added) Market Penetration GAP (Market Opportunity) Products
Checking Business Loan Internet / VRU Money Market Debit / ATM Installment Loan Savings / CD Cash Management International Merchant Services
Drivers
Descriptors
38
CB&T Business Segmentation Exercise
Bucket # of Employees # of Segments
Analysis Business %
Comp
Universe Business %
Comp
Business % Pen
Business Index
B1 1-3 46 38.26 49.86 0.95 77
B2 4-9 46 31.05 28.88 1.33 107
B3 10-24 45 17.28 13.26 1.61 130
B4 25-49 51 6.59 4.11 1.98 160
B5 50+ 48 6.82 3.90 2.16 175
Total 236 100.00 100.00 1.24 100
Buckets were determined by logical, meaningful and manageable breakpoints in the data.
Employee Size is the key metric for defining buckets because it is a reliable and well populated metric on both customer and prospect files.
The CB&T Buckets
39
Making the Results Actionable
Market Opportunity Prioritization
40
Making the Results Actionable
County Potential SVA County Potential
SVA Alameda County 158,244,214 Orange County 350,167,230 Alpine County 243,695 Placer County 38,011,572 Amador County 4,589,333 Plumas County 3,567,607 Butte County 21,598,301 Riverside County 144,391,367 Calaveras County 4,536,616 Sacramento County 126,307,083 Colusa County 1,919,942 San Benito County 4,088,750 Contra Costa County 87,974,697 San Bernardino County 145,392,031 Del Norte County 2,175,153 San Diego County 298,726,235 El Dorado County 17,065,325 San Francisco County 128,127,691 Fresno County 70,897,746 San Joaquin County 48,407,044 Glenn County 2,418,451 San Luis Obispo County 32,873,040 Humboldt County 13,680,059 San Mateo County 80,766,723 Imperial County 11,722,321 Santa Barbara County 43,056,806 Inyo County 2,666,534 Santa Clara County 201,955,950 Kern County 57,076,771 Santa Cruz County 29,203,212 Kings County 8,309,586 Shasta County 19,047,705 Lake County 6,386,023 Sierra County 524,652 Lassen County 2,609,325 Siskiyou County 5,190,087 Los Angeles County 952,943,679 Solano County 33,526,296 Madera County 9,702,545 Sonoma County 53,662,740 Marin County 38,324,989 Stanislaus County 40,953,271 Mariposa County 1,932,907 Sutter County 7,620,693 Mendocino County 10,966,162 Tehama County 5,254,867 Merced County 14,287,026 Trinity County 1,347,755 Modoc County 1,547,349 Tulare County 30,205,178 Mono County 3,063,320 Tuolumne County 6,061,773 Monterey County 39,281,426 Ventura County 78,350,288 Napa County 18,433,391 Yolo County 16,467,043 Nevada County 13,300,345 Yuba County 4,678,635
Modeled Demand (SVA) By CountyMarket Opportunity Prioritization
41
Making the Results Actionable
Segment Opportunity Prioritization
Methodology to prioritize segments Combine size buckets to create three 0 – 9, 10 – 49, 50+
Balance three critical elements:A. Number Businesses in CA for a segment (The Market Size)B. Penetration in CA (How well CB&T traditionally does with a segment)C. SVA per business (The anticipated benefit to CB&T when acquired)
Priority Score (Weighted Value) = 50% of A, 15% of B & 35% of C
Identify high risk segments with Business Partners Result – 28 unique segments identified as priorities
42
Making the Results Actionable
Development of “Segment-In-A-Box”
Everything a banker needs to know about a segment/industry in one complete package
Designed to help bankers be more effective in the sales process and demonstrate industry expertise
Aligned with relationship sales process and brand positioning
Applicable to both customers and prospects
43
Making the Results Actionable
Segment-In-A-Box includesSegment Information:
Segment Profile Industry Profile (by First Research) List of Associations (by geography) List of Primary Trade Publications Business Journal Editorial
Calendars for major market business journals
44
Making the Results Actionable
Segment-In-A-Box includesMarketing Materials:
Customizable Sales Letter Template
Segment Specific Pitch Book Slides
Segment Specific Flyers
Segment Specific Brochures
List of Additional Sales Collateral to use on sales calls
45
Making the Results Actionable
Segment-In-A-Box also includesSales Tools
Market Plan / Call Planner Call Prep Questions (by First Research) Telemarketing Scripts Prospect list for each segment (loaded in Salesforce.com) Customer lists Packaged product offerings
46
Measuring Success
Metrics are always important, but the story they tell is what is critical!
47
Measuring Success
Measurement #1 Success Stories
Survey used to gather success stories from the field
Gift card drawing used to encourage participation
Success Stories published bank-wide and posted on Intranet
48
Measuring Success
Man
ufac
turin
g
Pro
fess
iona
l
Who
lesa
le
Man
ufac
turin
g
Pro
fess
iona
l
Who
lesa
le
Man
ufac
turin
g
Pro
fess
iona
l
Who
lesa
le
Man
ufac
turin
g
Pro
fess
iona
l
Who
lesa
le
Man
ufac
turin
g
Pro
fess
iona
l
Who
lesa
le
B1 B1 B1 B2 B2 B2 B3 B3 B3 B4 B4 B4 B5 B5 B5
-
50
100
150
200
250 CB&T Segment-in-a-Box, 2008 - 2011
2011 Index2010 Index2008 Index
Measurement #2 Tracking Segment Penetration Over Time Compared to 2008
(and relative to changes within the state of CA), CB&T’s concentration in 2011 has increased in key segments
Compared to 2008 (and relative to changes within the state of CA), CB&T’s concentration in other key segments has not experience as much of a decline
49
Measuring Success
Measurement #3 – CRM Reporting
Track use of segment specific prospect leads
Monitor usage of segment specific materials
Track segment specific campaigns
Monitor pipeline for segment specific deal activity
50
Key Learning's
C-Suite Sponsorship and Region Management buy-in
Sales management and sales process must be aligned with marketing and segmentation strategies
Clean customer data provides the foundation for insights derived and it instills confidence in the results
Data inputs used in the analysis are dependent on the business objectives you are trying to achieve
It’s crucial to understand the data in the results to determine which factors impact performance metrics over time
Requires a long-term perspective and investment
