Evolutionary Business Planning For Lenders – Part Two

If you’ve been reading our blogs you’re beginning to recognize that we advocate taking a more thoughtful and strategic approach to every facet of sales.  In this, the second blog in our educational series, Taking an Evolutionary Approach to Business Planning, our intent is to leverage the insights learned from the recommended actions laid out in our last blog.

What Insights Were Gleaned from Last Week’s Analysis?

Oliver Wendell Holmes said, “A moment’s insight is sometimes worth a life’s experience.”  Wow, that quote certainly sheds light on the value of reflecting.

In last our last blog we laid out a process designed to help your lenders discover insights on how to be more efficient and effective in their sales efforts.  The goal of this process is to develop stronger 2016 business plans and stronger 2016 results.  The steps we discussed were:

1. Be Intentional
2. Discover Your Numbers and Closing Ratios

No doubt, if you followed our recommendations you learned something useful about yourself and about last year’s sales activities.  So what did you learn?

What Did Your Learn? 

First off, were you disciplined enough to actually block time in your calendar?  Did you actually schedule an appointment with yourself in your calendar to focus on and complete the simple process outlined?  If you did, fantastic!  If not, you’re probably one of those people who fit “doing the work” in and around appointments and meetings.  Most of us do this!  However, I assure you, you are nowhere near as focused and productive as you could be if you’re not scheduling your work just as you schedule meetings and sales calls.  One of the biggest gains in productivity comes from scheduling time for the completion of high priority work that needs to be completed.  This will be discussed in future blogs.

Second…did you answer the seven questions in the last blog?  If so, what did you learn?

• You invested minimal effort – Maybe you recognized that you didn’t invest much energy into creating or revising your 2015 and/or 2016 business plan.  Maybe you simply changed the year at the top of your business plan from 2015 to 2016 and changed some of the numbers on the plan and turned in it into your boss.  Why didn’t you take the creation of your business plan more seriously?  Is it your belief that business plans have no real value?  Maybe you’ve never really used a business plan to govern your monthly marketing and sales activities?  One thing is for sure, if you invested minimal effort creating your business plan, you likely have minimal belief in their value or belief in the power of focus on one’s ability to produce results.

• You never looked at your business plan – Maybe as you were reflecting on last year’s business plan, you came to the realization that you never really follow your business plan.  After your plan was submitted and approved, the plan was filed in an electronic folder in your computer…seldom if ever to be looked at again until the end of the year. Never looking at your business plan during the year certainly isn’t going to create any value for you or help you to improve your production results.

• You never followed your business plan – Maybe you realized that many of the decisions you made last year in terms of where and how to invest your time were based on emotions rather than careful analysis.  A high percentage of sales people in every industry tend to proceed through their year much like a sailboat without a rudder letting the winds and currents push them in different directions.  This approach to sales relies heavily on luck and chance which means that there will be very little consistency from year to year in your production.  Your business plan should be your GPS to help you navigate the myriad of opportunities and decisions lenders have to make with respect to where and how to invest their time and energy. 

Why Do Over Half of All Lenders Fail To Hit Their Annual Sales Goals?

There are numerous reasons lenders don’t hit their annual sales goals.  One of the more critical reasons we believe is the lack of understanding and appreciation of the business planning process.  The annual business planning process is one of the best training, development and coaching tools in your bank. Most lenders (and sales managers) fail to see how, in two or three short years, an annual evaluation and business plan refinement process can help a lender to develop a repeatable, predictable and sustainable approach to sales goal attainment.  Few lenders take the time to look back at the prior year’s actual activities and results and compare them to the projected activities, targets and goals established in their business plans.  Many great learning lessons come from taking a more disciplined and introspective approach to understanding your numbers and conversion ratios. 

What Did Your Numbers and Conversion Ratios Teach You? 

I want you to think about sales production in a new way…a formulaic way!  Consider for a moment, that there is a sales formula that if executed consistently, insures any lender will hit their annual sales goals.  It’s assured!  That’s the beauty of this!  Sales goal attainment is assured…if lenders know and follow their sales formula.  By the way, every lender has their own unique sales formula they just don’t know what it is. That’s because they’ve never thought about sales in a formulaic way.

In last week’s blog, we coached you and your lenders to come up with your 2015 new customer acquisition statistics.  Below is an example of the following activities:

Example:  2015 New Customer Aquistion Stats                                           

Number of Face-to-Face Initial Prospect Calls: 23

Number of Proposals Issued:   7

Number of Closed Deals:                                             5

Dollar Value of Closed Deals:                                  $3M

Dollar Average of Closed Deals:                             $600K

Conversion Ratio: Appointments to Proposals      32%

Conversation Ratio: Proposals to Closed Deals     71

Additional Stats

Number of Warm Introductions Asked For: 10

Number of Warm Introductions Provided:            12

Number of Weekly Meals with Prospects & Customers:   1/Week

Number of Trade Association Events Attended: 8

Number of Deals Closed from Warm Introductions: 1

Number of Deals Closed from Trade Association Activities: 2

Where might this lender focus their improvement efforts in 2016?

A quick analysis of the above metrics and conversion ratios gives a pretty good indication on how this lender can work smarter rather than harder in 2016.

1. Increase the number of sales calls. This lender missed their 2015 sales goal of $5,000,000 in new loan production.  Based on their sales formula, there are several, practical steps they could take to hit their new loan sales goal of $6,000,000 in 2016.

• Doubling the number of face-to-face sales calls in 2016 would insure this lender met their new business production goal.
• Increasing the average deal size to approximately $1,200,000 by calling on larger companies would also insure goal attainment.

1. Improve the appointment to proposal conversation ratio.  A three-to-one appointment to proposal conversion ratio is certainly above average for lenders. However we’ve seen lenders with even better conversion ratios for this metric.  This lender could be more discerning about the types of referrals they’re looking for.  They need to better educate COI’s so the quality of referrals increases.  This will improve this ratio and their production.

1. In the Additional Stats section we see numerous opportunities to increase production.

• This lender isn’t coming close to leveraging their network for warm introductions.  If they set a goal of asking for one warm introduction per week in 2016, imagine the increase in the number of new, face-to-face meetings.

• This lender isn’t providing many warm introductions.  There is a direct correlation to the number of warm introductions provided to the number of warm introductions received.  This lender is likely more focused on sourcing deals than creating value in the market.  An improvement in this area will also increase the number of face-to-face appointments.

• This lender isn’t taking enough people to lunch on a weekly basis.  Breakfasts and lunches are rich opportunities for adding value to the relationship and developing new business opportunities.  Increasing the number of weekly meal appointments will increase the number of new business opportunities.

• This lender isn’t investing the time necessary to capitalize on the bank’s membership in trade associations.  Trade associations if worked strategically provide numerous opportunities for new business development.

• Improve the ratio of warm introductions asked for to deals closed.  A ten-to-one ratio in this metric isn’t bad.  It’s probably about average…therefore there is considerable room for improvement. Through better communication with COIs about the type and size of warm introduction you’re looking for, this lender’s ratio will get better making them more efficient.

• Number of deals from trade association activities.  Most lenders would be thrilled to get two deals per year from their participation in a trade association.  This lender has found a very good, active trade association worthy of investing time.  More participation and exposure in the association will clearly lead to more deals.

In Our Next Blog…

In our next blog we will be discussing:  Modifying Your 2016 Plan Based on What You Learned From 2015

Clearly, it’s nearly impossible for an effective sales manager to help their team without knowing each lender’s “sales formula.”  And if you’re a lender, it’s nearly impossible to work smarter rather than harder without knowing your own sales formula.