If your bank is like a lot of banks, you did more business in a few weeks, than you did in the past 5 to 10 years because of the SBA’s Paycheck Protection Program. Congratulations, the value proposition of being a community bank has never been stronger! Hundreds of thousands of smaller businesses learned very quickly that having a relationship with a banker who cares about them has real value.
So now what? Successfully on-boarded PPP customers offer an excellent opportunity to improve bank performance on several levels.
- Generate more deposit activity
- Use more products and services
- Greater activity volume
- Increased fee income
- Stay with your bank longer
In short, more engagement translates into greater relationship profitability!
If your bank has experienced a windfall of new customers because of the SBA’s PPP, here are three strategies your commercial and branch teams can implement to convert PPP customers into full banking relationships.
- Don’t Try To Sell PPP Customers Anything!
It would be natural for a bank to develop marketing campaigns offering various products and services targeted at PPP customers. Equally compelling would be having your commercial and branch teams talking to PPP customers about various other credit facilities, cash, and treasury management services. This is what customers have come to expect from banks. In fact, this “traditional approach” won’t differentiate your bank much from their prior bank and is likely to increase the probability that your PPP customers will leave your bank within a year or two.
A better, less traditional approach would be to spend the next three to six months focused on learning more about your PPP customers and getting to know them on a personal level. Like the Farmers Friendly Review concept where annually, Farmers Insurance agents would meet with their customers to discuss a myriad of personal and business subjects, branch and commercial teams can take more of a consultative approach with PPP customers that focuses on learning and uncovering opportunities that can be addressed down the road.
While counter-intuitive, by not focusing on selling PPP customers and focusing on deep and authentic relationship development, you increase the likelihood of cementing a long term, profitable relationship with each PPP customer.
- Branches Become Advice Centers
While not a new concept certainly, with the migration to digital channels due to the pandemic, banks must “up their game” with respect to how to better leverage branches and branch staff. But what will it take to move in a direction where branch staff can have much more substantive conversations with customers as opposed to facilitating transactions?
Preparing branches for more complex transactions involves a myriad of steps and “upgrades” a couple of which include:
- Adopt a New Mindset: An attitudinal shift around the roll of a branch and branch employees is required. With far less branch traffic, every customer that walks into your branch must be seen as a rare and unique gift. Customer engagement skills must be developed for branch staff to better leverage each customer interaction. The goal must become to take full advantage of each customer interaction, as opposed to the prompt and efficient processing of a customer’s transaction. This requires new strategies, skills, and different incentives.
- Reduce Fear of Change: Managers and supervisors must take the lead on helping employees understand that mistakes and discomfort are part of change. Several things managers can do minimize fear and increase employee adoption of new behaviors are reinforce job security, lead by example means being willing to change your behavior, and lastly provide time in team meetings to acknowledge your concerns and discuss your discomfort with change. When managers discuss their concerns around behavior change, it creates a safe environment when employees feel more comfortable changing their behavior.
The bottom line is customers today need more education and support from their bank to navigate these challenging times. Your goal can remain to “deliver excellent customer service,” but we must move from a “service focus” to a “serving focus” if we are to provide more of the advice and counsel your customers’ needs from your bank.
- Adopt a Customer-Centric Consultative Approach: The #1 reason leading banks are adopting a customer-centric, consultative approach to working with PPP and existing customers is to create a stronger, more distinctive, value proposition…and get paid for that additional value. If increasing relationship profitability is a key metric in your bank, this represents one of the biggest opportunities to improve performance.
We help our clients understand that the #1 way to expand a customer relationship is to expand the types of conversations your bankers are having with customers. And, the #1 way to expand the type of conversations your bankers are having with customers is to expand the types of questions asked. With 20 years of experience training and coaching high performing commercial teams, I can tell you that an average commercial banker will ask approximately a dozen or so questions of a customer throughout the sales process whereas a top- performing commercial banker will ask their customer at least twice as many questions as an average commercial banker. The banker who asks more questions has far more knowledge about the customer and their priorities will make fewer incorrect assumptions and is in a stronger negotiating position.
One of the most overlooked opportunities to create a stronger, more distinctive value proposition is to focus on asking questions that uncover non-banking needs. Another counter-intuitive approach, when commercial bankers uncover problems and challenges that a business owner is having outside of the typical financial needs bankers typically address, that banker is in an ideal position to make a referral or warm introduction to another bank client or colleague.
Always remember, your customers’ biggest challenges are your biggest opportunities to add value, differentiate and solidify the relationship with both PPP and exiting customers.
In conclusion, the risk of doing business with yesterday’s pre-COVID strategies is too high. Bankers must be receptive to looking different and sometimes new ways of approaching customer interactions if we hope to convert PPP customers into full banking relationships.