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Business Banking

Paul Corrigan is a Senior Consultant at Peak Performance Consulting Group. He is a leading expert on Workplace Banking (Bank at Work programs). Specifically, he was responsible for the development and management of both Citibank at Work and RBS Citizens’ YourPlace Banking. His experience covers the full range from strategy to execution and includes considerable experience in program implementation and channel management.

 

This article was originally published in BAI Banking Strategies on April 4, 2014

 

BY: PAUL CORRIGAN

 

Financial institutions are facing declining branch transactions and diminished branch sales. As a result, more banks are looking to Workplace Banking as an effective channel for attracting new customers, expanding relationships with existing customers and therefore improving sales productivity and cost efficiency. After all, Workplace Banking puts branch teams in front of prospects and customers they no longer see in the branch.

 

If implemented effectively, Workplace Banking can be a significant incremental source of revenue, representing between 10% and 30% of total new customer relationships according to our analysis of over 20 Workplace Banking programs. The problem is that while many banks offer Bank-at-Work programs, comparatively few provide the structure needed to optimize long term profitability. Here’s a look at some myths about Workplace Banking and some suggestions of why your bank may not be getting the most out of these programs and how you can rectify that:

 

Myth #1. Workplace Banking drives low balance, low quality customer relationships.

 

Reality: Workplace Banking provides higher account quality than the bank average if the program structure includes focused company targeting. Although company targeting is the number one determinant of new account quality, many banks fail to put a disciplined process in place. Without this structure, local managers will often call on the easiest targets of opportunity, such as retail and hospitality, resulting in low balance and high turnover accounts. Conversely, employees working in professional services, academic, medical and technology fields will provide the bank with profitable, long lasting relationships. Additionally, branch teams will also meet current bank customers at their worksite and have the opportunity to cross-sell and deepen relationships.

 

Top Tip: Successful programs include a company approval and registration process to insure targeting strategy is maintained and fail-safed.

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The small business market is large and very profitable. The average small business relationship generates 50% more revenue than retail “affluent” customers because deposit balances tend to be higher, and because business owners tend to consolidate their personal and business accounts at the same institution.

 

In most respects, small businesses behave more like consumers than middle market companies. 92% of small businesses are owner managed and they are heavier than average users of bank branches. Retail branch distribution is key to acquisition and retention of small business accounts — 56% of all new small business banking relationships are acquired through retail branches.

 

Distribution convenience is a key reason why 62% of business owners ultimately consolidate their accounts. However, business owners are almost 40% more likely to combine their relationships at the bank where they have their personal accounts, rather than the other way around.

 

One of our clients developed a very successful strategy to acquire small business accounts and grow revenue. The first step involved identifying business owners who had either a business or a personal relationship with the bank, but did not have both. Products were created which recognized both the combined business and personal relationships, and provided incentives for consolidation.

 

A similar effort was undertaken to identify businesses that were not customers but were located within the trade area of the bank’s branches. Different sales and marketing strategies were created based on the estimated profit potential of the relationship. Specific sales actions (who would call, how often) were key to this institution becoming the leading small business bank in their market – and growing branch generated small business revenue 41%.

 

Do you have the right strategies to grow small business relationships?

 

  • Simplify. Make it easier for both your customers and branch staff by offering small business accounts that mirror your consumer accounts.

     

  • Consolidate business and personal relationships. Identify customers who have either a business or personal relationship with the bank, but not both. Create target marketing and relationship recognition programs to consolidate relationships.

     

     

  • Create targeted new customer acquisition programs. Identify prospects in your trade area who are not customers. Leverage new data tools to predict which financial institution they currently use, and model potential account profitability — then fine tune sales prospecting to acquire your best prospects.

     

  • Create focused distribution strategies. Improve the effectiveness of your small business distribution. Clearly identify your target market, then map the location of every target prospect. Create small business hubs based on customer and prospect concentrations — and develop distribution strategies that will extend your reach and market share.
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Banks have the opportunity to increase consumer and small business banking profitability by digging deeper into sub-segments to find unmet needs.

 

In this brief webinar, Ric Carey discusses:

 

  • Determining your segmentation plan
  • Consumer and small business segmentation options
  • Developing an integrated strategy
  • Designing marketing strategies and tactics for each segment

Please click on the screen below, or the following link: Innovative Consumer and Small Business Segmentation Strategies

 

For additional information or a copy of these slides, please contact ric.carey@ppcgroup.com

 

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Ned Miller and his team at MZ Bierly Consulting have worked with several of our clients and we are always impressed by their business banking acumen.

 

Guest post by Ned Miller, MZ Bierly Consulting

  1. They don’t spend enough time with average performers. Sales Managers like to hang around with their best people; high performers remind them of themselves! (They also have massive recognition needs—”Hey, boss, let me tell you what I just did…”) Chronic low performers also command attention—often an exercise in futility. Who gets left out? The 70% of the sales team whose performance could probably benefit most from coaching.

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Tom Zayko and Ric Carey, Directors at Peak Performance Consulting Group, were interviewed recently by SNL Financial. To them, banks are overemphasizing expense reduction efforts at the cost of engaging with customers — interactions that could lead to greater, more profitable relationships. Zayko and Carey propose leveraging the branch network to make it a more effective transaction point with customers, marrying data about channel usage and current products to customize offerings. They encourage banks that have been focused on cost cutting through branch optimization and investments in technology to try a different tactic: talking to retail and small business customers and tailoring services and packages to their needs.

 

This is a modified version of the SNL Financial article.

 

What is your read on 2013 so far and what do you think will be an area of interest for banks?
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This article was originally published in BAI Banking Strategies on January 11, 2013

 

Banks have the opportunity to nearly double their business banking profitability by digging deeper into small business sub-segments to find unmet needs.

 

BY RIC CAREY AND DAVID KERSTEIN

 

It is accepted wisdom throughout the industry that small businesses represent banks’ best opportunity for higher spreads, improved fee income and superior relationship profitability. Yet we find that few banks are actually succeeding in doing what it takes to effectively penetrate this segment and unlock the profit potential.

 

It’s not for lack of trying. Many banks put serious money behind their commitment to small business – primarily by staffing up on lenders and increasing marketing support.

 

And it is an exciting time to focus on the small business banking segment. Our research that probed deep into the sub-segments of small businesses reveals that banks can provide huge value. Thanks to new channel advances and advanced analytics, banks have more to offer than ever and small businesses have urgent banking needs that go unmet.

 

But to do so, bankers must re-think old assumptions about customer needs, channel preferences and marketing tactics.

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