bank sales

Several years ago search firm Heidrick & Struggles and the Marshall School of Business at the University of Southern California conducted a survey of directors and CEOs at over 600 of the largest publicly traded companies in the U.S. In perhaps another example of the Lake Wobegon effect (“where all the women are strong, all the men are good-looking, and all the children are above average”) 95% of the directors rated themselves and their boards as effective or very effective. The CEOs surveyed did not share this inflated view of their board members: only 20% of them rated their directors as effective.

I’m not sure what responses a current survey of the effectiveness of bank boards would get today. But if the test was on only one aspect of their increasingly complicated job– their contribution to the bank’s business development efforts– many board members would flunk. Why do bank boards of directors struggle bringing in new business?

There are a number of possible explanations.  Some board members may never have been asked to get involved in business development. The CEO may want board members to contribute to the effort but not get too concerned if individuals don’t. (One banker I know likens this to the approach of not-for-profits regarding fundraising.  That task is one that every board member is expected to shoulder, but at the end of the day many don’t do much to bring in new donors.) 

Over the last decade, new business didn’t get much attention at board meetings.  Compliance issues, asset quality and other more pressing topics took precedence on board agendas. And even when it did merit time, the focus was  more about what bank management was doing to grow the bank, not on the contribution of the board members themselves. (This would not apply to the advisory boards that some banks have established to generate leads.  That is their sole mission, one which most directors take seriously. They want to be involved and are disappointed when they feel they’re being underutilized.)

It’s clear from our work with regional and community banks over the last 20 years that for board members to be successful at this task, they need direction and guidance from Executive Management.  It usually starts with the CEO’s commitment to engaging board members and holding them accountable. As one senior manager put it, “If the CEO doesn’t makes it a priority and hold them accountable, it won’t be effective. “

Others in the bank’s Executive ranks can drive the routines that will make a director business development initiative a success. But while CEOs can delegate this task, they still need to stay on top of what’s happening.

Here are some of the critical elements in an effective plan:

1.Directors need to be clear what types of business the bank is seeking:  While some directors are familiar with the bank’s sales strategy, some are fuzzy about which business opportunities different lines of business are pursuing.  Involving them early on in developing the annual sales plan provides an excellent opportunity to review the bank’s target markets, top clients and prospects, competitive strengths and weaknesses, and relationship-building strategies with prominent CPA and Law Firms.  As one banker remarked recently, “It’s important to make sure that they understand what you are looking for or you’ll get junk.”

    2. Board members need to know how they can assist: If they are unsure of what specific things they can do, board members will probably do nothing.  Some bankers are reluctant to ask for help, which only exacerbates the problem.Think about how they can assist you and your team. Do you need somebody with expertise in a particular industry? Are you interested in getting an introduction to a leader in the local business community? Would testimonials from board members open doors?

    3. Your directors need to get to know your front-line people: Whether you assign RMs to specific board members or encourage individual RMs to build relationships with a number of directors is usually the CEO’s call. But unless your directors know, like and trust the key players on your sales teams, it’s hard to imagine that you’ll get many referrals.

    4. Review progress at your board meetings:  Provide written reports and summaries for all to review. Have directors update others on their business development activities. Get people to commit to upcoming activities (e.g. arranging a lunch with a prospect, making phone calls to invite COIs to a bank-sponsored event, going on joint calls with bankers, etc.)

    5. Decide how best to reward board members who do a good job.  Not every bank opts for trips and prizes for referrals. Some find that board members get rewarded by learning more about the bank’s products and services, including its credit process. Other CEOs use special networking events as a way to energize and motivate their board members. Listen to one community banker:  “We have a small intimate cocktail hour once a quarter hosted by the directors and the commercial and private bankers. We schedule them for the time when people are heading home at the end of the day. It lasts between 60 and 90 minutes. We typically have a mix of about 20 customers and prospects. The purpose is to thank good customers and give prospects a chance to interact with our directors and bankers. The added benefit is that the customers typically espouse the virtues of doing business with us which further supports our client development effort. This is now a coveted invitation among business people and has been successful beyond our expectations. The directors love it!”

    Bottom line: If you want your board members to be successful, you need to make sure that they can identify which customers, prospects and COIs you’d like their help on and plan  with them on how they can assist you in executing the strategy.

    Comments? Add them below or email nmiller@mzbierlyconsulting.com.

    Complimentary webinar on October 27 with Buck Bierly: Q&A on Prospecting. Call Susan Lersch on 610-296-4771 to register or email her at susan.lersch@mzbierlyconsulting.com.