Guest Blog by Lana Chandler

The word “conversation” implies that two or more people are exchanging ideas, information, thoughts, etc. In a conversation, people are talking and sharing….it’s not a product spiel or lecture. “About 60 to 70% of Branch Managers making outside sales calls have the nasty habit of doing product pitches and trying to identify ‘one need’ that this business owner or this business manager may have, and then selling to that need, feeling successful about that and moving on to another call. That isn’t a conversation – it’s more of a product pitch,” observes Buck Bierly, President of MZ Bierly Consulting, Inc. (Malvern, PA).

“Bankers needs to have conversations with business owners. And what I really mean is a discussion that says to the business owner, ‘the most important person in this conversation is you, not me and my financial institution. My job is to understand what’s changing in your end-to-end financial life,” says Bierly. Business owners have two lives – business and personal. Both lives have multiple financial needs. Limiting your prospecting calls to business products only reduces the profitability, growth, and loyalty of your relationships with business owners.

End-to-End Relationships

When you look at the data supported by people like Barlow Research, roughly 35-40% of small business owners borrow on a regular basis commercially. The other 60 to 65% of business owners do not borrow on a regular basis. If they borrow, it is typically through home equity lines or credit cards. By focusing on small business loans only, for instance, you’ve automatically narrowed the focus for conversations with business owners.

Successful bankers recognize that money is circulated all the way through the business and all the way through the owner’s personal life. By building end-to-end relationships, you can capture more sales and loyalty from business owners. “The conversation that we’re suggesting is…understand the end-to-end financial life of the business owner and how his or her financial life may change over the next year and three years,” says Bierly.

EXAMPLE: If you look at a business owner’s life – especially the under $5 million sales-size business, but even up to $15 million in sales – you have a situation where the primary source of income for this business owner’s family is the business. So, anything that is changing in the business will affect, eventually, their personal life. And, anything that is changing in their personal life could, in some way, shape or form, affect the business.

“An end-to-end relationship says that ‘from the moment a business owner sends an invoice to a customer until the moment a business owner makes a payment for his child’s tuition to college,’ that flow end-to-end is the complete financial life of the business owner,” explains Bierly. The money from the invoice circulates through the owner’s business….paying off credit cards, paying employees, going into an investment account, paying down a line of credit, etc. At some point in time, the owner takes money out of the business through salary and/or shareholder distributions. The business then begins a new process….the money starts circulating through the owner’s life.

Build Momentum

“We tell our clients that the name of the game is this: winning the business is not really beating the competition. Your competitors are faced with the same issues that you are. We assume that it is relatively easy for a business owner to move his/her banking relationship. There is the problem. Business owners are very busy people, and in the end, the last thing they want to do is to put into motion something that eats their time…unless there is a compelling reason,” says Bierly.

“The issue is really the business owner’s inertia. It’s easier not to make a change…unless it will have a significant impact on my life. Saving $10 on a checking account, getting free checks and getting a ‘quick change kit’ to move all of the electronic connections may sound good to a banker…but represents time to the business owner,” Bierly says. “It’s easy for the banker to talk about the value of making that change. But in the end, the banker isn’t the one who has to make the time to do it. The business owner has to invest the time.”

As the banker, you have to build the momentum to overcome the business owner’s inertia. It is very difficult to build momentum from one need/one product. Selling one product or selling one product at a time does not build enough momentum to win a significant portion of the relationship.

“You have to build enough ‘compelling reasons’ for the business owner to make that change. It’s going to take a commitment of time and energy to make a change in his banking relationship, so the owner needs to be convinced that the change will significantly improve something in his business and financial life,” Bierly says. “We call that ability to overcome inertia building momentum. And the fastest way to build momentum with a business owner is to understand what’s changing in his business – the Business and Financial Management Processes that support his business success – or his personal life.”

So how can you build more momentum? “Stop selling products….start selling to change. Identify and develop five or more changes that are taking place in the business, understand the impact of those changes on the day-to-day business operations of the business and then link those to the changes that may be necessary in the current financial management processes of the business,” Bierly says. “Business owners don’t like change. Helping them more easily navigate through changes is more compelling than product features and benefits.”

TIP: Selling to what’s changing in the business shifts the conversation away from a product need to what is on the owner’s mind. That shift takes the conversation toward areas of concern. Where there is one area of concern, often there are two, three or more. Now you’re building mass. And that mass is more compelling than the one product.

Identify All Needs

When bankers are trying to uncover areas of concern, they sometimes get fascinated by the first concern that they hear. As soon as they hear that first concern, the banker immediately tries to “resolve” the issue by offering possible solutions. In many cases, the banker starts bouncing around the steps you need to go through in Relationship Development Meetings…and they lose the real focus of identifying three or more areas of concern.

“This starts to look like a stream of consciousness flow…and the conversation feels scattered and makes less sense to the business owner. Sales models are based on a problem solving model where the needs are the most important driver of commitment. Stay focused on the needs until you have all of them on the table,” Bierly continues. “Each relationship development meeting should be a structured communication process. You don’t want a stream of consciousness event.”

Two Types of Conversation

Successful bankers see things and hear things that their competitors don’t. They think like a business owner. For instance, an owner is typically more concerned with solving processes related to receivables than getting free checks. Conversations that demonstrate business acumen pave the way for that competitive edge. What sort of business issues, opportunities and challenges is the owner facing? What’s happening in the owner’s personal life?

How you make those discoveries is driven by two types of conversations. While you can do both conversations in one meeting, doing both can result in a rather lengthy meeting. When working with clients, MZ Bierly typically recommends having the conversations in different meetings.

Successfully executing the two types of conversation will “align you” with what is changing in the owner’s life – business and personal. Then you can help the owner “optimize” the financial processes and lay the groundwork for building end-to-end relationships. Here’s an overview of each conversation:

1. The Business Process Conversation needs to occur first. “Bankers are taught that finance drives everything,” Bierly says. “Everything is about the loan, receivables, payables, etc. and that drives the business. In reality they support the business. The Business Strategy and Processes drive the financial needs!”

In a Business Process Conversation you focus on understanding current and future changes. These changes have a domino effect. They force changes in current and future business operations. And when the business operations changes, that forces changes in the financial operations.

In a Business Process Conversation, discuss the following:

Keys to Success. Identify value drivers and problem solving processes.

Current View. Confirm industry sector trends and business issues driving changes in the business this year.

3-Year View. Confirm industry sector trends and business issues driving changes in the next 3 years.

Changing Business Processes. These are shaped by the business issues, opportunities and challenges the business is facing. These changes will impact directly and indirectly the financial management processes.

2. The Financial Management Conversation focuses on issues and changes related to the underlying business management processes. Changing financial operations create changes in the financial needs and then an evaluation of the solutions currently in place.

In a Financial Management Conversation, discuss the following:

Changing Financial Processes. Financial management processes are not products. They are the underlying business management processes that affect receivables, payables and working capital. They have to be continually adjusted based on the changing business processes.

Optimizing Financial Processes. Identifying the financial processes that are not optimized to current and future business operations creates areas of concern for the business owner…and results in seeking other solutions.

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