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Selling Financial Products in a Down Market

Until the recent economic crisis struck, financial product sales were at record levels, and it appeared that the market for these products would continue to be robust. Unfortunately, when the economy was vibrant and demand for financial products was high, there was a tendency to become complacent in the selling process.

The Problem

What are the real problems facing those who are selling financial products? It is amazing how many excuses can be found for a lack of success in the selling process. Some would say no one is buying financial products in a down market. Others would opine that those prospective customers who might buy financial products are fearful of putting their money in a financial institution.

In reality, many of the problems emanate from a lack of market discipline caused by the sellers of financial products trying to compete with products and services that the customers deem to be outdated, or that they feel lack value for the price charged.

Last, and perhaps the biggest problem, is the negative tone that permeates from the top to the bottom of many financial organizations, fed by the constant reports of "how bad things are," or "how bad they are going to be."

The Solution

Before a solution can be reached, there must be a belief on the part of the leaders who shape the organization's future that there is potential for the organization to be successful in down economic markets, as well as up markets. If the leadership of the organization can't be visionary and positive about the future, the challenge becomes too great for the sales staff to overcome.

A personal example comes to mind in this regard, relating to the devaluation of the Mexican peso during the 1980s. As president of a large Texas border bank, I was invited to participate in a live, national news program with Dan Rather who was reporting on the peso crisis and its impact on the border economy of Texas.

"What can you and the merchants of this area do to overcome this overwhelming blow that will dry up your local trade?" Rather asked. My immediate response was we were going to turn lemons into lemonade. I further explained that we were not going to let this economic crisis cause us to give up.

The next day, the local newspaper called me a "Pollyanna banker" and painted a "gloom and doom" picture of the local economy. We got the local merchants and our staff to agree that we would show the newspaper how wrong they were. The staff bought into the program, and the bank had a great year regardless of the down economy.

The first step is to establish a marketing focus. This focus must take into consideration the needs of the markets being served and the resources the financial institution has available to meet the needs of that market.

Next, the financial institution should create a marketing plan that defines the customer segments targeted and the products and services necessary to meet the needs of the market being served. It should also detail what resources the financial institution has available to meet the needs of that market.

Since one of the key elements is to know what the customer desires in terms of products and services, a good solution is a survey of the customers or focus groups to determine customer needs.

Another important element leading to selling success, even in a down market, is being on the leading edge of technology. This will be the key to the effective delivery of a financial institution's products and services in the future. Failure to have effective technology will handicap the institution's sales staff in meeting the needs in the marketplace.

Create a selling environment by having regular sales meetings to set goals, train the staff, evaluate performance, and reward/recognize staff. The sales meeting allows the staff to interact about sales results, become motivated, and gain confidence.

Since selling encourages competition, at least monthly, the sales staff should be provided a list indicating the sales results of each staff member. The top performers should be recognized in the meeting.

One of the most difficult things to get the staff to do is sell the financial institution before they sell individual products. If customers recognize the quality of the overall institution, you will sell more products and keep the customer sold longer.

A perfect example of this concept is a promotion that Ford Motor Company did a number of years ago. "At Ford, quality is job one," they stated. They sold the automobile public on the company before they sold a specific automobile. During this promotion, Ford had the largest overall sales increase in its history.

As pointed out earlier, selling success requires that you know your customer and your customer's needs. And yet, a study by this author of 2,000 customers in 15 financial institutions in the southern United States found only 67 percent of the surveyed institutions' CEOs knew what their customers desired in the way of products and services.

Likewise, you must know the competition to successfully sell against them. You should be asking yourself these questions: What makes the competition better or worse than your organization? How do their products and services measure up against those offered by your firm? Has the competition gained or lost market share this past year? If so, what did they do to cause the gain or loss?

A big mistake some financial institutions make is trying to be all things to all people. The key to selling success is to select three or four products or services and place your marketing emphasis on them. This isn't to say you cannot sell other products and services, it does mean your focus should be on a select few.

A thorough knowledge of your products and services and how they can benefit your customers is also key to success in selling. Some firms have been very successful improving their staff's product knowledge by developing a product manual that describes the features and benefits of their products. In addition, sales training is valuable to make the staff comfortable with product knowledge.

Most of the institutions you compete with are selling essentially the same products as you are, so the key element that can set your organization apart from the competition is quality service. The secret to good service is developing a "service mentality" throughout the firm.

Enabling the staff to resolve issues at the lowest level of the organization is a basic requirement to enhance service delivery. Constantly look for better ways to serve the customer.

Too often, financial institutions react to and follow the competition. Do your own research and be the leader in delivering quality products and services that provide value to your customers.

In good times you need a sufficient number of leads to meet your sales goals. But it becomes even more critical in times of economic difficulty to develop a substantial number of leads because it takes more leads to get sales. Most successful salespeople seek to call that first lead as early in the day as possible, as they want to make the first sale early to ensure success for the day.

Lastly, sell against success. Ask some of your satisfied customers for referrals. There is nothing better than a recommendation from a satisfied customer. Usually, the customer will be pleased to accommodate you with a referral.

In summation, whether in good economic times or bad, the difference between success and failure is determined—not so surprisingly—by discipline and commitment.

James B. Bexley, Ph.D., is the Smith-Hutson endowed chair of banking at Sam Houston State University in Huntsville, TX.