Commercial Insights | Sales and Marketing January 2012 | ABA Center for Commercial Lending & Business Banking

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Copyright 2012 American Bankers Association, All Rights Reserved


Sales and Marketing

Leveraging Your Network in Prospecting
Ned Miller, Senior Vice President, MZ Bierly Consulting

I recently attended a planning session at which the bank management team reviewed the results of a survey of their
business customers. One of the questions asked was how likely the customers were to recommend a company with
similar needs to the bank. To the delight (if not the surprise) of the bankers in the room, nearly 80 percent of the banks
customers said they would.

At a break, one of the senior managers recounted how he had gone on a call with a business banker whose main
objective was to ask a long-time customer for help in getting in to see several prospects. When the time came to ask, the
Relationship Manager (RM) seemed to freeze. He could not ask his customer who by all reports was extremely happy
with the bank and the RM for assistance.

The senior manager chalked this up to fear. He sensed that his subordinate was afraid of being turned down in front of his
boss. Afterwards the RM groped to explain why he was not comfortable asking and assured his manager that he would do
so the next time he met with his client.

Is this bankers reluctance to ask for referrals unusual? Research in 2007 before the gyrations in the economy created
tensions between many borrowers and their bankers indicated that only 22 percent of small business customers and
37 percent of middle market customers had been approached for referrals in the previous 12 months. I have collected
enough anecdotal evidence in workshops with bankers over the last year to believe that, if anything, the percentages
today are worse.

Many business owners really do like their banks and would gladly refer their Relationship Managers to others. Not all
banks have scores as high as my clients 80 percent the surveys suggest that on average community banks score in
the 70s, regional banks in the 60s and megabanks in the 50s. Its worth noting that generally individual RMs score higher
than their banks.

Bankers know that referrals really do improve their chances in prospecting. All have been encouraged by their Sales
Managers to leverage their networks. Some clearly do, but many do not.

Without delving into the reasons why bankers are skittish about asking for referrals I will address that in a future article
and conceding that this is not exactly a new phenomenon, why is it important?

Most banks are looking to their commercial and small business banking teams for significant revenue contributions in
2012. With retail divisions laboring under new restrictions on fees and higher compliance costs, their commercial partners
have to find ways to grow revenue.

While deepening relationships with existing clients is a high priority, many commercial bankers are convinced that
acquiring new clients is critical to their success. With the demand for loans still sluggish and the competition for good
credits fierce, prospectors have their work cut out for them.


Commercial Insights | Sales and Marketing January 2012 | ABA Center for Commercial Lending & Business Banking | aba.com
Copyright 2012 American Bankers Association, All Rights Reserved
The first two challenges that every RM faces in prospecting are getting a first appointment and then creating enough
momentum in the initial meeting to get a second and third (and usually a fourth, fifth and sixth) call. Recent surveys of
business customers indicate that getting in the door the first time may be easier than it has ever been. Many small to mid-
sized businesses are disenchanted with their current banks and are seriously contemplating changing their primary
banking relationship in the next 12 months. (According to data from Barlow Research and Greenwich Associates,
companies banking with several of the largest national banks are most likely to move; those with healthy regional and
community banks are less inclined to head for greener pastures.)

But, you protest, it is still hard to schedule appointments with prospects.
Maybe, but here is where the preceding discussion about referrals comes
in to play. If you are cold calling your prospects for appointments, good
luck. It can work, but it is usually not that effective. One of the big problems
with cold calling is that even if you land an appointment, the chances of
closing a piece of business with the prospect are remote. (See sidebar for
one bankers analysis of the math of cold calling.)

The Business Banking Board has published data that demonstrates that
referrals have a much higher probability of closing than cold calling. Here
is a quick test. All of the following could be part of a commercial or small
business bankers network. All could create qualified leads. How would
you rank the likelihood of an RM closing a piece of business from each
source?

1. The RMs current clients
2. Business brokers
3. Former clients
4. Other bank employees (Cash Management, Wealth Management,
Capital Markets, etc.)
5. Centers-of-Influence (COIs) like attorneys, CPAs, realtors, investment bankers, executives of trade associations
and governmental authorities, etc.
6. Bank Board and Advisory Board members
7. Customers and suppliers of current clients
8. College alumni
9. Leads group members (sometimes referred to as BNI groups for Business Networking International)
10. Friends who sell for a living
11. The RMs prospects
12. Trade association contacts
13. Members of civic and fraternal organizations the RM belongs to
14. Parents of friends of the RMs children

You will not be surprised to learn that according to the Business Banking Board, satisfied current clients are number one.
(For those of you who have changed jobs recently, former clients are also good referral sources. While you are madly
trying to hustle them for their business, do not forget to think about them for referrals.)

Business brokers are a close second, but do not take that as a blanket endorsement of the deals they send your way.
Many bankers are appropriately wary of transactions from certain brokers (and while we are at it, certain investment
bankers).


Although I dont have empirical
evidence to support this, Ive found
that if you are cold calling and you get
an appointment, 95 percent of the
time the company cannot be banked
(as good companies generally have
bankers swarming all over them and
dont need to take cold calls) and 5
percent of the time you are simply
lucky as your timing was spot on.

So, to put this in real terms, if you
have a 10 percent hit rate with cold
calling (might be aggressive), you
need to make about 200 cold calls to
get one good appointment. Thats not
time well spent.

(A senior vice president from a
regional bank)
Commercial Insights | Sales and Marketing January 2012 | ABA Center for Commercial Lending & Business Banking | aba.com
Copyright 2012 American Bankers Association, All Rights Reserved
Your line of business partners are next, in a virtual dead heat with COIs. In both cases, their familiarity with an RMs
capabilities makes them great potential lead sources. What is interesting is that a lead from a satisfied customer is twice
as likely to close as a lead from either of them. Why the difference? With your colleagues, it may be a question of not
knowing precisely what opportunities match your target market and risk criteria. In the case of COIs the banker is rarely
the only option suggested by the CPA or attorney. I will address how to work with both groups in more detail in future
articles.

Okay, if this is stuff you already know, you are probably yawning. Are you ready for a NAP? I am talking about a Network
Activation Plan for 2012. If you are interested in improving your prospecting results, here is a chance to build some
momentum through a step-by-step process designed to help you build and leverage your personal network. In this series
of ABA Commercial Insights articles you will receive specific tips on how to:

Identify which members of your current network to approach for assistance;
Plan when and how to ask for assistance; and
Execute more confidently on a referral-based prospecting approach.

I will provide specific assignments, tools and other resources. But you have to commit to doing something. If prospecting
is important to your success, not leveraging your network is a cardinal sin. If you are unsure of whether this is for you, talk
it over with your Sales Manager. If you still have questions, feel free to email me at nmiller@mzbierlyconsulting.com.

NAP Assignment 1:

Build a list of your satisfied customers. Come up with as many as you can but try to get at least 10 to 15. How
do you know if they are satisfied? They may have told you that they were at some point in the not too distant past.
They might have made a similar comment to others your boss, say. Maybe they have even referred business
to you. (If they have, you might also consider scheduling an appointment with them now to thank them again and
explore with them names on your prospect list.)

Develop a list of at least 50 other people in your business network. If you get stuck, go to the list of potential
referral sources included in this article.

These lists have to be in writing. Some people can memorize phone books but most bankers I know cannot. If you would
like an Excel spreadsheet to use in this effort, go to mzbierlyconsulting.com/building-a-network-list/.

Next month: How to Confidently Ask Customers for Referrals

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Ned Miller is with MZ Bierly Consulting, Inc. in Malvern, Pa. He works with regional and community banks to improve
results with commercial and small business customers and prospects. Sign up for his blog at
mzbierlyconsulting.com/bank-sales-corner-blog/. Connect with him on LinkedIn at linkedin.com/in/nedmillerbankingsales.