Bank Sales Corner

Tired of Losing on Price? 5 Prospecting Tips for Bankers

  

 delicious  

  

Question: My team is struggling with prospecting. We’ve lost a number of deals recently to other banks on price. My lenders are getting frustrated and so am I. Any thoughts?

Answer: Price competition is a fact of life. With more and more competitors out there, many bankers vow not to lose good relationships over price so they’ll cut rates and fees when pressed. To win over a prospect today usually requires something more than just beating the incumbent’s price.

Here are five things you can do:

1. Before your Relationship Managers issue a term sheet or make a proposal to a prospect, discuss what their sales strategy is. This is not a discussion about pricing or structuring the credit, although those issues may well come up. What you want to know is what the prospect’s key issues are and how specifically you are going to differentiate yourself from the competition (your “value proposition.)
2. Figure out what the default value proposition is of each of your Relationship Managers. You might be surprised how many naturally gravitate toward “we’ll save you money.” While this may resonate with the price-shoppers out there (about 50% of the universe in our view), it doesn’t get the job done with prospects who attach more importance to relationships or service factors. Coaching your people on how to position themselves and the bank is critical.
3. Expect to lose to the incumbent more often than not in your first attempt to win new business. To the extent you can, prepare your prospect for the promises and love fest that will ensue when the incumbent feels threatened (“Think about our relationship. We have been with you since 1987. We got you started. Blah, blah, blah…”). If your prospect stays put, don’t give up—see #5 below. You may have lost the initial battle but not the war. (Note to Sales Managers: You might want to sign up for our archived webinar on “Losing to the Incumbent” at http://mzbierlyconsulting.webex.com.)
4. Call up prospects you don’t land and ask for a few minutes to review how your bank did. The feedback may surprise you; one sales manager I know who has been doing this for years says that only rarely does a prospect invoke price as the deciding factor. Share what you learn with your team.
5. Preach that prospecting is really about teamwork and persistence over time. Most bankers have a tendency to give up too soon. If you lose a deal, don’t stop calling on them. This may require some additional strategizing with your product partners (e.g. Cash Management, Wealth Management, Leasing, etc.) but it’s often the second or third at bat that leads to success in prospecting.

Check out our archived webinar on “Value Propositions: It’s Not All About Price” by going to http://mzbierlyconsulting.webex.com. You can also call Susan Lersch at 610-296-4771 for more information about our archived webinars.