Avoiding a Sales Productivity Crisis

Darryl Demos
October 31, 2011 | COMMENTS

With its recent announcement of 30,000 job cuts, Bank of America Corporation has fired the opening shot in an industry-wide move toward deep cost reduction in retail banking. Going into 2012, many other revenue-starved banks likely will slash branch staff as well, given the almost 40% profit decline in retail banking.

But aggressive contraction re-introduces an age-old problem, which is how to generate equal or greater branch sales volume with a smaller team. It gets down to staff sales productivity, which already was coming under pressure prior to the recession as branch customers began transacting more business online.

In fact, as measured by weekly sales per full-time staffer, average branch sales productivity has declined by a third since 2003, according to our research. Although staff cuts may lower expenses, much of the benefit will be lost unless the remaining branch staff can sell at sustained higher levels.

Fortunately, banks can pull the following four levers to reduce these unfavorable sales productivity trends: superior flexibility in allocating resources and setting goals; recasting branch managers as sales leaders instead of backfield coaches; improving service-to-sales conversion programs; and eliminating internal channel competition in favor of collaboration between the branch, contact center and on-line channels.

Flexibility. By segmenting various types of local markets (i.e. urban versus rural) within the branch network, banks can sharpen staff deployment. Inside the branch, there are huge untapped opportunities to cross-train people so that they can flow among multiple assignments during the workday.

Managers as sales leaders. Both in terms of skill and customer rapport, branch managers typically have high sales potential, yet most are severely distracted from that role. Our research shows that branch sales productivity typically is sharply higher when managers themselves are directly involved in selling.

Service-to-sales. One of the great ongoing challenges in branch sales is converting customer traffic for service into completed sales. Our research shows that top-selling branch managers have well-defined sales goals, including units and revenues, more strongly linked with overall branch targets for revenue and profit generation.

Channel coordination or competition? Online and contact center channels likely will continue to grow rapidly relative to branch sales, yet most customers still prefer an “in-the-branch” sales experience. Any major bank that is serious about improving sales productivity needs to target and test new coordinated multi-channel sales strategies, especially given changing patterns of customer channel usage.

As these initiatives illustrate, the core challenge in retail banking is not raw cost reduction—it is productivity improvement. The good news is that to return to pre-crisis sales productivity levels in the branch, the typical branch network only needs to lift performance by an average of two product sales per week per banker.

Darryl Demos is a partner in the Boston office of Novantas LLC, a management consultancy. He can be reached at ddemos@novantas.com. Read the full article, with more details about implementation, in BAI’s online publication Banking Strategies at http://www.bai.org/bankingstrategies.