Capitalizing on Culture: Going From Effective Service to Profitable Sales at Your Branch BAI SmartTactics Conference fo

1. Capitalizing on Culture: Going From Effective Service to Profitable Sales at Your BranchBAI SmartTactics Conference for Profitable Retail Delivery May 2005 Margaret Kane Andrew Mastorakis Kane Bank Services Executive Vice President 488 Hopkins Rd. Tri-Counties Bank Sacramento, CA 95864 (916) 488-0660 (916) 485-2589 (FAX) www.kanebankservices.com margaretkane@earthlink.net

2. � 2005 Kane Bank Services Tri-Counties Bank 2 What Does a Sales Culture Mean to You? Positive Connotations Focus on customer relationships Grow market share and profits Proactively match products to customer needs Negative Connotations Push products that customers don�t need or want Create a stressful work environment

3. � 2005 Kane Bank Services Tri-Counties Bank 3 Unique Advantages of Community Banks Position in the marketplace Clear alternative to big banks Serve a defined and stable base of customers The �community,� often defined as the small town, or section of town Dedication of employees Lower turnover rates than big banks Employees and customers know each other Frequent contact, familiar, first-name basis Customer perceptions �They know and care about me.� Focus on service Bankers seen as friendly and nice

4. � 2005 Kane Bank Services Tri-Counties Bank 4 Redefine Service More than courtesy Value of the service provided Do salespeople provide service? Do service people provide sales? What service do your customers expect?

5. � 2005 Kane Bank Services Tri-Counties Bank 5 The Disconnect People do business with people they like If we are likeable, nice, familiar, and part of the �community,� why aren�t they buying anything from us? We �Friendly Bankers� stop short of asking for their business What if we try to �sell them something,� and they stop liking us? What if they think the only reason we are nice to them, is so that they buy something?

6. � 2005 Kane Bank Services Tri-Counties Bank 6 �I Didn�t Know You Guys Did That!� If you don�t define your service and your expectations of the branch, the customer will define you based on their perception Make change Accept deposits, make withdrawals Takes a lot of effort to overcome the �Stiction*� of the �default perception.� �I didn�t know that you offered that!� *(The word �stiction� is a combination of the words stick and friction, created to emphasize the difference between static and dynamic friction. For example, it is sometimes hard to move a piece of furniture. You apply increasing pressure and it suddenly gives)

7. � 2005 Kane Bank Services Tri-Counties Bank 7 Overcoming Stiction Push your service proposition so hard that you break the assumed perception over time! Frequency Repetition Time Challenge: It�s the friction! Customer initial receptiveness (a confused or unsure mind always responds with the safety of a �no!�) If employees perceive it as an unwelcome inquisition, it will lead to rejection, or worse yet more emphasis on asking for the sale Eliminate the �I didn�t know you did that here.�

8. � 2005 Kane Bank Services Tri-Counties Bank 8 So How Do You Do That? A lot of hard work! Sell the new definition internally Go overboard in defining sales as a higher form of service Make more money Save money Save time, convenience, ease, etc. Not a �Sales Culture,� but a service environment where sales are the �Report Card� of a job well done

9. � 2005 Kane Bank Services Tri-Counties Bank 9 Sales and Service: A Customer�s View of The Trusted Advisor �I trust my financial well-being to you. Deliver on your promise, and I will give you another opportunity. Deliver consistently, and you may be my trusted advisor on financial matters. Over the years, I wouldn�t think of making a financial decision unless I talk to you.� You have the first right of refusal on any of their business!

10. � 2005 Kane Bank Services Tri-Counties Bank 10 Creating Trusted Advisors You have some! (I know you do!) Objective is to develop more Consistency�all customers, not just some Grow the ranks�Trusted Advisors Review definition�start at the beginning Deliver on a promise or service. Inquire, inquire, inquire! You have a right to ask for the business. Individual journey with each customer

11. � 2005 Kane Bank Services Tri-Counties Bank 11 Just Ask! People are often willing to respond if they know you want and value their business High pressure? NO! Girl Scouts are high pressure! No one has bought a house because you needed to sell a mortgage! No one went out and bought a car because you needed to sell a auto loan! No one got and extra $100,000 because you were selling a deposit or investment product! Just ask-begin the journey and eliminate the �I didn�t know you did that here!�

12. � 2005 Kane Bank Services Tri-Counties Bank 12 Tenacity in the Fundamentals Sell, Sell, Sell (these concepts) Redefine your �service proposition� Drive it home! Sales = Report card of service Set expectations, and mean them! Observe, Review, Refine, Repeat Measure, Measure, Measure Reward, Celebrate, Share Leverage Success

13. � 2005 Kane Bank Services Tri-Counties Bank 13 Most Won�t! Mastery of the fundamentals is not �sexy� Obstacles, real and perceived, are the reasons for failure The environment and circumstances Technology may provide the solution Better products, better prices provide the solution �I will wait for a better, easier diet�

14. � 2005 Kane Bank Services Tri-Counties Bank 14 How Do You Know When You Are on the Journey of Leveraging Service into Sales? All employees in the bank are focused on improving performance and take pride in their success. Individuals and teams are recognized for their success. Performance metrics are clear. People know their goals and are striving to meet them. Employees have been taught how to perform according to the expectations. Senior management relentlessly communicates the strategy and the vision.

15. � 2005 Kane Bank Services Tri-Counties Bank 15 Five Key Components to a Community Bank Sales Strategy Executive leadership and vision: The foundation for success People: They make it happen Activities and processes: Consistency and discipline Information: Tools to support people and processes The perceived service advantage is leveraged into a sales advantage.

16. � 2005 Kane Bank Services Tri-Counties Bank 16 A Community Bank Success Story....and A Failure Two Community Banks in Northern California...both about $1 billion in deposits Both open denovo branches One grows $8 million in 2 months One hopes to get to $5 million after 5 years One actively deploys a �Sales Culture�...the other does not How does that get translated into action? Tactics for success

17. � 2005 Kane Bank Services Tri-Counties Bank 17 Step #1: Develop Bank-Wide Vision Articulate senior manager vision: �ABC Bank strives to be the premier bank in Maintown by surpassing our customers� expectations for superior service and fulfilling all of their financial service needs.� CEO sets the tone and the expectations Strategy needs to be understood at all levels Regular communication processes Does your CEO: Hold quarterly meetings with front-line staff? Call on top customers regularly? Stay close to the front-line with regular branch visits? Personally recognize top performers? Walk the talk?

18. � 2005 Kane Bank Services Tri-Counties Bank 18 Key Questions about Leadership and Vision: Would Your Employees Say �Yes�? This organization�s strategy and vision guides me in how to do my daily job. Senior management is regularly engaged with front-line employees. Senior management has communicated a clear vision of our future direction. My supervisor leads by example. Senior management is actively involved in developing a customer-centric organization.

19. � 2005 Kane Bank Services Tri-Counties Bank 19 Step #2: Leverage Service into Sales Ask for the business at the teller line Offer services: debit, on-line banking, OD protection Establish referral goals Reward tellers through weekly promotions Quarterly telemarketing to all clients Thank them for their business Ask if there is anything else that you can do Obtain permission for follow-up calls Dedicated bankers for high-value clients

20. � 2005 Kane Bank Services Tri-Counties Bank 20 Step #3: Establish Performance Metrics Translate financial plan into performance plan Understand the drivers of performance: deposits, loans, fee income Track branch and individual performance Rank branches, relationship managers, branch officers, tellers, etc. Create regular, ongoing reporting mechanisms

21. � 2005 Kane Bank Services Tri-Counties Bank 21 Establish Performance Expectations Develop an infrastructure to support the desired culture and results. Job descriptions: Do they tell people what do to? Job evaluations: Do they tell people what constitutes success? Self assessment tools: Do managers and employees have a way of conversing about how they view the employee�s performance? Most community banks have strong financial plans, but don�t translate the financial plan into performance plans. Incorporate the drivers of performance: deposits, loans, fee income into your performance expectations. Top employees want and need a roadmap so that they can control their destiny.

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24. � 2005 Kane Bank Services Tri-Counties Bank 24 Step #4: Establish Goals to Support Performance Metrics Create strategic alignment for performance metrics. Establish goal congruence at all levels. Don�t assign goals if you can�t track them. Create ownership throughout the organization.

25. � 2005 Kane Bank Services Tri-Counties Bank 25 Branch Quarterly Goals

26. � 2005 Kane Bank Services Tri-Counties Bank 26 Branch Sales Goals Start with branch manager expectations Divide branch goals among all staff DDA sales New Account services ratio: debit, online, bill pay Equity Auto Savings and Investments Investment referrals Credit card Mortgages

27. � 2005 Kane Bank Services Tri-Counties Bank 27 Branch Unit Sales Goals

28. � 2005 Kane Bank Services Tri-Counties Bank 28 Step #5: Align Incentives Compensation is about performance, motivation, and retention. Deploy compensation plans to your advantage. Use salary surveys from the marketplace. Incent for individual and bank-wide performance. Keep it fair, clear, and consistent. Establish a teller referral program. Incent for growth, not just units. Don�t take benefits lightly. Keep perks as perks. A perk given once is a perk. A perk given twice is a benefit. A perk given three times is a right!

29. � 2005 Kane Bank Services Tri-Counties Bank 29 The Top Executive View: Percent Who Agree Their Company Attracts Highly Talented People

30. � 2005 Kane Bank Services Tri-Counties Bank 30 Step #6: Focus on People as a Competitive Advantage Create the right foundation. Recruitment Interviewing standards Behavioral screening Develop an infrastructure to support the desired culture and results. Job descriptions Job evaluations Self assessment tools Provide training and development. New hire and new position training Yearly development plans Coach employees to further success. Focused Coaching Customer Observation

31. � 2005 Kane Bank Services Tri-Counties Bank 31 The Top Executive View: Recognizing and Rewarding Talent

32. � 2005 Kane Bank Services Tri-Counties Bank 32 Step #7: Recognize Your Best Performers Make your bank a place people want to work. Conduct employee satisfactions surveys. Deploy compensation plans to your advantage. Use salary surveys from the marketplace. Incent for individual and bank wide performance. Establish a teller referral program. Incent for growth, not just units. Develop formal recognition plans. Quarterly top-performers recognition events Annual trip Sales campaigns Recognize great results informally. Success stories in the employee newsletter Notes and voicemails of appreciation

33. � 2005 Kane Bank Services Tri-Counties Bank 33 Step #8: Bridge the Gap Between Your Top Employees and Everyone Else The top 20% of sales employees are 67% more productive than the average. The top 10% are 8 times more productive than the bottom decile.

34. � 2005 Kane Bank Services Tri-Counties Bank 34 Step #9: Create Consistency and Discipline with Front-line Activities and Processes Develop standard activities for each position: Sales and Service practices Provide ongoing, regular feedback Focused Coaching Customer Observation Establish standards for customer interactions Profiling Three-Step New Account Opening Process

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36. � 2005 Kane Bank Services Tri-Counties Bank 36 Step #10: Use Information to Support People and Processes Provide the front-line with useful customer information. Next product most likely to buy Consolidated product holdings Most profitable customers Provide management and employees with actionable performance information. Best practices of the top performers Peer group performance

37. � 2005 Kane Bank Services Tri-Counties Bank 37 Step #11: Use Marketing to Support the Sales Effort Develop a marketing calendar with key initiatives. Branch merchandising Direct mail Advertising In-branch promotions Provide a template for localized promotions. Stock ads and flyers for branch use Provide targeted lead lists. Establish process for donations and community support. Track successful events.

38. � 2005 Kane Bank Services Tri-Counties Bank 38 Keep Strategy Aligned with Execution Adjust strategy based on results. Keep the core business plan simple and consistent. Keep the focus on serving the whole customer. Change the ancillary focus to allow for new service or product improvements. Focus on daily execution. What gets talked about gets done.

39. � 2005 Kane Bank Services Tri-Counties Bank 39 11 Key Tactics to Build Success Develop Bank-Wide Vision Leverage Service into Sales Establish Performance Metrics Establish Goals to Support Performance Metrics Align Incentives Focus on People as a Competitive Advantage Recognize Your Best Performers Bridge the Gap Between Your Top Employees and Everyone Else Create Consistency and Discipline with Front-Line Activities and Processes Use Information to Support People and Processes Use Marketing to Support the Sales Effort

40. � 2005 Kane Bank Services Tri-Counties Bank 40 Aim High �In most companies, the majority of individuals believe there is some preordained, and typically uninspiring �industry� growth rate. Growing as fast as one�s mediocre peers is deemed good enough.� Gary Hamel Leading the Revolution