Magazine article American Banker

Comment: Improving Sales Effectiveness in Small Business

Magazine article American Banker

Comment: Improving Sales Effectiveness in Small Business

Article excerpt

To win in the small-business market, banks need to target potentially profitable businesses with distinctive and compelling value propositions. These propositions can be structured by gifted salespeople in the course of a number of expensive personal visits. Or they can be developed more systematically in an exercise designed to define and serve unique and profitable customer segments.

Given that most banks lack a superabundance of gifted salespeople, the second approach would seem the more productive. Unfortunately, many segmentation efforts don't go beyond the use of simplistic five-digit standard industrial classification codes. This can fail because the codes describe the requirements of "average" firms, and no firm is really average; and because they generate a potpourri of segments, some of which are too small and others too large and unwieldy.

The answer is an approach that aggregates companies with similar behaviors and attractive profitability characteristics into an actionable number of segments. The key to successful segmentation is understanding that behavior is driven by needs -- a function of lifecycle position as well as industry -- and by attitudes -- what the decision maker wants in a banking relationship, for example, a detailed product catalogue versus synthesized information and advice.

With this approach, the bank has a better chance to develop killer value propositions. The issue: how to get the information needed to do this faster and more cost-effectively than via in-person calling or surveys that are limited in scope, inflexible, and, being one-way communication tools, ill-suited to reveal a prospect's thinking.

We have introduced an approach called Rapid Cycle Learning/Testing, or RCT, essentially an upgraded process that allows the bank to dramatically accelerate the pace of gathering information and testing the hypotheses needed to develop effective value propositions. …

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