How do you, as an executive, build a performance culture that attracts top talent, retains top talent, and allows your bank to thrive?
Top performance culture is easier said than done—but it can be done
You just have to know the magic performance culture formula that works for other banks and apply it within your bank for the same results. But finding that magic formula is the key.
I’ve had the great honor of working with some of the most revered banks with the best cultures in this country.
When I started as a lender, I got a briefcase, got in my car, and went up and down the street calling on folks hoping that they would bring their commercial and agricultural relationships to me.
Well, sometimes they did, and sometimes they didn’t. I thought I was doing the best thing possible because I watched what everybody else was doing. I did the same thing and got the same middle-of-the-road results.
I didn’t know then what we know now.
Harvard Business Review has a great article about how team selling outperforms individual selling by a truckload.
I wonder what the sales fundamentals are of banks that command premium pricing and achieve their loan growth goals. Are they different from other banks?
You see, what we put into a system creates the outputs we pull out of that system. And sadly, many banks aren’t achieving their loan growth goals with the loan caliber, quality, and premium pricing they need because they don’t have the right sales strategies.
The Right Fundamental Sales Strategies
For me, “sales” is a negative word. And yet “sales” is simply helping people buy what they need in a way that never feels like they’re being sold to.
What if you’re going about loan growth in all the wrong ways?
Now, you’re probably not doing it all wrong. But there might be some ways that you could be doing it a whole lot better. That’s because all loan growth is not the same. The quality of the deals that you’re bringing in and the desirability of those deals—because of their creditworthiness and their willingness to pay premium pricing—matters a lot. And yes, strategically speaking, most banks are not addressing that correctly.
Everyone thinks all loans are the same in terms of quality
They think that if they walk into your office and say,
I bet your strategic plan does not have anything in it that says, “We want to match rates. We want to shrink our net interest margin. Oh, what can we do to match the rates of our desperate competitors?”
Of course, those words aren’t in your strategic plan. And yet have you noticed that the way your plan is being executed demonstrates a reliably predictable pattern? One which basically means your people are still matching rates? Your strategic plan may as well have “We want to match rates” in it for all the good it’s doing.
Do you ever think you’re worth more? Yeah, you probably do. We all do. So doesn’t it feel like a violation whenever somebody says, “Hey, we can do business with you, but you’re going to have to match the rate.”
That never feels okay. As soon as we match the rate, our net interest margin squashes. We don’t want that to happen. Why would we when we don’t even have the profit built-in? Instead, what we want to happen is that every time we do another loan, it’s a profitable loan.
“If you want to reach people no one else is reaching, we’ve got to do things no one else is doing.”
Andy Stanley said that, and it starts my chapter on debunking the five biggest myths of loan growth in my Breakthrough Banking Blueprint book.
Those five biggest myths, sadly, are crushing net interest margin and loan growth for too many banks.
Myth Number One: You can match the rate to get the deal.
Yeah, that’s true, but you’re not going to have any profit in the deal.
Dear Banker: A Message from COVID to You
I go by many names: Co-Ron A. Virus, Coronavirus, COVID, COVID-19, ‘Vid, “The Big One.”
Some of my names are downright hurtful. The 2020 Plague. The Dirty ‘Rona. Those are actually some of the milder ones.
And yes, for some, I was devastating in every way. I don’t feel bad about that because I have no feelings, remember? I’m microscopic. But I did help you with loan growth with those PPP loans, so there’s that.
I also messed with your relationships.
How do you—with great certainty—pull away your bank competitors’ very best customers?
Now there’s a question that should stimulate some really good thinking. Because let’s face it, you can go buy a branch someplace else, but that’s expensive. Or, you can set up a new branch someplace else. But that’s very expensive too, and often isn’t profitable for a very long time.
You can do all kinds of things to try to get additional business and bank loan portfolio growth. But honestly, the best thing you can do is to make sure that you are systematically identifying and picking off your competitors’ best customers and bringing them in at premium pricing compared to what they were used to paying.
Loan growth in your bank has never been more important. And it’s probably never been harder.
There have probably never been more desperate competitors who are willing to undercut your best customers. Competitors who will take that business away at a profit margin that you can’t even understand—at a margin that you’re sure it is a ticket out of the business.
But if they become lunatics and take that stand, do you really want to follow by matching that kind of a pricing strategy for loan growth?