Why Premium Pricing Is a Leadership Decision—Not a Market Condition [VIDEO]
Most banks believe their market determines pricing. Discover why that belief destroys profitability—and how elite community banks command premium pricing instead.
#1. Culture trumps strategy.
Hundreds of studies now show that culture is the leading predictor of future growth and profitability.
The Gallup Organization found the increase in earnings per share for companies in the top quartile that have high employee engagement (a measure of culture) to be 2.6 times. Amazing!
Unfortunately, there is a false belief in banking that culture means sales training, goals, and incentive pay. Dead wrong. Culture is the mood. Motivation is a racket because it depends on others catering to an employee’s every need. Inspiration is what you want—that’s intrinsic.
#2. Remarkable customer service.
Almost every community bank CEO whom I’ve ever talked to says his or her institution has fantastic customer service. Still, too many of their institutions are actually less remarkable in providing superior service than they think. Smiling and knowing names only gets you in the game. Truly taking effective action that meets a customer’s needs better than the competition is what wins and keeps customers.
Gallup found that customers who are “fully engaged” (meaning they actively interact) with a bank are much more likely to buy additional products than those who are just “satisfied” with their bank. Remarkable customer service creates engaged customers and leads directly to timeless strategy #3 …
#3. Mastery of owning the entire client relationship.
The efficiency ratio of a bank that owns a customer relationship—where the same effort it takes to open one account now is spread out among several—makes a powerful impact. Nobody is going to negotiate the price of your bank’s services if he or she sees it as the solution.
Professionals prescribe. Street vendors sell. The number of banks that have truly mastered the art of prescription selling remains infinitesimal. Fully understanding the needs, wants, passions and fears of that business owner or person are at the core of that discussion. Then, taking that information and knowing how to skillfully ask questions to get that prospect to tell you how your differentiating value strategies could bring hundreds of thousands of dollars to that business takes price out of the equation.
Those who say it can’t be done and buy into “net interest margin compression is a given” put their banks in great peril. Owning the relationship without a price as a buying decision is a product a skillfully orchestrated holistic “strategy-marketing-sales” unified process properly executed.
#4. Targeting high-profit accounts.
When the flight attendant announces putting your oxygen mask on first, it’s a sign! Profit is oxygen for any business, including your community bank. Only by having profit-rich client relationships with high-quality credits can your bank afford to have other clients. Great banks know how to get out of the commodity business and get 100 basis points more every time.
Roxanne Emmerich
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