“Always bring… and people will beat a path to your door”

I don’t think we’ve ever seen loan pricing competition like we’re seeing right now, and I don’t think it’s over.

I think it’s going to get much worse through 2022.

What do you do in terms of creating some loan pricing strategies that allow you to command premium pricing when others are undercutting your pricing on your very best customers AND the prospects that you’re going after?

What doesn’t work? 

What doesn’t work is buying the profitability analysis software that allows you to figure out when you have broken even and then building something more into that.

I’ve been an eyewitness to bank after bank losing their independence because of that strategy.  The reason that strategy never works is that you can never command enough pricing on those when you don’t have enough profit built into them.

What else doesn’t work? Saying those things that all bankers tend to say: “We have good people” and “We have great service; therefore, we’re worth more.”

Sure, maybe you can occasionally get an extra 25 basis points despite the lack of differentiation, but that’s probably the upper limit, and it’s far from a “tried and true” approach.

It’s also kind of a lame way to go about it— It just doesn’t work well.

What does work?

Creating that extreme differentiation for your bank that far exceeds the additional premium pricing that you’re about to charge that customer.

When you create that differentiation, it’s a powerful way to create a distinction in your customer’s mind that you’re worth more.  That’s if you create a differentiation such that they can tell you that the value you bring is worth more— whatever that happens to be: $800,000,  $1 Million, maybe $2 million more, and you’re charging $10,000 or $20,000 additional, which sounds like a pretty good deal to them.

To make this work, it requires two elements:

As Wallace Wattles said so well, “Always bring 10 times more value than the cash you asked for, and people will beat a path to your door.”

Never is it more profoundly true than in banking when we’re up against desperate competitors trying to steal away our best customers by low-balling the pricing.

– Roxanne Emmerich

Discover where Elite Bank Executives go to Revolutionize their Sales Culture Strategies, Improve Every Metric, and Drastically Improve Loan Growth at the ALL-NEW ELITE BREAKTHROUGH BANKING BLUEPRINT SUMMIT.

Please watch the video above and share it with your exec team and board.

Leave a Reply

Your email address will not be published. Required fields are marked *