To most people, the notion of disruption in financial services centers on changes to payments, lending, asset management, and banking through technologies such as blockchain, mobile, peer-to-peer and artificial intelligence.
Although these innovations may seem disconnected, the reality is many of them are focused on customer centricity—enabling customers to take direct control of their finances. This focus, rather than the technologies supporting it, is the true disruption. And this shift is affecting significant change in how financial services companies are developing goals and motivating employees to achieve those goals.
Typically, sales teams have been measured and rewarded based on shorter-term “accelerator” goals and incentives such as account or transactional commission. Under this model, salespeople are paid a flat amount per new account/transaction, or product focused-metrics that encourage salespeople to push a particular product or account, in some cases irrespective of the customers’ needs. This model is, however, no longer considered a best practice. These types of incentives run the risk of leading to sales tactics that erode customer loyalty and lifetime value.
The shift toward customer-centric sales metrics.
Understanding that customer experience and loyalty will be the long-term driver of success, rather than short-term revenue bursts, banks are resetting their courses by shifting away from traditional sales metrics and toward customer-centric metrics.
By measuring benchmarks such as customer success, net promoter score, and needs met, banks ensure that their sales reps are aligned with each customer’s interests while discouraging short-term manipulation and inappropriate risk-taking. Let’s take a closer look:
- Customer Success – Customer success metrics are defined by an increased focus on asset growth, aligning salespeople to outcomes achieved by the customer.
- Net Promoter Score – NPS measures customer satisfaction and can be a steady predictor of growth and customer loyalty. NPS also helps identify what is inspiring a bank’s most loyal customers, and what is turning off “detractors,” which can help managers tailor their performance coaching more effectively.
- Needs Met – Needs met metrics result from personalizing the customer experience. Bankers must get to know each customer on an individual level and put their best interests at the center of the transaction/relationship. A reversal of product-focused metrics, needs met looks at individual needs and maps the appropriate product strategy on top of that.
Focusing on the above customer-centric metrics helps promote positive selling behaviors across the bank that deliver more long-term value due to the resulting customer satisfaction and financial success.
Standardizing the preferred behaviors.
To succeed within this new paradigm, it is absolutely critical to identify and standardize the preferred selling behaviors across the entire bank. Some banks take this challenge head on and engage with strategic partners who can help them objectively assess and establish the processes that tie such behaviors to business objectives—in this case, customer loyalty. Here are a few specific ways to achieve this process standardization today:
- Use data to evaluate performance.
Hidden within a bank’s data are signals of both good and bad selling behavior. For example, an analysis can identify patterns of outliers, such as a heavy focus on one particular product, that point toward problem areas. Alternatively, data can also unearth the behavior of reps with the highest levels of customer success. Once those positive behaviors are identified, everyone can be trained to perform those specific activities and held to that performance standard.
- Create new incentives.
Incentives motivate sales reps to perform the activities outlined by management. Thus, new incentives should drive to the customer-centric strategy set forth. Set targets focused on individual customer needs assessments, and do not pay out to reps unless such needs assessments have been completed. This strategy manifests itself in the following example:
A retail bank sales rep begins working with a young family. That rep needs to find out how many children they have or plan to have, what their current living situation is, and how much that family has saved. From there, the rep could be rewarded based on the recommendation of a 529 savings account, or by helping the family successfully close on a house via a first-time homebuyer’s mortgage. These are the products aligned with the customer’s needs, revealed through the needs assessment.
- Remove incentive eligibility.
When new data-based performance processes are in place, banks can see which reps are adhering to activity standards and which are not. Those who are not should be deemed ineligible for specific bonuses or other compensation until the desired behavior is sustained over a set period of time.
The most important part of this tactic is to clearly, proactively and consistently communicate the new processes and set expectations with the sales team. Don’t rely on performance manuals that employees may never read. See to it that they understand what those key activities and standards are, where they should be focusing their attention, and most importantly why the incentives are set this way. Consistently reinforce these standards through the incentive communications and sales enablement technology. Ensuring that everyone understands the role they play in the bank’s success—and that of their customers’—is critical for buy-in and productivity.
It’s time to move toward a future where sales teams are motivated by their customers’ success and individual needs. The strategic alignment between salesperson and customer, empowered by the shift toward customer-centric sales metrics, will serve the best interest of the customer and the bank in the long run through greater customer loyalty and advocacy.
Originally published on ABABankMarketing.com on Oct. 22, 2018.