Practical Tools to Differentiate Your Bank from ABA Marketing Conference.

1. ABA Marketing Conference
SHARPEN YOUR SMALL BUSINESS FOCUS
PRACTICAL TOOLS TO
DIFFERENTIATE YOUR BANK
Susan Brown-Monforte, Senior Vice President
Marketing Group Manager, California Bank & Trust ($10B),
San Diego, CA
Buck Bierly, President
MZ BIERLY CONSULTING, INC. Malvern, PA

2. A Definition or Two
• Defining Small Business*
• Small Business: Businesses with less than $10,000,000 in Sales
• Business Banking: $10,000,000 to $25,000,000 in Sales
• Defining Sustainability
• Sustainable Top Line Revenue Growth in Segment
• Sustainable Profitability in Segment
• Sustainable Asset Quality in Segment
• Wallet Share
• Capture 65% of the Relationship (“Relationship” includes both the
Business and Consumer Opportunities)
• Relationship Manager (RM)
• Branch Manager
• Business Banker (< $10,000,000 segment)
• Small Business Representative
* Not Effective for the < $750,000 Business
2

3. Building SUSTAINABLE GROWTH
in a Crowded Market
1. If the economy remains in a slow recovery, loan demand will remain
“tepid” as Business Owners use “retained earnings” for capital
expenditures and look for “efficiencies” in their operational processes
2. The industry’s continued “reduced dependence” on investor real estate
lending will create increased competition for well run operating
businesses
3. “Re-pricing” loans will become a constant as Banks use pricing to build
market share or to survive
4. Liquidity continues to be important; low cost deposits remain key
5. Revenue replacement is still a critical issue, replacing lost fee business
6. The acquisition [and then expansion] of new clients remains a focus
7. Successful “Business Development” Processes will focus on
“differentiation” in the market. (Bank and RM differentiation!)
3

4. A Changing Environment. . . with Opportunities
1. Banks require increased discipline on resources and segmentation
to drive profit growth:
• 85-90% of profits driven by 10% of clients
• “High Value” companies (high profit accounts) require high touch,
distinctive service
• “Low Value” companies require good cost effective service that instills
loyalty but does not over-serve
2. Advice remains a critical need, a notable opportunity remains for
banks to successfully differentiate and win/retain business acting as
a partner.
• Only half of banks provided “advice” and that the advice currently
provided is typically a thinly veiled product sell.
Data from Greenwich Associates, June 2012
4

5. A Changing Environment. . . with Opportunities
3. Strategic options are on the minds of business owners.
• More than 30% of small firms are considering a merger,
acquisition, or sale of the business in the next 24 to 36 months.
• RMs must initiate dialogues with business owners early to
identify M&A financing, and wealth management opportunities.
4. About 16% of firms are actively seeking a new Treasury
provider.
• Flawless execution on delivery and demonstrating value are
critical
Data from Greenwich Associates, June 2012
5

6. Building Relationships, Growing Recurring Revenue
Professional Practice: 10-years, $800,000 in sales 65% of the
“Relationship”
Business Owner
DDA DDA
MMA MMA
Internet Banking Short-Term/Long-Term Investments
Line of Credit Retirement Planning/Retirement Plan
Equipment Loan/Lease Mortgage
SEP HELOC
Liability Insurance Term Life Insurance
Employee Relationships
Total: 8 Total: 7
6

7. Building Relationships, Growing Recurring Revenue
Business Services: 15-years, $3,500,000 in sales 60% of the
“Relationship”
Business Owner
DDA DDA
MMA MMA
Web-Based Banking/Cash Management Web-Based Banking
Line of Credit Investments
Equipment Loan/Lease Retirement Planning/Retirement Plan
Commercial Mortgage Jumbo Mortgage
401(k) HELOC
Liability Insurance Life Insurance
Key Man Insurance, Buy/Sell Agreement
Total: 9 Total: 8
7

8. Building Relationships, Growing Recurring Revenue
Professional Practice: 18-years, $8,500,000 in sales 60% of the
“Relationship”
Business Partners(s)
DDA/Cash Management DDA
MMA MMA
Line of Credit, Acquisition Financing Web-Based Banking
Equipment Loan/Lease Private Banking
Commercial Mortgage Investment Management
Merchant Account Retirement Planning/Retirement Plan
401(k) Jumbo Mortgage
Liability Insurance HELOC
Key Man Insurance, Buy/Sell Agreement Life Insurance
Total: 9 Total: 9
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9. What is the Brand you are Building?
The Focus prior to the Recession
 “Excellent customer service. . .”
 “Highly responsive to opportunities and requests”
 “Faster turnaround than our competitors”
 “Give you what you ask for. . .”
Today, these are some aspect of a “brand” that your competitors are
already focused on. These are now the price of entry, not a
“differentiator”
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10. Adding Value is not a Concept
In a highly competitive (or re-pricing) environment...
• What value is your RM adding?
• As a “Line of Business”, does the Sales Team have a
“Plan” for Adding Value?
Every thing has changed, in Today’s Environment. . .
Sales Team Leaders and RMs need clear direction and
on-going guidance
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11. Business Owners and “Value Added” Skills
This study correlates skills with
“Customer Satisfaction” and with the
likelihood a Business Owner would
refer you to other Business
Owners.
Data from the Corporate Executive Board
11

12. Business Owners and “Value Added” Skills
Business
Acumen
Data from the Corporate Executive Board
12

13. Business Owners and “Business Acumen”
The Questions that
drive results and
satisfaction.
Data from the Corporate Executive Board
13

14. Business Owners and “Business Acumen”
Business
Acumen
The Key Questions
that drive
satisfaction.
Data from the Corporate Executive Board
14

15. Business Owners and “Business Acumen”
Relationship
Development
Strategies that
drive satisfaction.
Business
Acumen
Data from the Corporate Executive Board
15

16. Business Owners, Business Acumen and
Uncovering Financial Opportunities
Business Acumen
Leads to Financial
Opportunities More
Effectively
Data from the Corporate Executive Board
16

17. Business Owners, Business Acumen and
Uncovering Financial Opportunities
Business Acumen
Leads to Financial
Opportunities More
Effectively
Data from the Corporate Executive Board
17

18. Adding Value: Business Acumen vs. Product Acumen
• Business Acumen* is bringing Business Issue Insights and
Unsolicited Financial Ideas to the table. It is a significant
“differentiator” in a competitive marketplace and is highly effective
in proactive situations
• Product Acumen is important in reactive situations. It is less of a
differentiator in proactive situations
* Business Acumen is Conversational Competence in Business Issues; it is not the
same as a “Business or Industry Expert”. Business Acumen, as we are discussing it,
is Conversational Competence around “Industry and Business Issues”.
18

19. Levels of Relationship and Relationship Development
1. Not all Decision Makers want the same level of relationship with an RM.
2. Not all RM can build all levels of relationship with a Decision Maker.
Business
Acumen
Product
Acumen
19

20. Levels of Relationship and Relationship Development
Level 3: Providing a High Level of Support
What gets you to Level 3 is the Client’s understanding
that you are providing more “financial ideas” than
your competitors are providing.
Identifying opportunities to support the short-term,
mid-term and long-term business objectives of a
decision maker is a well established method for
building Level 3 relationships.
Putting together a team of Business Partners,
presenting an overview of a Client or Prospect’s current
and future plans and looking for ways to help them get
to where they want to go. . . before they request your
ideas gets you closer to this level.
Many banks are capable of doing this but few do it
consistently.
20

21. Levels of Relationship and Relationship Development
Level 4: Focusing on Business Issues
The Level 4 Relationship is focused on business
Issues. Clients know that you provide better service
and support than competitors; what they see now is
that you understand their industry, trends within their
industry, and “business issues” those trends are
creating for their businesses.
At Level 4, you generate ideas for addressing more
than explicit financial needs; you focus on topics like
efficiency, productivity and market strategies. At Level
4 you provide [1] industry and business insights that
help Business Owners see mid-term/long-term issues
more clearly, [2] on-going education, [3]
“benchmarking” of business/financial operations.
21

22. Changing the Conversation toward Business Acumen
Consider these Questions. . .
1. Where are you banking?
2. What products are you using?
3. How are they priced and structured?
4. What 2 things do you wish your bank was
2 doing but they’re not?
5. Can I have a copy of your statements to
put together an offer of how we would
handle your banking relationship?
Where are the Business Issues here? These
questions focus on products; comparing
your products with a competitor’s. These
questions demonstrate product acumen!!
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23. Changing the Conversation toward Business Acumen
Use this Question Set to Demonstrate Business
Acumen and Building Relationship Momentum.
2
These questions align with a Business Owner‟s
Business Strategy, Business Plan, Business
Objectives, Business Operations. These questions
demonstrate business acumen!!
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24. Changing the Conversation toward Business Acumen
2. Industry trends affecting the
1. Keys to success business today. 3. Industry trends, business
affect current and future changes in next 3 years.
decisions.
4. Current and future
5. Current and future changes force changes in
changes in business current and future business
operations force changes operations.
in current and future
financial operations.
6. Changing financial
operations create changes in
the financial needs and then
an evaluation of the solutions
currently in place.
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25. Relationship Development Process Overview
25

26. Relationship Development Process Overview
Market Management Process
Three Sources of
Business. . .
Relationship Development Process
Three Steps:
Identify, Plan, Execute
Face-to-Face Meeting Process
26

27. Sustainable Performance is Driven by Leadership
High Performing Sales Leaders . . .
1. Provide “Targets” to Team Members and
2. Keep a focus on the quality of the calls made on
those Targeted Businesses
27

28. The Market Management Process
The Market Management Process “proactively” focuses on 3 sources of
leads. . . Customers, Prospects and COIs .
Sustainable growth in top-line revenue (and asset quality) is driven by
developing leads with “targeted” relationships within these lead
sources. Typically. . .
1. Retention Relationships (Key Customers)
2. Expansion Relationships (High Potential Customers)
3. Acquisition Relationships (Key Prospects)
4. Current and Prospective COIs
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29. Identify the Right Targets
Define the industries you want more business from.
Target Industries Limited Appeal Industries
Distributors Transportation Businesses
Law Practices Trade Contractors
Architect, Engineering, and Business Service Firms Real Estate or Construction Businesses
Financial Service Providers Retail
Insurance Brokers or Firms C-Stores and Gas Stations
Wholesalers Used Car Dealerships
Medical, Dental, and Health Practices Restaurants
Accounting Firms Farming
Manufacturers Mini-warehouses
Retail Trade

30. Identify the Right Targets
Define the businesses you want more business from.
Business Characteristics
In business over 3 years
Sales revenue between $750,000 and $10,000,000
Employing more than 5 people
Plant located within 10 miles of a branch location
Privately held
Experienced management team
Borrowing needs greater than $100,000
Satisfactory commercial borrowing-track record
Profitable (Net Profit After Tax) for at least two consecutive years
Tangible Net Worth greater than $250,000
Leverage (Debt-to-Worth) less than 4 to 1
Deposit balances average more than $50,000
Using or needing 5 or more business banking products

31. Defining the Conversation with the Business Owner
Use this Question Set to Demonstrate Business
Acumen and Building Relationship Momentum.
2
These questions align with a Business Owner‟s
Business Strategy, Business Plan, Business
Objectives, Business Operations. These questions
demonstrate business acumen!!
31

32. A Model for a Marketing and Sales Partnership
So, this what sales teams need. . .
This is where the
Marketing Partnership
is both Key and Necessary
for Sustainability
32

33. A Model for a Marketing and Sales Partnership
PRACTICAL TOOLS TO
DIFFERENTIATE YOUR BANK
Susan Brown-Monforte, Senior Vice President
Marketing Group Manager, California Bank & Trust ($10B),
San Diego, CA
33

34. Segmentation
Segmentation 101
What is it?
Segmentation is the process of defining and subdividing a large homogenous market into clearly
identifiable segments based on similar needs, behaviors, or characteristics.
How do you build it?
It depends on the business objective a company is trying to answer. The initial discovery process
determines the approach used and it centers on answering two main questions:
 How will you take action?
 How will you measure success?
How does it add value?
Segmentation is a tool companies use to solve specific business problems. For example:
 “If I develop a new product…What will the demand for the product be? Who is most likely
to buy it? Where do I find them? And how do I speak to them?”
 “Where should I place my TV and Online ads in order to best reach my intended
audience?”
34

35. CB&T Business Segmentation Exercise
Why It Was Important
 Gain better understanding of customer base
 Identify and align opportunities for growth within organization
– expansion and acquisition
 Calculate opportunity for any geography, trade area or market
 Transition from a product focus to a segment focus
 Support relationship emphasis versus transaction emphasis
 Optimize sales and marketing efforts
 Help inform other decisions
35

36. CB&T Business Segmentation Exercise
The Process
1. C-Suite Sponsorship
2. Selecting the Right Partner
3. Understand the Goals & Objectives
4. Receive Data & Audit it
5. Match the CB&T data to our Universe of Businesses
6. Append everything we know about each Business
7. Create „Buckets‟ & segments (with known, measureable, &
implementable metrics)
8. Add the Descriptors (operational metrics)
9. Apply the segmentation to CB&T‟s „universe‟
10. Deliver results and continue with implementation plan
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37. CB&T Business Segmentation Exercise
Segments were defined with known, measureable, & implementable metrics
 Type of business (SIC code)
 Size of the business (small, medium, large, etc) Drivers
Segments were described by CB&T operational metrics
 SVA (Shareholder Value Added)
 Market Penetration
 GAP (Market Opportunity)
 Products
 Checking
 Business Loan
 Internet / VRU
 Money Market Descriptors
 Debit / ATM
 Installment Loan
 Savings / CD
 Cash Management
 International
 Merchant Services
37

38. CB&T Business Segmentation Exercise
The CB&T Buckets
Analysis Universe
# of # of Business % Business
Bucket Business % Business %
Employees Segments Pen Index
Comp Comp
B1 1-3 46 38.26 49.86 0.95 77
B2 4-9 46 31.05 28.88 1.33 107
B3 10-24 45 17.28 13.26 1.61 130
B4 25-49 51 6.59 4.11 1.98 160
B5 50+ 48 6.82 3.90 2.16 175
Total 236 100.00 100.00 1.24 100
Buckets were determined by logical, meaningful and manageable
breakpoints in the data.
Employee Size is the key metric for defining buckets because it is a
reliable and well populated metric on both customer and prospect
files.
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39. Making the Results Actionable
Market Opportunity Prioritization
39

40. Making the Results Actionable
Modeled Demand (SVA) By County
Market Opportunity Prioritization
Potential Potential
County County
SVA SVA
Alameda County 158,244,214 Orange County 350,167,230
Alpine County 243,695 Placer County 38,011,572
Amador County 4,589,333 Plumas County 3,567,607
Butte County 21,598,301 Riverside County 144,391,367
Calaveras County 4,536,616 Sacramento County 126,307,083
Colusa County 1,919,942 San Benito County 4,088,750
Contra Costa County 87,974,697 San Bernardino County 145,392,031
Del Norte County 2,175,153 San Diego County 298,726,235
El Dorado County 17,065,325 San Francisco County 128,127,691
Fresno County 70,897,746 San Joaquin County 48,407,044
Glenn County 2,418,451 San Luis Obispo County 32,873,040
Humboldt County 13,680,059 San Mateo County 80,766,723
Imperial County 11,722,321 Santa Barbara County 43,056,806
Inyo County 2,666,534 Santa Clara County 201,955,950
Kern County 57,076,771 Santa Cruz County 29,203,212
Kings County 8,309,586 Shasta County 19,047,705
Lake County 6,386,023 Sierra County 524,652
Lassen County 2,609,325 Siskiyou County 5,190,087
Los Angeles County 952,943,679 Solano County 33,526,296
Madera County 9,702,545 Sonoma County 53,662,740
Marin County 38,324,989 Stanislaus County 40,953,271
Mariposa County 1,932,907 Sutter County 7,620,693
Mendocino County 10,966,162 Tehama County 5,254,867
Merced County 14,287,026 Trinity County 1,347,755
Modoc County 1,547,349 Tulare County 30,205,178
Mono County 3,063,320 Tuolumne County 6,061,773
Monterey County 39,281,426 Ventura County 78,350,288
Napa County 18,433,391 Yolo County 16,467,043
Nevada County 13,300,345 Yuba County 4,678,635
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41. Making the Results Actionable
Segment Opportunity Prioritization
Methodology to prioritize segments
 Combine size buckets to create three 0 – 9, 10 – 49, 50+
 Balance three critical elements:
A. Number Businesses in CA for a segment (The Market Size)
B. Penetration in CA (How well CB&T traditionally does with a segment)
C. SVA per business (The anticipated benefit to CB&T when acquired)
Priority Score (Weighted Value) = 50% of A, 15% of B & 35% of C
 Identify high risk segments with Business Partners
 Result – 28 unique segments identified as priorities
41

42. Making the Results Actionable
Development of “Segment-In-A-Box”
 Everything a banker needs to know about a
segment/industry in one complete package
 Designed to help bankers be more effective
in the sales process and demonstrate
industry expertise
 Aligned with relationship sales process and
brand positioning
 Applicable to both customers and prospects
42

43. Making the Results Actionable
Segment-In-A-Box includes
Segment Information:
 Segment Profile
 Industry Profile (by First Research)
 List of Associations (by geography)
 List of Primary Trade Publications
 Business Journal Editorial
Calendars for major market
business journals
43

44. Making the Results Actionable
Segment-In-A-Box includes
Marketing Materials:
 Customizable Sales Letter
Template
 Segment Specific Pitch Book
Slides
 Segment Specific Flyers
 Segment Specific Brochures
 List of Additional Sales Collateral
to use on sales calls
44

45. Making the Results Actionable
Segment-In-A-Box also includes
Sales Tools
 Market Plan / Call Planner
 Call Prep Questions
(by First Research)
 Telemarketing Scripts
 Prospect list for each segment
(loaded in Salesforce.com)
 Customer lists
 Packaged product offerings
45

46. Measuring Success
Metrics are always important,
but the story they tell is what is critical!
46

47. Measuring Success
Measurement #1
Success Stories
 Survey used to gather
success stories from the
field
 Gift card drawing used to
encourage participation
 Success Stories
published bank-wide and
posted on Intranet
47

48. Measuring Success
Measurement #2
Tracking Segment Penetration Over Time
CB&T Segment-in-a-Box, 2008 - 2011
 Compared to 2008
250
2011 Index
(and relative to 2010 Index
changes within the 200
2008 Index
state of CA), CB&T’s
concentration in 2011 150
has increased in key
100
segments
50
 Compared to 2008
(and relative to -
changes within the
Manufacturing
Manufacturing
Manufacturing
Manufacturing
Manufacturing
Wholesale
Wholesale
Wholesale
Wholesale
Wholesale
Professional
Professional
Professional
Professional
Professional
state of CA), CB&T’s
concentration in other
key segments has not
experience as much of
a decline
48

49. Measuring Success
Measurement #3 –
CRM Reporting
 Track use of segment specific prospect leads
 Monitor usage of segment specific materials
 Track segment specific campaigns
 Monitor pipeline for segment specific deal activity
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50. Key Learning's
 C-Suite Sponsorship and Region Management buy-in
 Sales management and sales process must be aligned with marketing
and segmentation strategies
 Clean customer data provides the foundation for insights derived and
it instills confidence in the results
 Data inputs used in the analysis are dependent on the business
objectives you are trying to achieve
 It’s crucial to understand the data in the results to determine which
factors impact performance metrics over time
 Requires a long-term perspective and investment
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