|
 |
Refuse New Corporate Clients In Order to Succeed Sept. 4, 2000 (SmartPros) As a corporate banker, it is your responsibility to increase your customer base and grow your business. However, trolling for new customers should not override business logic. That is to say, not every new customer is a good customer. Regardless of whether a prospective customer represents a small, medium or large business, it is important to keep in mind that potential revenue from that customer should not be the sole reason you take them on. When you stray from the path of pursuit of the right customer, you can get yourself into trouble by taking on business that is not healthy for the profitability of your bank. Saying "no" to new business seems like the wrong thing to do -- it is your responsibility to build your customer base and meet certain sales goals. So how can you possibly turn down the opportunity to increase sales?
Experience shows, however, that there are times when saying no to business is really the right thing to do. Consider the following nine circumstances in which new business should be turned down.
1) Your Gut Instinct Says No.
This circumstance belongs at the top of the list. You have probably learned this lesson in your personal life and the same rules apply in your professional life -- everyone has an active gut instinct that should never be ignored. Consider the following scenario: You meet with a prospective customer about opening up an account with your bank, but you have a sinking feeling in your stomach. A red flag alerts you to a potentially dangerous situation. You cannot put your finger on it, but you know something just is not right and you are not seeing the whole picture. Then your head gets in the way: This louder, more practical voice talks you out of those negative feelings and you dismiss your instincts as ridiculous. You take on the new customer.
There does not even have to be a logical explanation as to why you do not trust the situation. Just remember when you get that inner nagging feeling, do not to allow the pressure of meeting sales goals force you to ignore your first impression.
2) The Customer Does Not Appreciate the Value of Your Services.
While some customers make decisions based upon the price of services, the most profitable business for your bank will come from customers who appreciate the value that you offer. Value is based on banking expertise and guidance, credibility, a bank's products and services, the level of service provided and even the intangible "warm and fuzzy" element.
You offer customers an entire package, the components of which are both tangible and intangible. It is usually the intangible "added value" which sets your bank apart from the competition. Any customer who selects your bank based on price alone views you as a commodity, not a valued service. You will always have to be aware of any competitor who might undercut your fees, thereby lowering your opportunity for increased business from the customer and a decent profit margin.
3) The Customer is a Bad Credit Risk.
This is a fine line for a banker. Obviously you will run a credit check on your customer -- and sometimes it might be a bit sketchy. Before you turn the customer down, however, investigate the reasons behind the poor credit history. Perhaps there were extenuating circumstances. In fact, depending on those circumstances, you may be able to help turn the customer around financially. Asking the right questions will help illuminate the situation and determine whether the potential customer has a realistic future of profitability or is simply a poor credit risk and not appropriate for your bank.
4) The Customer Does Not Need Most of Your Products or Services.
Although you would like to be everything to everybody, sometimes the fit is just not right. If the customer really only needs one of the many products or services your bank provides, there is little chance of a long-term profitable relationship. On the other hand, the potential customer could be a relatively small business now -- but one with the potential to grow into many of the products and services you offer. It is a good idea to carefully review the customer's business plan to determine if it looks like it will grow into your ideal customer profile.
5) The Customer Does Not Treat You in a Courteous or Professional Manner.
Profitable business is based on good working relationships. This does not mean the customer has to be your best friend but, in essence, your best customers will be those who seek partnerships with you. Any customer who constantly questions your advice, nit-picks about your fees, acts in an unprofessional manner or questions your credibility or judgment is not looking to develop a business relationship. There is no opportunity for trust in a relationship such as this.
Again, this type of customer will view your bank as a commodity -- and any customer who acts in an unprofessional manner clearly shows that he or she does not value your business or trust the relationship and might migrate to another bank at the drop of a hat.
6) The Customer Asks for Products or Services You Do Not Provide.
All banks specialize in assisting certain types of businesses. You are best able to serve the market whose products and services are tailored to your ideal customer profile -- whether it is defined by revenues, employee size or type of industry. If you have a potential business-customer who is looking for a bank but who clearly has a set of commercial-banking requirements that fall outside of your internal bank operations capabilities, it is best to refer them to another institution. Never promise any products or services to a client that you know you cannot deliver because of internal operations limitations.
It is always a temptation to tell a potential customer you can give them exactly what they want even when, in reality, it might not be possible. But the best relationship will blossom when you are able to give them more than they expected, not less then they were promised.
7) The Customer Has No Future Growth Potential.
Many small businesses are moderately successful. They pay their bills on time, turn a small profit and have a steady stream of consistent business. This does not necessarily mean, however, that they will be good customers for your bank. Your growth is based on the customer's growth. But in some cases, a business has no opportunity for growth or, in fact, no desire to grow beyond its existing revenue. Ask the customer what the future plans are for the business. If it is a family-run company, find out if there is a succession plan in place. Consider if the business has a product that will soon become obsolete or the market has already been saturated. This is all important information to gather in order to determine if the owner is truly looking for a banking partner in the growth of his or her business.
8) You Do Not Have Time to Service the Customer.
Customers tend to fall into three categories:
You need to decide which types of clients you have time to service. There is a distinct difference between those customers who rely on your banking expertise and want a close working relationship with you, and those who monopolize your time and energy needlessly.
The latter are the types of customers who do not value your time, energy and expertise. A person who does value your expertise will call you for advice and then trust you to handle all the necessary details without frequently checking up on you.
9) The Customer Expects You to Offer Many Services for Free.
There is no hard-and-fast set of rules that defines what added value you can offer a customer. When you have a good working relationship with a customer, you have the flexibility to offer some services for free for which you typically would charge a fee. When the customer expects you to waive all the fees all the time for your services -- and threatens to take his or her business elsewhere unless you accommodate them -- you know that this is not a customer who wants a long-term relationship with your bank. On the contrary, this is a customer who clearly shops for price rather than value. They will have a strong tendency to migrate to your competition over fees.
Finding the right customer is not always an easy task. But sometimes it is better to know what type of business you do not want so you can devote your time and energy to business that you do want. Turning down potential business may not be a poor business decision but rather a wise decision for the long-term growth and profitability of your bank.
Send your comments, questions and article proposals to information@smartpros.com.
2000, Smartpros Ltd. All Rights Reserved.
|
|
|
|||||||
|
||||||||||
|
|
||||||||||
|
||||||||||
