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Incentivize What You Want To Accomplish

By Blair Rugh 23 Nov 2016

Recently I have read and heard advertisements from Wells Fargo as they try to get back to some sort of normalcy from its recent compliance debacles. In addition to their promise to compensate customers for what they have done, they are promising to notify customers if a new account(s) or service(s) is opened in their name. Wells Fargo said that they have removed any quotas or incentives for employees selling new accounts or services to customers. Most community banks or credit unions don't have the level of problems that Wells Fargo faced which seems to be at cross-purposes with a bank's goals. I do not know of any financial institution that doesn't want new customers or members and does not want to sell additional products and services.

Most organizations spend a lot of money advertising and marketing their products, and their calling officers spend a lot of time calling local businesses trying to get new customers. I find banks and credit unions unusually weak in utilizing their front line employees as sales persons; tellers and customer service representatives are primary sources of communication. Unfortunately, too frequently all they do is react to the request of the account holder; infrequently do they suggest to the individual additional services and products that the financial institution offers that might be to the their benefit.

I go into the local branch of the bank where I bank about twice a month for roughly the last 10 years. I know all of the branch personnel by name and they know me, but never once in all that time have they suggested that there are other products or services that the bank offers that I might find useful. I don't have a debit card and the bank knows it, nor do I have a home equity line of credit, these would be a great start. I know that the bank's automation system has a space on the customer screen that can be used to prompt the teller or customer service representative which products and services to suggest to that customer. Apparently the bank is not using it.

One of the most successful banks I have been associated with was Commerce Bank in New Jersey, which is now a part of TD Financial. Its culture was to use every occasion a person entered a branch as a sales opportunity. It used things like free coin counters to drive traffic to its branches which was wildly successful. Part of the compensation package for its front line staff was a reasonable bonus for new customer acquisition and for the cross sale of additional products to existing customers. I think that all institutions should take a hard look at the atmosphere in their branches to see if they are taking full advantage of the opportunity that they provide. In most cases, I think they will be disappointed in what they find. Too many bankers feel that being a salesperson is beneath their dignity, but it is not, sales should be one of every banker's primary responsibilities.

In that vein, you are going to get more of what you compensate. One of the best ways to generate more sales is to pay for them. At the same time the payment should be sufficient to obtain the result, but not so aggressive that sales become the employee's primary focus.

Speaking of compensation, another thing that all financial institutions want is a compliant result. Again too few financial institutions make compliance a part of their compensation package. I have seen some reward employees for good compliance results and others penalize employees for poor compliance performance. Whichever you select, I recommend one or the other. If compliance is a part of an employee's compensation package, either positively or negatively, it will make compliance a part of their thinking process, and thereby improve the financial institution's results.

Employee incentive compensation is a good thing. Look at your strategic plan, then develop the culture that will achieve it and incentivize your employees appropriately.

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