Banks are revamping their compensation systems to encourage more retail-like behavior from their salespeople, including branch and call center customer service representatives, loan officers and third-party distributors, according to Jacob Jegher, senior analyst with Boston-based Celent. Part of the trend, he says, is the adoption of systems that provide more analytic capabilities to enable staff to quickly identify which customers are good prospects for cross-sales.
The new automated systems -- from vendors such as Callidus Software (Santa Clara, Calif.), Oracle (Redwood Shores, Calif.) and Motiva (Pleasanton, Calif.) -- track sales, referrals, compensation and account relationships, Jegher relates. "[Banks are] putting intelligence in the hands of the relationship managers," he says.
The use of these technologies is growing along with the branch-building efforts of many banks, Jegher continues. "The branches used to be administration-focused operations," he says. "Now they're focused on sales." The construction of new branches by large banks, such as Washington Mutual's (Seattle; $348 billion in assets) uniquely designed Occasio branches, are focused on maximizing sales capabilities, Jegher notes. Of course, building new retail centers from scratch is not completely necessary for all banks. Some are infusing new life into older branches by adding the technologies to help them adopt a more retail/sales focus, he adds.
For example, HomeFederal ( Columbus, Ind.; $850 million in assets) recently deployed BankingBonus, a sales force automation program from Rennhack Marketing Services (Grapevine, Texas). The solution automatically tracks referrals, closed sales that originate from the referrals, and rewards earned and redeemed by salespeople. "Part of our goal is to retain good employees," says Diane Trout-Cummins, assistant VP and marketing director for HomeFederal. "To do that we need to reward them for good performances."
Employees are rewarded more for selling more-profitable products (e.g., commercial loans), Trout-Cummins explains. Additionally, employees are rewarded only for cross-sells and upsells. "If someone is coming into the bank to get a checking account, the employee won't be rewarded for that. But if he also sells the customer a credit card or other product, he will be rewarded [for the additional sale]," she says. "We're going for additional relationships."
To help ensure that bank staff are knowledgeable about the products and services they sell, the BankingBonus system also awards points for successfully completing embedded sales training materials, including exams and quizzes, Trout-Cummins adds, noting that sales compensation systems that reward employees with annual percentage or "merit" increases just don't work in today's banking environment. "Other compensation plans didn't seem to have any rhyme or reason to them," she remarks. "This is just so much easier" and more effective.
Another advantage of HomeFederal's program is that employees can choose the rewards that motivate them. Trout-Cummins says she recently saw the value of this when an otherwise unmotivated employee worked hard to earn an iPod and now is working on a gift for his wife.
Employees and managers can keep track of points and how far along they are toward their goals. "This provides them with 'trophy value,'" says Rennhack CEO James Gresham. "They remember how they earned [the rewards]."