Don’t worry, this isn’t another article about those three P’s we remember well from the Paycheck Protection Program – thankfully, those weekend hours and all that paperwork are in the rearview mirror for many bankers.
However, in the wake of the PPP, one of the things we’ve heard most from IBISWorld banking clients is how competitive the market is for commercial lending.
Savvy bankers have used publicly available information from PPP loans to go after competitors’ customers, which is a good strategy if you have a compelling reason for a business owner to switch banking providers.
So, how can a Relationship Manager stand out among competitors? And furthermore, how can they ensure a smooth client experience throughout the loan process?
Using industry research is just one way a banker can stand out as a consultant to their clients, as well as remain profitable to their senior leadership.
Honing those good old-fashioned sales skills is still imperative, but doing industry research can help bankers with the three 3 P’s that come up at the beginning, middle and end of every deal: prospecting, preparation and prescreening.
Let’s break them down:
Prospecting
Even the most tenured Relationship Manager should still be prospecting for new clients. By using industry research, you can easily find industries that are concentrated in your market, are capital intensive and low risk.
By finding concentrated industries in your market, you can rest assured that once you win one new client, you can use that expertise to sell other, similar businesses in that same industry, leveraging what you’ve learned from one client by applying it to others.
Secondly, identifying industries that are capital intensive means you’re maximizing each opportunity. While several industries will require treasury and cash management services, looking for industries that are more regularly in need of financing will mean more opportunity for C&I loans or Equipment Financing.
Lastly, you want to make sure you’re prospecting in industries that fit your Credit team’s risk appetite – a little more on that later. Knowing that your client’s industry is fairly low risk will mean the greater likelihood that your deals are approved or priced favorably.
Preparation
It doesn’t need to be a full hour. In fact, taking only 5 to 10 minutes ahead of a call or meeting to uncover impactful industry trends for your client, or jotting down pointed questions, can easily distinguish you from other bankers that start their meeting by asking “So, what does your business do again?”
It’s old hat, but positioning yourself as a trusted advisor is key to both keeping existing clients and winning the hearts and minds of new ones.
If industry profit is shrinking, how can you help them overcome that? Are there new industry technologies they should be adapting to? What is their regulatory environment? Curiosity is key while preparing.
Prescreening
More and more commercial lenders have shared that they try to prescreen each of their deals. Before handing that loan application and financials over to your Credit team, do you know how your client’s financials stack up against the industry average? Are they underperforming or outperforming their peers? If they are underperforming, what information about the business can you provide the credit analyst to mitigate any concerns?
Addressing some of these items ahead of time not only puts the Credit team at ease, but also saves you from having to go back to the client for more information, something that always slows a deal down.
None of these 3 P’s should be revolutionary to a banking professional, but as we enter a more uncertain environment with rising inflation, interest rates and labor shortages, knowing which industries are ripe for new business and talking proactively with clients about headwinds they’re facing is more important than ever. In fact, IBISWorld touched on this in a webinar hosted in May with Anthony Cole Training Group.
If you wait until you’ve booked a meeting with a client to do research, try prospecting through an industry lens – you might find yourself booking more meetings that turn into opportunities.
If deals are getting held up in Credit, try doing a little prescreening on the next one – your internal reputation can be just as important as your reputation with customers. Often, changing up your process can be uncomfortable, especially if you’ve been doing it for years, but it’s crucial to standing out as a sales leader.
Matt Murphy
Vice President – Commercial Banking
matt.murphy@ibisworld.com
