7 Proven Strategies to Come Out Ahead During a Recession
As featured in the upcoming Spring 2009 edition of Extraordinary Banker Magazine
Charlie Brown said it best—”Good Grief!” What an economy! Many of the brightest futurists are saying this is not one of those “cycles” we’ve been through a hundred times in the market but a longstanding shift. What will you do if they are right?
IF they are right, then it stands to reason that our old approaches to dealing with challenging times won’t do much good.
You CAN’T fix this one the old way—if your top two strategies for this year are to cut expenses and focus on loan quality, the bad news for you is that your stock will end up making somebody a great short sale.
Yes, those are good strategies—but if those approaches get you through this year (and that’s a big IF), what about next year, the year after that, and the year after that? The last expense you’ll cut is your own paycheck—and, to be really blunt, you will have earned that cut for your lack of foresight and leadership.
And it may come sooner than you think.
What do you do to not only survive but prosper during this challenging time?
1. Decide not to participate in the recession
That’s right. You didn’t sign up for it. Why should you participate?
Is this crazy? No. During times like this, even some of your really good loans will go bad. SOME things are out of your control. But a plethora of things remain within your control—raising your net interest margin by being worth it, attracting higher quality loans, getting all those deposits that are “floating on the surface,” to name a few.
It is your job to control the mindsets of your people. Victims become victimized. If you act like a victim and play the cost-cutting card, you have sent a message to your people that you’re helpless and unable to follow the historic lessons of how to use times like this to pull ahead.
Mindset is EVERYTHING.
2. Aggressively acquire cheap deposits
No, I did NOT say pay up for them. There is absolutely no good reason to do that. I said acquire them. Get aggressive. Target deposit-rich people and companies. Be of massive value. Create value FAR beyond offering product and being good at customer service. That game won’t cut it anymore.
Order takers have no place in your bank any longer—you simply can’t afford that luxury. Make sure that every order taker in your bank is transformed or invited to free up their future. That may sound cruel, but those people are costing the others their bonuses, and potentially, if things get bad enough, THEIR jobs!
It hurts your good people to allow mediocrity to prevail in your troops.
3. Upgrade the quality of your loan portfolio
Remember all those loans that wouldn’t leave your competitor? You tried and tried again, to no avail. Well, NOW is the time to shake them loose. And what could be better for improving the quality of your loan portfolio than bringing in some stellar loans?
Identifying the quality loans and getting them in your pocket is step one. Follow that with an iron-clad sales process that so differentiates you that there is no question that you are the real deal and that it will be a well-worth-it-changing relationship.
4. Position yourself as the perceived expert—and get out there
Now is the time to speak up. Many of my friends outside of banking ask me, “Why are banks not making loans anymore?” “What do I invest in now?” “How does FDIC work?”
Well, those are some interesting questions. Of course, good banks ARE still making loans, and a lot of them. But if your prospects and customers don’t know what your bank is doing and not doing, the fault lies squarely on your shoulders.
During difficult times, customers want you to talk with them—send them information, call them to explain what is happening and how to protect themselves AND capitalize on the situation. You get the point. This is NOT the time to ignore them or wait for them to call.
If your marketing department is still doing “brand development,” “image ads,” and “rate ads,” they need a major dose of instruction about what is really working these days. You can’t afford to waste those critical dollars. Business experts agree that marketing budgets should be up during a recession while others are cutting back. That said, ineffective marketing never makes sense.
People are running away in herds from financial institutions that aren’t talking to them. The old days of sending out statements and waiting for people to call with questions are over—and reserved for those who are about to complete their careers in banking, one way or another.
5. Expect more from leaders and managers
The Wall Street Journal recently stated that investment in
leadership development is one of the few areas showing a growth trend. Of course. How can you possibly advance your bank or even survive this economic climate with people who have stopped their development at the acquisition of “technical skills”?
Your people have to engage their hearts to move and move fast. They need to create accountability plans and hold each other accountable. And they have to out-think, out-strategize, and out-execute your competitors.
6. Acquire “non-salesy” sales skills for EVERYONE in your bank
Let’s get honest. You’ve been talking about the need to improve your sales culture for years. Decades, maybe.
But now, it’s fairly apparent that having anyone—even your operations people—failing to understand how to own a client’s entire relationship is inexcusable and can take you down.
Worse than having no attempt at improving sales skills are the banks who hire the traditional sales trainers. Nice as they are, these dudes walk in with their slick suits and teach those old sales skills with no understanding that it’s “nice, but no cigar.” It doesn’t work. In fact, hundreds of banks talk of how things actually get WORSE after these trainings.
Why? Think about it. Who ever walks into a bank and wants to be “sold” to? That’s the last darn thing somebody wants! They want to BUY and have someone ask them questions and make great suggestions. But the traditional sales approach is now cited as a leading reason people LEAVE their banks. Yuck. Can you afford that?
For years, CEOs would tell me that they had wasted hundreds of thousands of dollars on sales training with no improvement. That’s no surprise. How can you expect sales to increase when “culture” is the leading predictor of future growth and profitability increases?
Sales training without culture shifts, alignment with marketing systems, strategy realignment, execution improvement, and setting a uniform direction often does more harm than good.
CEOs are now often recognizing that the sales training they are doing is counterproductive—and recognizing it DURING the training!
It’s time to get your people productive and seeing themselves as an ROI for the company. The only way to do that is to engage everyone to understand the step-by-step systems that help people buy the right things at the right time AND create an unshakable relationship.
7. Lighten up
It’s just life, and this whole thing is not life threatening. Create massive intention for your goals and keep a light heart, no matter how much the handwringers beg you to wring along with them. It will serve you well.
Now’s the time for a breakthrough. No more excuses. No more heads in the sand. For those who sleep through these times of great opportunity to pull ahead, the prognosis is dismal at best. So be awake!