Selling financial services TEB Kosovo 2012


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Selling financial services TEB Kosovo 2012

  1. 1. Selling financial services TEB Kosovo 2012 R.J.Claessens&Partners 1 Helping you through the learning curve
  2. 2. The purpose of the seminarProvide you with a selling technique and product knowledge 2
  3. 3. From: www.rogerclaessens.euRoger Jean Claessens is an International lecturer &consultant for the financial services industry.• Professor at UBI (United Business Institutes), Brussels• Expert lecturer for FEBELFIN (Federation of banks & insurance in Belgium)• Expert lecturer for the EIB in Luxembourg• Expert lecturer for BGL BNPPARIBAS amongst othersAuthor of :• “Corporate culture in Banking”, 2011, Serbian Bank Association (SBA) & AuthorHouse, UK• “What is a bank?”, 2009, Promoculture & AuthorHouse, UK• “A brief introduction to accounting”, 2008, Unibook, Belgium• “Marketing in financial services”, 2007, SBA• “Branch Management”, with P. Wiertz,2006, Promoculture & SBA• “Ethics, corporate values and prevention of money laundering”, 2006, SBA 3
  4. 4. Effective Selling 4Practice is the best way to learn
  5. 5. ContentDay 11.Branding requirements2.A “brief introduction” to the balance sheet3.The impact of interest rates on the bank4.Basic selling skillsDay 25.Case studies6.Mastering delicate situations7.Conclusions and review of what can be improved8.Tips and tricks of the trade 5
  6. 6. Selling financial services Module 1 Branding requirementsA. Why would someone purchase your product?B. Brand associations, expectations and differentiationC. Goals to be reached to be better than competition 6
  7. 7. WHICH is WHICH ? 7
  8. 8. The origin of the word « BRANDING »8
  9. 9. A BRAND But is thecowboy A PRO?9
  10. 10. A BRAND WIND 10
  12. 12. 12
  15. 15. What is the PROMISE inthis case?First name NameDate
  16. 16. A BRAND IS THE RESULT OF MARKET RESEARCH That car was born in a marketing department…What was the 16 THINKING behind it?
  18. 18. A BRAND SHOULD BE AUTHENTIC Authenticity is vital as it increases your LEVERAGE18
  23. 23. Branding in the time of crisisBRANDING IN THE TIME OF CRISISThe premises of the brand remainunchanged BUT the accents change 23
  24. 24. BRANDING IN THE TIME OF CRISIS Appeal to core values 24
  26. 26. A BRAND IS A STORY “ All great stories start with a white page ” Source: AUDI26
  27. 27. A BRAND IS A STORY What makes a great story?27
  28. 28. A BRAND IS A STORY What makes a great story? • Unexpected ending • Structure • Your hope is fulfilled “Good storytelling • Meaning last for decades” • Fills gaps Steve Jobs • Participative • Connective • Empathy • Can be told over and over again28
  29. 29. A BRAND IS A STORYThe classical steps of BRANDING1. Start a conversation with stakeholders2. Look around (research, insight, emotion, rationalisation)3. Define your direction4. Put the message together5. Choose the media6. Follow up with the stakeholders and adjust over time29
  30. 30. A BRAND IS A STORY eBrands “The winners on the Web are the companies fiercely dedicated to making themselves known names in the markets they serve” “It has transformed customers into disciples, avid supporters who have spread the word about iVillage to friends and colleagues” (Source: Phil Carpenter, HB School press)30
  31. 31. A BRAND IS LINKED TO CULTURE A brand is linked to Corporate culture • What is corporate culture? • How do you create it?• How do you evaluate it? 31
  33. 33. A BRAND IS LINKED TO CULTURE Corporate culture Is a matter of:  people,  believes,  motivation  values  attitude33
  34. 34. A BRAND« Values are best demonstrated as opposed to talk about it! » (R. Hytner, Saatchi & Saatchi) 34
  35. 35. A BRAND REFLECTS A CULTURE CULTURE requires a TEAM SPIRIT which in turn leads to a REPUTATION35
  37. 37. Remember: If BRANDING is not a concern at ALL LEVELS OF THE ORGANISATION it will be side-lined to the benefit of other short term objectives37
  38. 38. Selling financial services Module 1 Branding requirementsA. Why would someone purchase your product?B. Brand associations, expectations and differentiationC. Goals to be reached to be better than competition 38
  40. 40. The top of the mind brand has a What it your DISTINCT TOP OF THE COMPETITIVEMIND BRAND & ADVANTAGE WHY? in brand space, as it has the first chance of evaluation for purchases! 40
  41. 41. Attitudes are theopinions associated with the brands,products, services….The attitudes towards the brands can helpdetermine the brands’ weaknesses and appealing factors. 41
  42. 42. • Usage patterns, which are subject of the demographic profile, help reveal the how the respondents are interacting with the brand, product or service! 42
  43. 43. Selling financial services Module 1 Branding requirementsA. Why would someone purchase your product?B. Brand associations, expectations and differentiationC. Goals to be reached to be better than competition 43
  44. 44. The objectives to be reached are: A culture of motivation44
  45. 45. The objectives to be reached are: NIKE SHOES What would you be thinking, when jogging? “NO GAMES, JUST SPORT” A culture of listening45
  46. 46. The objectives to be reached are:For instance, this PC is the result of a constant search for excellence: FASTER CHEAPER SMALLER SIMPLER BETTER A culture of excellence46
  47. 47. Self-efficiencyA culture of self-efficiency 47
  48. 48. A culture of follow-up 48
  49. 49. Selling financial services Module 2 A “brief introduction” to the Bank’s balance sheetA. The structure of a bank’s balance sheetB. Risk elementsC. AssetsD. LiabilitiesE. Off balance sheet products
  50. 50. The concept of a balance sheetWhat I HAVE What I OWE
  51. 51. The concept of a balance sheet What I HAVE What I OWE House Mortgage Car Car loan FurnitureEquipment Equipment loan Savings Invoices“Petty” Cash Overdraft
  52. 52. The concept of a balance sheet What I HAVE What I OWE House 100 Mortgage 65 Car 10 Car loan 5Furniture 30 Equipment 20 Equipment loan 10 Savings 10 Invoices 5 Petty Cash 5 Overdraft 10Adding up 175 Adding up 95
  53. 53. The concept of a balance sheetWhat I HAVE What I OWEHouse 100 Net worth 80Car 10 Mortgage 65Furniture 30 Car loan 5Equipment 20 Equipment loan 10Savings 10 Invoices 5Petty Cash 5 Overdraft 10Total 175 Total 175
  54. 54. The concept of a balance sheet What I HAVE What I OWEAll this does not tell us much about our income orexpenses during a given period of timeThis would be shown in other reports, i.e.• The Profit and Loss report or Income statement &• The Cash flow report
  55. 55. The balance sheet of a bank ASSETS LIABILITIESWhat the bank HAS What the bank OWES
  56. 56. The balance sheet of a bank What the bank HAS What the bank OWES Assets Liabilities• Fixed assets & other assets • Shareholder equity• Participating interest & • Profit of the year shares in affiliates • Debts evidenced by• Variable yield securities certificates• Fixed income securities • Various debt• Loans & advances to credit • Amounts owed to credit institutions institutions• Loans & advances to • Amounts owed to customers customers
  57. 57. Net worth Assets-Liabilities to third partiesSum of asset Sum of products liability products 57
  58. 58. The mission and product range of a bank The mission and product range of a bank will be reflected inthe balance sheet, its main elements, in the profit and lossstatement as well as its cash flow statementLooking at balance sheet items as a sum of products sold• A car financing loan = a product• A 2 year deposit = a product 58
  59. 59. Why is it important to look at it this way?•A product has a cost, a contribution to the profit margin…and a « risk profile »•A product needs to be accounted for•A product requires branding 59
  60. 60. What is a product? A product has a cost price, a potential revenue and a «risk profile » Product costLow price Competition High priceNo profit Perceived value No demand Risk profile 60
  61. 61. What is a product?• One can state that factors, such as attitudes to risk, to debt, to the need for security will affect customers’ perception.• Therefore, a segmentation of the customer base on revenues and socio-demographic data is one of the best tools to optimise product distribution and development• Furthermore, a good segmentation allows to determine to which extend customers could be approached in an automated way - distribution strategy. 61
  62. 62. A bank is a sum of assets financed by liabilities Shares Cost > 10% Bonds Assets Cost > 5% Deposits Cost > 3% Current account Cost >0 % 62
  63. 63. Risk elementsIf banking is about selling products, why do somany banks fail? Discussion 63
  64. 64. Risk elementsBanks mainly fail for two reasons:1. Their customers go bankrupt2. The bank’s management has proven unprofessional or recklessAdmittedly some elements are beyond management control, mainly:§ The economic cycles§ The political elements§ The sociological developments§ The technological developments 64
  65. 65. Key Risks1_ Credit risk2_ Liquidity risk3_ Interest rate risk and FX risk4_ Capital risk5_ Profit risk 65
  66. 66. 1_ Credit riskBankers have Three Responsibilities with Respect to CreditRisk –Risk assessment (skill) –Risk taking (management decision) –Credit review and administration 66
  67. 67. The 5 C’s of Credit risk–Character - the willingness of the borrower to repay =Know your customer–Capacity - the ability to repay the debt from cash flow =Determine his income and borrowing capacity–Collateral - the security backing the loan =Collateral actsas a guarantee–Capital - the strength of the borrower’s balance-sheet =Determine his net net worth–Conditions - the sensitivity of the project to outsidefactors such as economic cycles and competition = Adaptthe terms and conditions to the bank’s and client’s needs 67
  68. 68. 2_ Liquidity riskLiquidity risk is the risk that a shortageof funds will require funding of someassets by liquidation of other assetsunder unfavourable conditions orthe acquisition of additional funds onunfavourable market terms. 68
  69. 69. 2_ Liquidity risk (1) Cash in A(2) Cash out(3) Cash in (4) Cash out 69
  70. 70. 2_ Liquidity Profile Balance Sheet MaturitiesAmounts/difference Assets Maturing (+) 400 Liabilities Maturing (-) 300 GAP (+/-) 200 Cum. GAP 100 0 1 2 3 4 5 Period (time band) -100 -200 -300 70
  71. 71. 2_ Liquidity risk What is the role of Treasury?The primary objective of the Treasury is to manage liquidityby investing in short and long-term portfolios,as defined in duly approved guidelines,while optimising performance and yields within the market,as well as the Bank’s credit and liquidity risk policies. 71
  72. 72. 3_ Interest rate riskCost, return, risk change under the influence of interest rates - The definition of an interest rate The preference curve of the borrowers 72
  73. 73. 3_ Interest rate risk Cost, return and risk of products change under theinfluence of interest rates - The definition of an interest rate The preference curve of the lenders 73
  74. 74. 3_ Interest rate riskThe interest rate = the cost of borrowing and the return of a deposit 74
  75. 75. 3_ Interest rate riskWhen the perspectives change, so does the cost and the risks involved. 75
  76. 76. 3_ Interest rate riskWhat would happen to those three banks in case of a sharp interest rate increase? Discussion 76
  77. 77. 3_ Interest rate risk Bank A Mortgages 500 L-term deposits 400L-T Govt. bonds 400 Bonds issued 500 Other 100 Equity 100 1,000 1,000 77
  78. 78. 3_ Interest rate risk Bank BMortgages 200 L-term deposits 300Overdrafts 700 Current accounts 600 Other 100 Equity 100 1,000 1,000 78
  79. 79. 3_ Interest rate risk Bank C Mortgages 600 S-term deposits 200 L-T Govt. bonds 300 Current accounts 700 Other 100 Equity 100 1,000 1,000Long term (fixed rate) assets funded by short term (variable rate) deposits. Balance sheet is “mismatched”. RISK = Rise in interest rates will increase cost of funding with no off-setting rise in 79 interest income
  80. 80. The economic circuit Products & Services GNP WHAT?ENTREPRENEURS HOW? CONSUMERS FOR WHOM? Salaries, interest, rentals LABOUR
  81. 81. 3_ Foreign Exchange riskWhat happens when you purchase a product in the USA? € $ 81
  82. 82. 3_ Foreign Exchange risk• The foreign exchange market is the largest market in the world. It is an over the counter market, regulated by a strict code of conduct.• The daily turnover is now close to an estimated $4,000,000,000 (world GDP is 65 trillion USD) • Because of its seize it is quite unpredictable! 82
  83. 83. 3_ Foreign Exchange riskSettlement needs to be done in two working days Physical exchange $ Settlement risk ! € 83
  84. 84. 4_ Capital risk CAPITAL Assets-Liabilities to third partiesSum of asset Sum of products liability products 84
  85. 85. 4_ Capital risk Why does the Bank need Capital ?– To absorb unanticipated losses with sufficient margin of safety to maintain public confidence in the banks ability to continue as a going concern;– To protect uninsured depositors and other creditors in the event of liquidation of the bank; 85
  86. 86. 4_ Capital risk Why does the Bank need Capital ?– To assure shareholders of bank solvency;– To comply with the requirements of bank regulators;– To provide for premises, equipment and other non- earning assets necessary for bank operations. 86
  87. 87. 5_ Profit riskWhat are treats to a bank’s profitability and your job? Discussion 87
  88. 88. 5_ Profit risk Problems in Determining Bank Profitability– cash flows do not occur when interest is earned or payable, interest income/expense has to be accrued– changes in value of assets/liabilities are essential components of profitability and so must be adjusted regularly by provisions or revaluations– banks carry and transact in several currencies 88
  89. 89. 5_ Profit risk Problems in Determining Bank Profitability– receipts and payments have to be split between interest and capital– gains/losses from maturity mismatches are mixed up with commercial profits– shared costs make product pricing difficult– bank regulators in different countries establish different reporting policies 89
  90. 90. What are YOU selling? 90
  91. 91. Asset products 91
  92. 92. Product type Current account in overdraftBalance sheet type Current assetProfitability Large margin over cost of fundsRisk profile Liquidity, solvency due to non repaymentTreasury impact Uncertainty, average outstanding needs to be used as guidelineCustomer profile Known customer, middle to top segmentDocumentation Account opening, financial statement, follow-up doc, memo’s of call. 92
  93. 93. Product type Corporate current account in overdraftBalance sheet typeProfitabilityRisk profileTreasury impactCustomer profileDocumentation 93
  94. 94. Product type Revolving loanBalance sheet typeProfitabilityRisk profileTreasury impactCustomer profileDocumentation 94
  95. 95. Product type Spot loanBalance sheet typeProfitabilityRisk profileTreasury impactCustomer profileDocumentation 95
  96. 96. Product type Credit card related loanBalance sheet typeProfitabilityRisk profileTreasury impactCustomer profileDocumentation 96
  97. 97. Liability products 97
  98. 98. Product type Current accountBalance sheet typeProfitabilityRisk profileTreasury impactCustomer profileDocumentation 98
  99. 99. Product type Corporate Current accountBalance sheet typeProfitabilityRisk profileTreasury impactCustomer profileDocumentation 99
  100. 100. Product type Savings accountBalance sheet typeProfitabilityRisk profileTreasury impactCustomer profileDocumentation 100
  101. 101. oduct type Time deposit lance sheet typeofitabilitysk profileeasury impactustomer profileocumentation 101
  102. 102. Product type Flexi depositBalance sheet typeProfitabilityRisk profileTreasury impactCustomer profileDocumentation 102
  103. 103. Some off-balance sheet productsAssets Liabilities Off balance sheet Off balance sheet 103
  104. 104. Product type Documentary credit (L/C)Balance sheet typeIncome statementProfitabilityRisk profileTreasury impactCustomer profileDocumentation 104
  105. 105. Product type RemittancesBalance sheet typeIncome statementProfitabilityRisk profileTreasury impactCustomer profileDocumentation
  106. 106. Product type CollectionsBalance sheet typeIncome statementProfitabilityRisk profileTreasury impactCustomer profileDocumentation 106
  107. 107. Product type Guaranty FacilityIncome statementProfitabilityRisk profileTreasury impactCustomer profileDocumentation 107
  108. 108. Banking productsA car loan A deposit = =what the what thebank has bank owes= An asset = A liability The margin is the difference between what the banks pays for its liabilities = its cost of funds and charges for its assets The margin pays for the expenses 108
  109. 109. Banking productsA car loan A deposit = =what the what thebank has bank owes= An asset = A liability The margin is the difference between what the banks pays for its liabilities = its cost of funds and charges for its assets 109
  110. 110. Selling financial services Module 3 The impact of interest rates &economic indicators on the bank
  111. 111. The intervention of the Central BankThe question central bankers must answer is: “What isthe correct money supply level?” The easy answer isenough to buy all the goods and services produced, sothat full employment is reached without a rise inprices”. P.Q = M.VIt is NEVER perfectly in balance & winds of optimism and pessimism cause ECONOMIC CYCLES
  112. 112. The intervention of the Central Bank P.Q = M.V• P = price level of goods and services• Q = quantity of goods and services produced in a national economy (= GDP)• M = the monetary supply (the assets of the consumers and the entrepreneurs, with corresponding liabilities for the banking system and the central bank)• V = is the velocity of the circulation of money
  113. 113. What is the economy telling YOU? 113
  114. 114. The economic cyclesDiscussion What might be indicators around us of an economic boom or a slow down?
  115. 115. The economic cycles• Production • Stock exchange• employment • GNP• productivity • public sentiment• wages • risk taking• sales • new activities• profits • interest rates• output • central bank• credit • resources• investment goods • inventories
  116. 116. The economic cycles– Orders – Intensity of fluctuation– exports / imports – Excess capacity– employment – liquidity– sacrificed prices – credit-crunch– raw materials – competition– intervention – central bank– bankruptcies – producers– savings – imagination
  117. 117. The economic cyclesThe better the understanding of a situation is, the greater the probability to take a right decision, hence the study of the economic indicatorsThey are the language of the economyThey are the basis for educated decisions
  118. 118. Government Central Bank Products & Services GNP WHAT? ENTREPRENEURS HOW? CONSUMERS FOR WHOM? Salaries, interest, rentals LABOUR
  119. 119. (c) The intervention of the central bank5 Keytools of the central bank 1.The printing of money 2.The short term interest rates 3.The fractional reserve requirements 4. The open market policy 5. The financial structure of the banks
  120. 120. The intervention of the central bank1- Printing money
  121. 121. 2- Interest ratesThe preference curve of the borrowers
  122. 122. 2- Interest ratesThe preference curve of the lenders
  123. 123. 2- Interest ratesThe cost of borrowing and the return of a deposit
  124. 124. 2- Interest ratesWhen the perspective changes, the curve moves
  125. 125. 2 – Interest ratesInterest rateShort term interest rate + inflation = +/- long term interest rateReal interest rate = +/- nominal interest rate – inflation
  126. 126. 2- Interest rates18016014012010080604020 0 Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q10 Q11 Q12 Interest shares GDP Bonds
  127. 127. 2- Interest rates 3 YEAR 3 YEAR LOAN DEPOSIT at 7% at 3 %Avoiding int. rate risk = a matching position 127
  128. 128. 3 – Fractional reserve requirementCommercial Bank Central Bank %LOANS DEPOSITS DEPOSITS
  129. 129. 3 – Fractional reserve requirementReserve requirement of 10 out of 100100 is deposited with Bank ABank A is going to deposit 10 with CB and lend 9090 is deposited with Bank BBank B is going to deposit 9 with CB and lend 8181 is deposited with bank CBank C is going to deposit 8,1 with the CB and lend 72,9…M0 = cash = 100 = monetary baseM1 = cash + sight deposits = 342,9 = money supply = (100+90+81+72,9)
  130. 130. 4 – Open market policy or “quantitative easing” Commercial Bank Central Bank Purchase of bonds Euro
  131. 131. 5 – Balance sheet structure Commercial Bank
  132. 132. The economic environment• The existence of a large national debt influences the interest rates and the possibility of adjusting them in order to attenuate the cyclical fluctuations.• Investments in government bonds cause interest rates to raise and divert essential means from the private investors and borrowers.
  133. 133. The ECB’s president argues that its mostvaluable asset is information, not money. 133
  134. 134. Selling financial services Module 4 Selling skills 134
  135. 135. 135How are you doing so far?
  136. 136. Effective selling Remember the basic structure of any message INFOR-SITUATION PROBLEM CONCLUSION MATION IMPLICIT EXPLICIT 136
  137. 137. Effective sellingMarket position Competition Marketing Products Effective selling 137
  138. 138. Effecive sellingYou do not want to sell an apple whereas the customer wants to purchase an orange! 138
  140. 140. CommunicationThe challenge is to be brief, structured, focused 140
  141. 141. Effective Selling• Situation questions concerning the customer or the prospect• One should manage to raise interest as of the first seconds in order to gain the right to ask further questions « open but targeted questions », allowing the customer to formulate himself the features of his problem, which will lead towards the key elements of the product which one wants him to purchase. 141
  142. 142. Effective Selling• Situation questions concerning the customer or the prospect• Customers will behave along following styles: – ACTION – ANALYSIS – HARMONY – AFFECTIVE 142
  143. 143. Effective SellingAction• Individuals talking with authority, who are result driven, stress resistant, focused mind, often impatient and… often convinced about the correctness of their point of viewAnalysis• Individuals talking with knowledge, reserved, systematic, who look for quality and…often too detailed or too critical 143
  144. 144. Effective SellingHarmony• Individuals talking with respect, a sense of purpose in order to find a mutual satisfactory…but are often too tolerant and too dependant upon the esteem of others.Affective• Individuals who are often intuitive and creative, are happy to find a solution…but they often take far too much time and may easily get side-tracked or loose the objective from sight 144
  145. 145. Effective Selling• Whatever the profile of the customer: – The customer pays our salary or our commission – The customer does not depend on us, we depend on him – The customer does not interrupt our workload, we work for the customer 145
  146. 146. Effective Selling• Whatever the profile of the customer: – The customer, who sees his problem being solved, gets what he is entitled to – The customer is part of out net worth – The customer is not an account number – The customer is the rationale for the bank 146
  147. 147. Effective Selling• Problem questions – His problems, difficulties, point of dissatisfaction, – a lack of information reveals: an implicit need – Take your time, do not draw conclusions too quickly, go “slowly” to the next step! 147
  148. 148. Effective Selling• Information questions – Required information so that the customer plainly realises his needs and wants. – His problem needs to become simple and clear as well as its solution – Make a comparison of pros and cons of the sales proposition – Treat the objections one by one ! 148
  149. 149. Effective SellingNeed pay off questions• For the customer, previous phases have allowed him to express his needs and wants• His implicit needs are now explicit• Its provides him a deep satisfaction as he is the one who has formulated the solution 149
  150. 150. Effective Selling• Comprehends in addition the 3 C ’s : – Competence ( I know my products) – Comprehension ( I understand the customer’s needs and I personalise my arguments) – Coherence ( I am firmly determined to convince my customer) 150
  151. 151. Effective Selling• An absolute must as far as products is concerned: – Product characteristics – Product advantages – Product benefits – (The onion) 151
  152. 152. Effective SellingA product is like an onion 152
  153. 153. Effective Selling What is a product?Definition : Product planners think about a productin three levels: 1. The core product 2. The actual product 3. The augmented product 153
  154. 154. Effective Selling Installation Augmente d Actual productDelivery Actual Benefit After sales Style or Core Service Quality MARQUE Brand Garanties 154
  155. 155. Effective SellingA plan for a sales talk1. The objective and the opening2. The situation3. The problem4. The proposed solutions5. The additional information6. The repetition of objectives7. The final argument8. The conclusion 155
  156. 156. Effective SellingDiscussion item 156
  157. 157. Effective Selling Discussion item You learn to play tennis with practice, practice and again practice….SAME goes for SELLING Groups of 4 with one seller, one purchaser and 2 observers4 Exercises with various briefings with a rotation of role playing See Hand-out 157
  158. 158. Effective Selling• Create a climate of confidence• Raise interest as of the first questions – “I will help the customer to make sure he understands his problem well and formulates his needs and wants adequately” – “It is the customer, who will help me to put on the table the right tailor made sales-arguments” 158
  159. 159. Effective selling• A Powerful argumentation is based on cause and effects.• An argumentation needs more than one single formulation of the customer’s needs.• An argumentation presents advantages and disadvantages + a simulation• An argumentation comprehends a conclusion 159
  160. 160. Effective selling• Verbal – a question or an objection – a favourable comparison with the competition• Non verbal – 50 % of the communication is body language – A moment of silence, a moment of reflection – A smile, a sign of decreasing contraction – A sustained interest for a simulation 160
  161. 161. Effective selling• The technical objections• The objections in principle• The objections to postpone a decision 161
  162. 162. Effective selling• The direct conclusion• The alternative conclusion• It is paramount to “isolate” the “buts” or the “ifs” and neutralise them ! 162
  163. 163. Effective sellingThe follow-up• Reinforces the customer’s confidence• Deepens the knowledge of the customer• Deepens the professional relationship with the customer• Provides information on the product and on the competition 163
  164. 164. Effective selling• Is the situation clear ?• Has the problem been well formulated ?• Does the information lead to conclusion ?• Do the closing questions lead to a final sale? 164
  165. 165. Effective Selling on the telephone We have seen 3 types of customer segmentation: • As to the attitude (parent, adult an child) • As to the nature (action, analysis, harmony and affective) • As to the profile (risk prone or risk adverse) • …but on the telephone? 165
  166. 166. Call centresSelling on the phone 166
  167. 167. Telephone contact• The « link » with the customer• The call is essential for – The reputation – Reaching excellence – YOUR career – YOUR ego – YOUR personal satisfaction 167
  168. 168. Telephone contact• The very telephone call needs to be a tone- setter in customer-contact, in service and commercial approach. It is the institution’s name card.• That call is essential for everyone in the organisation 168
  169. 169. Telephone contact• The quality of your call will depend on: – Your attitude – Your methodology – Your sensitivity to the customer• BUT ALSO on: 169
  170. 170. Telephone contact– Your attitude as to the number of times you let the telephone ring– Your first sentences– The way you introduce yourself– The way you create an atmosphere– The way you listen 170
  171. 171. Telephone contactThe various elements of a telephone contact:• Identification• The analysis• Expectations• Conclusion• Transferring• Language• Professional• Time 171
  172. 172. Telephone contact• Identification – The customer feels he is the centre of your attention. – A lack of proper identification or interest from your part will immediately and irrevocably penalise you. 172
  173. 173. Telephone contact• Analysis – Your questions will have enabled the customer to determine the exact nature of his problem. – Do not refrain from reformulating his problem in order to ascertain you are indeed on the same wavelength and will be in a position to meet the customer’s expectations 173
  174. 174. Telephone contact• Expectations – The telephone is not free. Do not keep your customer waiting on the telephone. Call back. Calling back means that you are working on the problem – On top if it leaves you the time to speak to colleagues, if need be 174
  175. 175. Telephone contact• Conclusion – The conclusion needs to be crystal clear for all parties involved – Rephrase the conclusion to ascertain all is clear – In case of doubt, ask closed questions; they will enable you to clarify things 175
  176. 176. Telephone contact• Communication transfer – A critical moment! – Sending the customer in the system is dramatic. – Loosing the communication is as bad• Make sure the transfer has indeed happened to the right person and the right department.• Make sure the customer has found as a professional counterpart as you are. 176
  177. 177. Telephone contact• Language – By means of focused questions, it is up to us to show that we are truly professional. 177
  178. 178. Telephone contact• Professional – The nicest compliment one can make to you is « Thank you, this is very professional ». – This is in line with his expectations and with your career objectives 178
  179. 179. Telephone contact• Time – Nothing takes « a minute ». – Call the customer back if you will only be listening with half an ear, whereas we have two! – Take a note that you have to call back. – Do call back in any event! 179
  180. 180. Effective selling Remember the basic structure of any message INFOR-SITUATION PROBLEM CONCLUSION MATION IMPLICIT EXPLICIT 180
  181. 181. CommunicationCommunication requires an interface between what is being said and what is being done 181
  182. 182. 182Good communication means ?
  183. 183. Selling financial services Module 5 Case studies
  184. 184. 184
  185. 185. CasesThe seminar belongs to YOU and its success restslargely with you.• Enter into the discussion.• Give freely of your experience.• Confine your discussion to the problem.• Say what you think.• Only one person should talk at a time.• Be patient with other members• Appreciate others point of view 185
  186. 186. Role playing (on a rotation basis)• Seller• Client• 2 Observers• What needs to be observed: – Structure of the dialogue (SPIN) – The aptitude to listen – The aptitude to describe a product – The understanding of the economic environment – The closing & the agreed follow up 186
  187. 187. Case 1Fatmir, 47, married, one child – existing customer – owner of one fully paid villa – is in a position to save about 10 % of his income – little experience in stock and bonds – holds presently about 20.000 EURO on his current account – no problem with currency exposure – his wife’s grandfather lost quite a lot of money at the stock exchange 187
  188. 188. Case 2Syzanna, 42 – She has inherited a significant patrimony – She is not a customer but her husband knows the bank well as he was the architect, who renovated the head-quarters. – She does not take everything for granted and questions a lot! – She heard from a friend that your bank provides good advice – She is prepared to “test” the bank for 25.000 EURO 188
  189. 189. Case 3Isak, 65, pensioner – knows the bank for which he has done upholstery in the past – he will receive a payment from the insurance in the tune of 40.000 EURO and wants to invest it properly – he is shopping around and has little understanding of “finance” but has a good grip on money matters, i.e. hard earned savings – He would like to have a monthly income of about 350 EURO 189
  190. 190. Case 4Vlajko, 55, an unsatisfied customer – Originally, he had invested 50.000 Euro of which 32,000 Euro is left. – he is the owner of a small supermarket under franchising – has predominantly invested in euro denominated bonds by lack of market knowledge – had a bad experience with shares many years ago whereby he had lost about 10.000 USD in the Asian emerging markets. 190
  191. 191. Case 5Dyturie• You are responsible for the expatriate prospects and managed to arrange a meeting with Ms. Dyturie, 33, who is a doctor in chemistry of the MIT and works for a UN mission.• She is hard nosed and seems to have a pretty strong knowledge about the US market.• Yet, she is a foreign national and is currently paid in EURO.• She believes she is going to be able to save about 1.000 EURO a month on her quite high expatriate salary. She is looking for some interesting tips. 191
  192. 192. Case 6Mike Le Sable• You left the bank this morning for a « cold call »• You heard that Mr. Le Sable - you estimate him about 40 years old - is the owner of a very successful firm behind the corner of your office - has quite a lot of means to invest.• You have called for an appointment and he said « O.K., one never knows. I have very little time and I am quite pleased with the present banking services, but by all means if you think you have something special to offer… » 192
  193. 193. Case 7Nikola Nikola had called upon you for a meeting in order to discuss a pension plan issue. You know him as a member of the chamber of commerce but have never been able to turn him into a customer. What questions would you asked Nikola in order to get a complete picture of his situation, his needs and wants and what information would you provide in order to close the business at hand? 193
  194. 194. Case 8Dr. Neijenrode,a Dutch legal counsel from Rotterdam, represents a wealthycustomer of the bank. This relationship was establishedyears ago. The lawyer has always represented thecustomer. The documents in the file are in order. Therelationship is significant. The customer, Mr. Alexos is abusinessman living in Greece.Dr. Neijenrode has received a power of attorney in due formin order to withdraw 25.000 Euro in cash.Q: What should be the teller’s dialogue? 194
  195. 195. Case 9Binary Inc,As account manager, you are handling an existing relationshipBinary Inc. of which average outstandings have been aroundUS $100.000 for the last two years. A non-resident company,Binary Inc. is involved in soft- and hardware and tradesworldwide. Years ago, the managing director and majorityshareholder, Mr. Löwenstein, was introduced by a highlyregarded customer.Mr. Löwenstein has called for an appointment in order todiscuss the practical arrangements in the framework of acontract for a new customer in Mexico. He proposes followingscheme: (continued) 195
  196. 196. Case 9(continued)•Instead of transfers from abroad the bank is going toreceive cashier’s checks on a regular basis.•The checks will not necessarily be made out in his namebut will be endorsed in your favour.•The checks will all be below the generally known UnitedStates reporting threshold of US $ 10.000.•The checks might be more than six months old•The checks will have a different amount than the underlyingeconomic transaction, if any.Q: How would you discuss this proposal? 196
  197. 197. Case 10Mr. PizonYour responsibility is the handling of the private customerswith ventures in EU countries. You enjoy being the accountofficer of Mr. Pizon who owns a few restaurants in Trieste. Infact you think he is a decent fellow but rather ignorant as faras markets is concerned. You do offer a definite addedvalue, which is a nice feeling.However, you have noticed that the monies deposited in theaccount have risen quite substantially above the average ofprevious quarters and wonder why this is the case.Q: How would you discuss the issue with Mr. Pizon? 197
  198. 198. Case 11Mr. & Mrs. Markovic• You are meeting Mr. and Mrs. Markovic for a revolving loan to finance the purchase of a new car. They have some savings with the bank in an amount higher than the value of the car.• Both are working and at first glance the loan appears to be reasonable, despite the fact that you feel Mrs. Markovic to be quite nervous to say the least.• How would you negotiate with the couple in front of you? 198
  199. 199. Case 12• You are branch manager and the number two has been promoted to head another branch,• Two persons, Ian and Donika, would like to get that open slot. However you believe that Ian is not as well up to the task as Donika,• You have a conversation with Ian to tell him that he will not have the promotion, he thinks he deserves.• YOUR goal is to keep him motivated despite his disappointment 199
  200. 200. Case 13• You are an account manager in a main branch and have been called upon to meet Ms. Cecelia, who has a two year time deposit with you in the amount of 20,000 Euro.• She is an accountant, about 40.• She seems annoyed and you wonder why.• The meeting starts on a difficult note as she could not find a parking space, it is raining and the local news of the day mentions a possible collapse of the banking system, at least as we know it. 200
  201. 201. Case 14• You are an account manager visiting a prospect, a small import/export company for hard and software.• This is your first visit. You checked available data and have the impression that there must be some opportunities at hand.• How would you go about it? 201
  202. 202. Case 15• You are a branch manager and are facing a key issue that poisons the atmosphere in the branch.• The two tellers of the branch, both relatively new employees do not co-operate with each other for breaks and lunch time schedule.• It seems that instead of helping each other they do the opposite. This has not only an impact on the branch but also on the customer service.• You decide to call a meeting to solve the issue,• How will you sell the idea that a smooth operation is essential and will benefit all stakeholders. 202
  203. 203. Selling financial services Module 6Mastering delicate situations & objections 203
  204. 204. Mastering delicate situations 204
  205. 205. Getting out• You are in the Arizona desert in the hottest time of the year. Because of a fire, the plane had to land and most of the contents have been destroyed but fortunately none of the three passengers and the pilot are hurt. You know that you are about 75 miles from the nearest town. Fortunately you have some pieces of equipment and items left that you could use for your survival.• The decision to make is: either to stay put and wait for help or move and walk the 75 miles to the nearest town.• Whatever the decision it needs to be taken unanimously! 205
  206. 206. Getting out• Below is list of available items, you should list them in order of importance to your survival, one being the most important, and decide what items to take with you in case you decide to move. You may also take the decision to stay and wait for potential help but should still list the items in order of value to your survival: 1. Compass 8. 1 case of rations 2. Small transistor radio 9. Maps of the desert 3. Shaving mirror 10. Cushions 4. Snake repellent 11. 5 litre of an oil/gas mixture 5. 5-liter of water for the four of you 12. 1 bottle of rum 6. 4 square meter of opaque plastic 13. Two boxes of 7. Mosquito netting chocolate 14. 5 meter of ropes 15. One boomerang 206
  207. 207. Creating consensus1. Clearly frame the issue to be decided & determine the result you desire to achieve (during the meeting).2. Clearly think about the process of decision making which will be used.3. Clearly explain your role.4. Use a proven sales technique and repeat to make sure you are indeed on the same wavelength, 207
  208. 208. Creating consensus5. The standard for consensus is that both parties must agree with the decision.6. Expect dissent and disagreement during the process and view this as a positive step towards a high quality decision.7. Allow your customer to be direct. 208
  209. 209. Creating consensus8. Actively listen to each person in the group if more than one person is purchasing. Look for the possible merit of each others opinions.9. Encourage everyone to approach the meeting and the decision in a rational manner rather than an emotional one.10. If the meeting gets off track re-focus the discussion on the desired result. 209
  210. 210. Dealing with dissatisfied customers 210
  211. 211. Mastering delicate situations• The more you are structured the more chances you have to reach a solution.• « Lay back! » You are not being blamed personally!• YOU are NOT part of the problem, you try to resolve it 211
  212. 212. Mastering delicate situations• You are looking for a solution in the capacity of a consultant• The customer is neither always right nor wrong. It does not matter. What matters is that you are a professional solving a problem• Remember that you are the best advertisement! 212
  213. 213. Mastering delicate situations• Always take objections very seriously• Be conscious about your attitude• Isolate each objection and address them one by one• Always finish a conversation on a positive note• Go to the very end• Conclude with closed questions (yes or no) 213
  214. 214. The attitudes of wisdom• What matters is concluding• A customer complaint represents an opportunity• Think about the marketing aspects of a complaint. A complaint is a piece of marketing information• One can commit an error but not twice the same. 214
  215. 215. The attitudes of wisdom• Never be on the defensive side, you are a consultant, who is looking for a mutually acceptable solution• Never be critical, the only criticism is constructive criticism• Never promise what you cannot deliver 215
  216. 216. The attitudes of wisdom• Learn from each situation what you can make out of it, knowledge means survival!!!• Good luck, whatever your level of professionalism, you do need some luck! 216
  217. 217. Objections in principleKeep contact YOU will have another opportunity in the future! 217
  218. 218. Selling financial services Module 7What can be improved? 218
  219. 219. 219
  220. 220. Distribution goes hand in hand with cost avoidance 140 120 Profit 100 80 60 40 Cost - 20 Consciousness 0 Avoiding waste Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q10 Q11 Q12 Cost Revenues 220
  221. 221. Some distribution channels are much cheaper than others ! INPUT€? €? €? €? €? €? 221
  222. 222. Advising the most efficient distribution channel will ultimately save jobs We can - safe a totally unforseenevent - avoid this 222
  223. 223. Effective Selling• Comprehends in addition the 3 C ’s : (reminder!) – Competence ( I know my products) – Comprehension ( I understand the customer’s needs and I personalise my arguments) – Coherence ( I am firmly determined to convince my customer) 223
  224. 224. Effective Selling The customer profile The decision process Economics Culture Politics TechnologyProducts The customer’s response Price The choice of the product The choice of the brand The moment of the purchase Place The amount spentPromotion People 224
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  226. 226. 226
  227. 227. Effective SellingThe follow-up• Reinforces the customer’s confidence• Deepens the knowledge of the customer• Deepens the professional relationship with the customer• Provides information on the product and on the competition 227
  228. 228. Effective Selling• Is the situation clear ?• Has the problem been well formulated ?• Does the information lead to conclusion ?• Do the closing questions lead to a final sale? 228
  229. 229. 1_The art of asking questions 229
  230. 230. Self-efficiency Question: What about my….: •Aptitude at beating competition •Management of time, data, meetings •Feedback to and from my colleagues •Attitude versus waste of any kind •Productivity, priorities •Listening carefully to advise, ….Avoiding waste of any kind starts with yourself! 230
  231. 231. Performance improvement Self-efficiency1. Avoiding waste (time as an example)2. Remembering more from reading3. Use effective selling to reach your goals4. Transactional attitude to gain time5. Information management to avoid waste6. Listening to avoid waste of time7. Self preservation through efficiency 231
  232. 232. The right type of transaction Parent Parent Adult Adult Child Child 232
  233. 233. Remember• Whatever the profile of the customer: – The customer pays our salary or our commission – The customer does not depend on us, we depend on him – The customer does not interrupt our workload, we work for the customer 233
  234. 234. Remember• Whatever the profile of the customer: – The customer, who sees his problem being solved, gets what he is entitled to – The customer is part of out net worth – The customer is not an account number – The customer is the rationale for the bank 234
  235. 235. Remember•A good meeting has to followingfeatures: Elementary feeling of trust Sense of equality Nobody is trying to manipulate Attendants can separate problems from people Everybody aims at a win-win situation Mutual respect 235
  236. 236. 236Even on the phone a smile is worth a thousand words
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  238. 238. Selling financial services Module 8Conclusions & likely improvements 238
  240. 240. The 20 steps TO IMPROVE on SALES1. Examine every alternative2. Use proven sales methods3. Take the long term view with the short term in mind4. Change selling proposals that are no longer attractive5. Consider the implications of the customer’s decision 240
  241. 241. The 20 steps TO IMPROVE on SALES6. Try to foresee and prepare for any objection7. Always ask what can go wrong with the customer’s decision8. Always consider the possible outcomes9. Always try to balance intuition and logic10. Avoid making proposals that have a large element of chance in them 241
  242. 242. The 20 steps TO IMPROVE on SALES11. Follow a precedent when it works12. Kindly challenge the customer’s perception if need be13. Be aware of cultural elements behind decisions14. Weigh the impact of decisions15. Do not be afraid to repeatedly make a point 242
  243. 243. The 20 steps TO IMPROVE on SALES16. Do not be afraid of rejection, think about an alternative17. Build trust in decision making process18. Avoid decisions under any kind of pressure19. If it proves to be a wrong decision, take fast action20. Never postpone vital decisions – make them quickly 243
  244. 244. Other final points• Selling and decision making is not an exact science,• Behind data there are men and women!• Thinking is not a tidy process but it should be done with a sense of order – use a proven selling technique• Remember that solutions are the seed of new demands• Lost sales are unforced errors but if you want to win their number should be limited• It is always worthwhile to listen to people• A problem is a solution in disguise• Brainstorming: reverse brainstorming = in how many ways can this idea fail? 244
  245. 245. Other final points• We need critical input from others to remove the filters from our eyes• Remember the mental roadblocks: – Lack of facts – Lack of conviction – Lack of a starting point – Lack of perspective – Lack of motivation 245
  246. 246. ConclusionsVarious factors play AGAINST us, such as The changing environment The pressure on margins The pressure on market share The need for substantial investments in IT The lack of customer loyalty The lack of differentiation possibilities 246
  247. 247. ConclusionsThe making or breaking point is people and systems providing: There is a market There is a purchasing power There are products matching the demand There is a culture of cost avoidance in order to prevent cost cutting There is a culture of marketing and not just PR or advertising There is a culture of HR There is a culture of WINNING 247
  249. 249. Bibliography & useful websites• “Principles of Marketing”,P. Kotler and G. Armstrong, Prentice Hall, International Editions• “Bank Branching 2010”, J. Svigals, Lafferty Publications• “Distribution 2000”, J.L. Bauer , Lafferty Publications• “Marketing Financial Services”, C. Ennew, T. Watkins & M. Wright, Butterworth-Heinemann• “Growing brand loyalty”, R. H. Evans, Lafferty• “E-Brands”, P. Carpenter, Harvard Business School Press• “Marketing in the Financial Services” R. Claessens, ed.Serbian Bank Association• “ Corporate culture in banking” R. Claessens, D. Markovic., ed. Serbian Bank Association 249
  250. 250. Bibliography & useful websites• “The HR scorecard”, B.E. Becker, M. A. Huselid, D.Ulrich, Harvard Business School Press• “The ten deadly mistakes of the wanna.dots”, R. Moss Kanter, HBR January 2001• “Branch management”, R. Claessens & Philippe Wiertz, ed Promoculture, Serbian Bank Association,• « Winning » Jack Welch, Harper Collins• « Strategic Performance Measurement », Chris Aston, Business Intelligence Ltd, 250
  251. 251. Bibliography & useful websites•••••••••• 251
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