Pat’s Blog

“People decisions are the ultimate — perhaps the only — control of an organization. People determine the performance capacity of an organization.” — Peter Drucker

Hiring the right sales person is undoubtedly a manager’s most important task. No other decision has a greater impact on a company’s current and future success. Yet, many managers put more time and effort into preparing for a sales call than preparing for an interview with a sales candidate.

What does your company’s hiring process look like? Is it systematic and standardized? Are you looking beyond prior production for candidates who possess the innate personality traits needed to succeed in consultative sales?

“There is only one valid definition of business purpose: to create a customer.” — Peter Drucker

Last week, I heard economist Doug Duncan speak on housing finance and the current marketplace. He believes that the “national financial crisis is over and like previous financial crises, this one has shifted from a national problem to a regionally-driven event.” Duncan said that there are currently 5 million loans that are 90-day delinquent or in foreclosure with 50% of the delinquency coming from the four “sand” states. He said that full recovery is 24 to 36 months out but that most states (with the exception of the “sand” states) will recover sooner.

It does appear that we have hit bottom which means the only way to go from here is up. While no one can predict the future, one thing is clear: Conducting business as usual is not going to cut it in a post-crisis market. Now is the time to take a good look at your sales processes. What’s working? What isn’t? Are you creating customer value with every sales activity? If not, it’s time to re-evaluate what activities matter most.

Important Update: We have just launched a new one-day training class, How to Interview for Integrity in Sales Reps. If you are interested in obtaining the agenda, just send me an email.

“Precisely because change is a constant, the foundations have to be extra strong.” — Peter Drucker

At a recent speaking engagement, I had two very different conversations that illustrate a growing problem in our industry: lowering our standards of excellence. One firm I spoke with said their average production per loan officer was $1 million which they felt was “pretty good” considering current marketplace conditions. Another company I spoke with averages $20 million per loan officer. When companies lower their standards and “settle for less,” the result is a mediocre sales culture. A tougher selling environment like the one we’re experiencing demands higher performance not lower to ensure success.

“`What is value to the customer?’ may be the most important question, yet the one least often asked.” — Peter Drucker

In my opinion, the most successful financial firms view sales as a process and have adopted a systematic approach to improvement. The first step in any process improvement is to identify how the customer defines value. The reason? The customer’s definition of value changes frequently. What was important yesterday may not be important today. Any potential process change must be held against the litmus test of “What does it mean to the customer?” Will the “improvement” make the customer’s life easier or harder?

“In an ecology, the ‘whole” has to be seen and understood and the ‘parts’ exist only in contemplation of the whole.” — Peter Drucker

When traveling for my consulting business, too often, I see financial firms still using the standard measurement of volume and units to evaluate results. This approach may have been fine 20 years ago, but it is not effective now. Volume and units are short-term measurements which is like looking at a daily stock price of a company which doesn’t really tell you the company’s value and long-term prospects.
Granted, volume and units are easy to deal with but the truth is that calculating profitability is more involved than merely looking at volume. Any sales process approach should be rooted in data to provide the context, in which a sales force gets information, discusses problems, makes their decisions and takes action. Any data collection should be anchored on understanding the parts of the process and how they interact. Parts of the process can be simplified into activities that the sales people perform and the decisions they make and the actions that the customer takes or declines to take.

“People determine the performance capacity of an organization. — Peter Drucker

Many large financial institutions invest untold millions advertising their company brands. While publicizing a company logo and tagline tells prospects something about your company, what really defines a brand for customers is the quality of their interaction with the sales person.

Every encounter a sales person has with a prospect or customer is an extension of your brand. The quality of this individual connection can make all the difference between having a transaction-based customer or one who is truly loyal to your company.

What is the quality of your sales staff saying about your company’s brand? Do you have the sales talent onboard to create customers for life?

“What matters in any system is the performance of the whole.” — Peter Drucker

Every financial firm wants to improve sales but not every company has the necessary components in place to do so. In my experience, there are three fundamental elements needed for better sales results.

First, sales professionals must possess good character. Customers want to do business with people and companies who are credible and trustworthy.

Second, sales professionals must be knowledgeable about products and have consultative selling talent. Customers are more informed than ever and demand sales professionals who are not only well-versed but can make the process enjoyable.

Finally, sales professionals need good managers to help them reach the next level of success. Ongoing improvement requires the individual to receive coaching and feedback which is the primary role of the manager.

Does your company have all three components in place? If not, which area needs improvement?

“The spirit of an organization is created from the top.” — Peter Drucker

In the past few weeks, I have visited some large mortgage banking firms and it strikes me how many senior management teams have lost their enthusiasm for the business. While it is understandable that the industry has been in a major correction that is going on its third year, it does make me wonder: If the executives are less than enthusiastic, how do their employees feel and act when dealing with customers?

It is important to remember that everything a manager does or says makes an impression on the sales team — for better or worse. What kind of message are you sending to your team?

Have a Happy Valentine’s Day!

“Continuous improvements in any area eventually transform the operation.” — Peter Drucker

Let’s face it. No matter how well you run your sales organization, sometimes problems seem to come out of the blue: Your top producer decides to quit or retire, the market dips, underwriting standards change and the list goes on. When problems arise, it is important to look at how they get identified, analyzed and resolved. All too often, it seems that managers don’t know what the real cause is and as a result, they choose one of the usual fixes. You’ve heard these before: “Let’s change the compensation plan, let’s have a contest,” and my personal favorite, “Let’s hire some super producers from the competitors.” Regardless of the problem, what works is having a systematic approach to improvement. This requires management to define sales activities and the corresponding results. Problems can then be more easily identified — and corrected — when they are tied to specific activities.

“The proof of the sincerity and seriousness of management is uncompromising emphasis on integrity of character.” — Peter Drucker

Everyone knows high integrity is essential for success in financial services but few companies have practices and processes in place to ensure they’re hiring quality sales professionals. Sure, most firms use background checks and the majority of managers feel they are good judges of character but it isn’t enough to answer important questions such as:

• Will the salesperson take shortcuts in processing?
• Will the salesperson be a team player?
• Will the salesperson operate on the edge of proper policy?

The right integrity assessment can help hiring managers identify candidates with a high risk of counterproductive behaviors. Before your next hire, ask “How well do I really know this person?” The answer may be different than what you originally thought.