Banking On Your Banker
Filed under: Business Growth, Pittsburgh, Profitable Growth, Top Line Growth, Uncategorized
Mention “banker” to business owners or “business owner” to bankers and you are sure to spark a reaction. Having worked with hundreds of each, I marvel at the state of such a critical and ancient relationship in this day and age. While bankers and owners need and value each other, few supplier/customers relationships are so complicated and fraught with angst. Owners vex over the strings, bureaucracy, and inattention that accompany the money they borrow from bankers. To many owners, most loan officers are seen as temporary caretakers who have neither the time nor incentive to understand their customer’s business.
Conversely, every bank president I have met, in spite of his or her regulatory and lending constraints, insists they are the bank for business owners and lead their lenders to do so. They lament over how “over-banked” and rate-driven their market is. And they are right that smaller businesses rarely understand banking, financial management, risk, or working capital.
Because of these disconnects, bankers and smaller business owners rarely
profit from the synergy of their respective positions. The shame is, together
they could become a powerful partnership. In our economy, an emerging business’
credit, deposit, and processing needs make them a bank’s best prospective
customers. And bankers can offer not just fair rates but provide needed counsel
and guidance to smaller businesses that are typically unsophisticated borrowers
and often less rate-sensitive. So why can’t business owners find lenders who
will provide more value? And why can’t lenders convince owners to look beyond
the interest rate and see how much more a bank can provide? With interest rates
still relatively low, rather than shopping for the best rate, smaller business
owners need to find the banker that will give them the time and expertise they
cannot afford to create internally. For their part, bankers need to be capable
and eager to provide far more expertise and understanding of the business
owners’ needs. So as an owner, here are my five key ways for you to bank on your
banker:
- Accept it is the bank’s money and not yours. A banker’s
first obligation is to protect and control their depositor’s money that they are
lending you. Bankers often finance up to 50% of their client’s balance sheets
but only 10% of the business’ costs. They can feel that they are more concerned
with protecting a company’s assets than the owners are. So be a good customer
and when you take their money, understand that much of the “paperwork” and
record keeping is a critical discipline to internalize. Your loan officer is
always evaluated first on how he protects his or her bank’s money. And, unlike
other investors, they won’t try to run your business as long as you do. - You are not a bank’s customer you are their supplier. Think
of yourself as the supplier (of a good credit risk) to your sales rep (the
lender) who must sell it to his customer (the credit committee) and your
expectations will be realistic. Furthermore, it is important to understand that
the decisions of the credit policy committee just as often are based on the
bank’s overall financial needs as they are on your credit worthiness so don’t
take it personally when their decision appears to disregard the obvious. No
aspiring lenders can or will ever jeopardize their career by going against
credit policies of their employer. - Bank on your loan officer, not his or her bank. As all banks quickly copy each other’s products and services, your contact makes all the difference. When deciding on a banker, pick the individual who has substantial tenure in their position and hopefully some business acumen outside of banking. The best lender for your smaller business is rarely the hard charging, most promotable, fast tracker, but rather the tenured expert who loves working with businesses more than his own political bureaucracy and may be perceived as a rebel within their own institution. Unfortunately, the average banker covers over 250 customers so it is harder to keep his eye on your business than to get the lowest interest rate. If your business is so dependent on debt service that even a ¼% can make or break your company, don’t blame this on your banker but rather examine if your Best and Highest Use® is sufficiently valued by your target market.
- Don’t settle for “service.” Demand expertise and advice. If
your banker is only a middleman and expediter, he or she may call this “good
service” but it doesn’t add value to your business. Worse yet, if you call your
banker after months of no talking, and frantically ask him to increase your line
of credit so you can make payroll, shame on you both! Your banker should be
proactively asking open-ended questions, such as how will you make payroll if
you lose an account or production capacity and follows that up with more
questions which lead to you and she agreeing on an overall financial strategy
and contingencies, you have the right person. - Buy on price when the value is not out there. If you can’t
get expertise you need in a lender, then shop for the lowest rate. Think of your
banking relationship as an outsource-before-you-in-source decision. As you grow
in financial sophistication and embrace the discipline your lender has taught
you, hire a treasurer or CFO with the expertise that will also bring your rates
down.
Over these last few years, credit has been scarce but virtually free in this
low-interest rate environment. While many banks say they are vying for your
business, demand a fair rate and the right banker. Or learn to live with even
less debt! If you can bank on your banker and you and your business will be
better off. Articles by Birol Growth Consulting are © copyrighted and all rights are
reserved. However, articles may be reprinted with prior written consent if
attribution is included as follows:
© Copyrighted by Andrew J. Birol,
President of Birol Growth Consulting, who helps owners grow their businesses by
growing their Best and Highest Use ®. Andy can be reached at (412)
973-2080, by email at abirol@andybirol.com,
or on the web at www.andybirol.com.
Advanced Referral Marketing
Filed under: Business Growth, Pittsburgh, Profitable Growth, Top Line Growth, Uncategorized
If you run a company, lead a sales and marketing team, or sell for a living, you know that referrals are your best source of new business.
- Nothing beats an introduction from a peer who knows what you offer to a prospect who needs your value now.
- No matter how strong your sales skills, marketing programs, or products and services, a referral to a qualified prospect most helps you close the sale.
- If most buyers turn to colleagues they trust for recommendations when making a purchase, who do yours turn to?
If referrals are your business’ best way to grow, why don’t we develop our referring skills and seek out more and better referrals? Instead, too many businesses lament the lousy referrals they get from well-meaning business friends. Whose fault is that? Rather than launch a costly and risky lead generation effort, why not improve your advanced referral marketing skills?
The Basics of Getting Referred
To review, there are some critical ingredients to getting a referral. You must:
- Provide specific value to a defined target prospect. If you do not have a Best and Highest Use® please define yours now or settle for being referred as a commodity.
- Be excellent. Always grow your track record of quality work and results.
- Stay in front of those who refer you. Communicate with them regularly and provide new and valuable information.
- Be trusted. Prove to your referral sources you will treat them and their referrals with respect.
While these fundamentals never go out of style, enough people practice these well enough now, that distinguishing your “refer-ability” takes even more effort.
Five Steps to Advanced Referral Marketing
To grow better and get more referrals, here are five steps you can take now:
- Determine Your Need for Referrals
- Understand Your Prospects’ Buying Process and Then Align Your Selling Process and Referrer’s Role
- Define the Ideal Relationship Your Referral Source Should Have With Your Buyer
- Give Referrals to Get Referrals
- Develop Specific Tools and Tactics
Here are the five steps in detail:
1. Determine your need for referrals. Are you clear on where in your sales and marketing process you need a referral and for what purpose? Do you need help finding, keeping or growing your existing business? Do you need an introduction, validation, or affirmation from your referral sources? At which point in your sales funnel are you most in need of their support? Is it in qualifying prospects or developing prospects? For help in determining this, review the PACER Process.
2. Understand your prospects’ buying process and then align your selling process and role for your referrer. Understanding your customers’ buying process is not new but applying this knowledge in obtaining referrals might be. Where can your referrers have the most impact?
If your business is a relationship or an anniversary business, your referral sources need to be constantly cultivating your prospects for you, but if your business is more transactional or event-driven, then you want your referees to be far more opportunistic and pounce when they see the chance to recommend you. Here are two articles to help you decide this. Click Events or Anniversaries: What’s Your Business? Or Relationships or Transactions: What’s Your Business?Once you understand the role your referral sources play in your prospect’s buying process, you will of course align your selling process to parallel their behavior. And the role that your referees need to play will be clear.
3. Define the ideal relationship your referral source should have with your buyer. What are the ideal referral sources for your business? For example, some businesses enjoy most of their referrals from law or accounting firms while others are best referred by suppliers or even their competitors. To determine who is best for you, understand the role your referral source plays with your prospects and why a prospect would accept their referring you to them. For example, a parts supplier is unlikely to refer a financial planner to a purchasing agent because this is not a likely topic for them to discuss. Consider whether your referral source has the sufficient trust and professional intimacy with your prospect to make such a referral. For example, a specialist can often refer another specialist while another specialist will seldom refer a generalist. Also, your referral sources must see you as a scarce commodity as opposed to being abundant. If every business broker is hounding every banker to refer them their next deal, how can anyone care or remember which one to refer to whom? The 80/20 rule applies just as much as to referees. A few will refer a majority of your leads and most will only refer you once. Understand who falls into which groups and why. Finally, make it as easy as possible to refer you. I provide any referral source with the following description of my target prospect and exactly why when and how they would hire me. Come up with your own example along the following lines as I have in my business.
A target prospect for Birol Growth Consulting is a majority owner/operator of a business who is:
A. Dissatisfied with his or her business’ level of profitable growth.
(as good or bad as it may be)
B. Impatient to grow their business to the next level
C. Is a
a. Services Firm
b. Wholesaler/Distributor
c. Manufacturer
D. Willing to take and apply advice by working with an expert who empowers optimism
E. Willing to pay for the value of outside advice that generates ten times the investment
4. Give referrals to get referrals. Apply the Golden Rule in your referral activities. Generously and freely give away as many referrals as possible. While many will disagree, I urge you not to take commissions or fees for referring business. The time you put into developing a fair scheme is not worth the loss of trust you face when your peers learn you are making money off of whom you referred to them. Despite many opinions to the contrary, do not enter into tying, exclusive relationships or “Circles of Influence” with only one referral source such as a single law firm. Your power in referring and being referred comes from being able to match the right people with the best skills and style. There is no one size fits all here. But most importantly, remember who did refer you, follow up and keep them posted on how your or their referral faired. There is nothing more disappointing to refer or be referred and never hear what happened. If you do refer someone constantly and there is never any reciprocity, ask yourself if you have fulfilled the basics as outlined above. Before getting annoyed with your non-responder, ensure you have refocused on the basics, if you have, then it is time to find new advocates.
5. Develop specific referral tools and tactics. Make it easy for your referral sources to refer you. One of the great tools is the reciprocal referral letter. Attached at the bottom of this article is a sample letter you can send, one-for-one, with a mutually referable source. Making it one-for-one is fun, as it challenges both parties to provide great referrals and then to hone their selling skills in obtaining as many appointments, proposals, and closed sales as possible.
Find ways to donate your services to charities so that your referral sources can place you in highly visible venues. Serve as a subject matter expert for their customers where you can showcase your expertise while helping your referral source’s clients.
Summary
Referral marketing can be one of the most enjoyable as well as the most profitable tactics in growing your business. Develop your skills and practices in this area and you will surely enjoy better clients, better relationships not only with those who value you the most, but most of all with people you like whom like you. And after all, isn’t this what business is supposed to be all about? For help in accelerating your referral marketing efforts, to explore how we can refer each other, or simply to learn more, please contact me at (412) 973 2080 or at abirol@andybirol.com.
Here is a sample referral letter you can modify for your business or, (with my gratitude) use to refer Birol Growth Consulting:
Mr. John Smith
President
Smith Products
222 Allegheny Blvd, Suite #4
Wexford, PA 15444
Dear John:
Growing my firm has always been challenging and risky. I often wrestle with questions of what to invest in and when. I wanted to pass on an intro of an exceptional business expert and friend of mine, Andy Birol, of Birol Growth Consulting. He is a published author (5 times I think), accomplished speaker and advises small to mid-sized operating businesses owners on effectively driving top line profitable growth.
- How has my marketplace changed its buying behavior and how should my firm respond?
- How can I create more profitable growth?
- What new channels for profitable growth can I pursue?
While you may not have heard of Andy, I know him personally and he has an extensive record of working nationally to great reviews. In his short time here in Pittsburgh, he has become a regular columnist for eTEQ Magazine and has been accepted into Leadership Pittsburgh.
I told Andy you were on my short list of must-visits and I’ve suggested he give you a call. He’s making a positive impact in Pittsburgh’s small business community. I’m sure meeting with him will be a good use of both your time. You can learn more about Andy before he calls, checkout his website at www.andybirol.com. His articles, client list and newsletters are particularly interesting. No doubt you’ll get an autographed copy of his latest book, The Five Catalysts of Seven Figure Growth, CareerPress, 2006.
If you have any other questions or need anything further please don’t hesitate to give me a call.
Thanks so much and take care,
Sincerely,
You
Your Company
Your Address
Pittsburgh, PA 15232
Has Your Firm Gone to POT? STOP!
The next time you meet with your executives and managers, look at your people around the table. How did they come to work for you? Were most referrals, coworkers or friends of you and your staff? You trust them, their experience and their fit into your company’s culture. What’s wrong with that? Nothing at first blush.
How are your people organized to work together? Has each one built his or her personal sandbox, or organizational box, on the organizational chart? Does this allow your people to work together, despite their different personalities, egos and styles? Nothing wrong with this either.
But how does your organization decide which tactics to implement when tackling problems, implementing projects and pursuing opportunities? Do you choose which tactics to implement based on how your company is organized? After all, how else do you get anything done, if not through your current structure and your people?
You’re not alone in building your company by going to POT (People in an Organization implementing Tactics.) Owners of most small businesses succeed by doing this until something disrupts their company’s success. That’s when their sales, marketing and operations start sputtering and fingers start pointing. And you, your people or an advisor asks the simplest question, “What’s our strategy?” The answer, after much handwringing, is simply, “Our strategy is the sum of the tactics our organization implements through our people.”
So if your organization has gone to pot…
…STOP!
Read on to learn how.
If you’ve ever cringed or felt defensive when someone asks you, “What’s your firm’s strategy?”, you’re not alone. Take solace in knowing that most business owners respond with a list of the work their organizations are doing today. They list the tactics they’re undertaking such as:
• “Our sales force calls on customers weekly.”
• “We deliver 95% of orders within 2 days”
• “We develop new products every six months.”
These aren’t strategies. They’re tactics. These are not the outcomes or ends, but means to an end.
Strategy comes first. So STOP! Rethink what your company is doing in this sequence: Strategy, Tactics, Organization and People. Here’s how!
Since a good strategy is critical, how can your smaller business create a simple, workable plan? Here are five key steps:
• Define and focus on your BHU® (Best and Highest Use) by understanding what your company likes doing and is good at doing.
• Validate your BHU by having an outsider ask your existing customers why they buy from you.
• Fortify your firm’s internal activities so they deliver on, and increase, your customer’s definition of your BHU.
• Develop a single sheet of 3-5 action steps with deadlines, key steps, staff and resources needed to get the work done.
• Lead by your actions to demonstrate your conviction and bias for action.
So whenever you are faced with people, organizational, tactical or strategic issues remember to STOP and put them in the right order:
1. Strategy
2. Tactics
3. Organization
4. People
And your organization will never go to POT.
