June 30, 2010

Selling is the process of proactively identifying needs and then finding solutions to them. It’s a simple term but with significant implications, not the least of which is its integral importance to a credit union’s long-term prospects.

No long-term plan should be considered complete if it does not consider how sales will be managed. Cost control, although essential, will not assure long-term prosperity. Mergers provide a source of growth, but involve significant integration risk. Outsourcing deposit and mortgage origination provides growth, but brings potential bad debt exposure and the risk associated with “hot money.” Certain investments can accelerate income growth but can’t cause a poorly structured balance sheet to perform well over time. In the final analysis, organic growth continues to be of primary importance, and that is the domain of sales.

Financial institutions that perform well through challenging times are meticulous in their sales practices. Interestingly, their primary objective is not simply to generate volume. The far more critical objective centers on achieving optimal asset and liability mix. An optimal mix rests on the understanding that profitable account relationships are the basis of strong financial performance for the credit union overall. Sales is therefore about executing strategy.

But that raises the interesting question: How do you really know it’s working?

Credit unions are used to financial and internal audits, risk management reviews, member satisfaction and staff climate surveys. To date no such tools have been developed to evaluate the effectiveness of the sales function. Given the critical importance that sales is now playing, it’s time to make a start.

The First Question to Ask: Are We Building a Successful Sales Organization?

A survey of credit unions completed in 2009 indicated that successful sales organizations follow similar paths as they develop greater levels of sophistication in their sales management practices:

• A number of foundational characteristics must first be in place to define sales as a function within the organization’s context.
• As the organization becomes more aware of its need to manage sales activity it will take steps to ensure its sales practices occur repeatedly and consistently.
• With more repetitive application of selling practices, a “sales organization” begins to emerge and the sales function is given the mandate of delivering planned results.
• It becomes increasingly apparent that the sales function requires specific and focused management in which the accountability to deliver on plans is allocated effectively.
• Once comfortable that the sales function can be made consistent, sales personnel begin to aspire to meet professional standards and to have more autonomy to manage their efforts to ensure their optimal productivity.

The phases--foundation, repeatability, a defined mandate, managed accountability and emerging professionalism--establish a series of criteria which broadly define areas where comparisons can be made.

Understanding how your credit union compares to others gives some initial insight into the degree it has developed in becoming a functioning sales organization.

But It’s Important to Go Further

Knowing that your credit union is developing its sales capacities assures there is an underlying infrastructure on which an effective plan can be built. The next step is to test further to determine if the attributes of a good strong sales organization are in place.

Ask Some Key Questions: Here Are Some Examples

• Is sales truly accepted as part of our operating culture?
• Are we a sales-driven organization or do administration and compliance dominate. Could we be giving a mixed message?
• Do we have effective sales leadership, solely focused on building an effective sales organization that’s measured on results?
• Is sales among the top three priorities each year?
• Do we prepare an annual sales plan that accompanies our financial and growth plans?
• Do we allocate our growth targets by channel and individual producer?
• Are potential sales personnel adequately tested before being placed?
• Have we documented our sales processes?
• Can we adequately track performance?
• Are sales staff properly supported through training and coaching programs?
• Do sales meetings focus on sales performance?
• Are we making effective use of incentives?

Then Critically Assess Results

•  Do we usually meet our quarterly sales objectives?
• Is our asset and liability mix both profitable and reasonably structured?
• Can we tell whether our sales staff are executing effectively and in accordance with our plan?
• Do our results compare well when measured against peers and competitors?
• Are our training, coaching and remuneration programs leading to the increased production we’ve targeted?
• Is the proportion of member account relationships that generate a profit in their own right increasing as planned?

Also Ask: Would an External Assessment of our Sales Organization Add Value?

Building an effective sales organization takes time and determination. Inevitably, new issues will arise that will compete for senior management’s time and attention and it’s important that momentum be maintained on the sales front. That’s not always easy.

New organizational priorities can make for mixed messages. Cultural change programs can then be disrupted and the underlying investment in systems and training rendered less effective.

An external assessment of the sales organization gives the executives in charge of sales and, in fact the whole management team, an objective viewpoint on its condition.

What to Look for in an Assessor

Credit unions are made up of many specialties and the way they interrelate dictates the degree of success the organization will enjoy. To make an effective assessment of any part of the organization an understanding of the impact any recommendations may have on each of the others is essential.

When assessing a sales organization, knowledge of sales management practices and a track record to support it is a must. This, coupled with experience in a key leadership role(s) in a financial institutions environment increases the odds of a balanced assessment.

Douglas Enns is president of Upturn Consulting Ltd. and a former credit union CEO. He can be reached at doug.enns@managedupturn.com.