With notable exceptions, commercial banks’ efforts to boost revenue by selling corporate finance and capital markets products to the middle market have not met expectations. Despite significant investments in investment banking capabilities, product training, and corporate finance training, this has kept corporate finance teachers busy for several decades. Why is this? What can sales team leaders and market managers do?

Two Key Factors Reduced the Growth Rates for Capital Markets Capabilities

While the reasons for under-performance vary from bank to bank, there are two universal themes: marketing strategies. The “service” organization (i.e., the capital markets group) and the field sales force did not mesh. The groups had different objectives and different compensation plans. Many salespeople considered the investment bankers arrogant and transactional, and the investment bankers considered the relationship managers dim-witted and antiquated. As a result, the two groups could not collaborate to define effective marketing strategies and exchange the information each group needed to take advantage of opportunities fully.

Bank Sales Management

The second is the sales process. Bank sales managers said: “RMS is already talking to these companies, and they can cross-sell or refer opportunities for capital markets.” The sales managers did not see customers buying capital markets services like buying more traditional bank products. Loans and bank products have been sold through a “features/benefits/price” conversation. Capital markets products and services must be sold as “professional services,” where ideas and professional competence are the primary value.

What will it take to close the gap? While much progress has been made, the most critical elements are:

1. better definition of market strategy and sales processes,

2. a new approach to training,

3. more focused sales management, and

4. a recognition and compensation philosophy that, at the minimum, does not distract salespeople from the task.

Better Definition of Market Strategy and Sales Processes

Market strategy is critical, particularly target selection for each capital market’s capability. Specialists and relationship managers must share a common understanding of “what a qualified prospect looks like” for each capital market’s product or service. These definitions should be specific, for example:

“Manufacturing companies with sales > $50 million who meet criteria for Bbb debt ratings and are interest-rate sensitive.” RMS must know these criteria for each opportunity they’re expected to find. These criteria enable RMS to plan its sales efforts and effectively forecast prospective business. They also reduce the “noise in the system” from opportunities that don’t deserve attention from scarce investment banker resources.

Crisp sales process definitions will help boost the number of opportunities identified and reduce the effort expended in a sales process. The field sales organizations and product specialists must define (for each product or service):

Sales process steps (from initial conversations through origination to the end of execution) respective roles in the sales process. Hand-off points (as from RM to specialist and back again). Information requirements for each service (what information RM or specialist passes to the other). Service standards for response times to inquiries, lead times for presentations, and other sales support activities. These definitions provide a framework for RMs and specialists to work together effectively, knowing what they can expect from each other and when.