The Wells Fargo fiasco has put the words “sales” and “banking” together like oil and water– bankers now are scared to even imply that they are salespeople or selling something. After all, when one of the largest banking institutions in the world opens millions of bogus accounts unbeknownst to their customers so that people could make their "sales goals" (and therefore make incentive money and basically keep their jobs...) then banking customers are naturally wary that their banker is "selling" them something they do not really need.
But if there’s one good thing about the Wells debacle, it’s that “relationship banking” is cool again. After all, if you’re in a relationship with someone–whether it is a spouse, friends, or your banker in this case–then you loyally trust that person not to treat you poorly or force some product on you that do not need.
A banking relationship for business owners
Let's think about what exactly “relationship banking” means from a business owner’s vantage point…
A few years ago, I had my own consumer packaging business. At that time, we were leasing our facility, but we were growing rapidly and wanted to buy a much bigger warehouse: We needed to borrow $2.5 million. So, I did what business owners do: I called my banker because I had a relationship with him. However, I also called three other bankers to see what kind of terms they could offer me.
Thinking back, if my relationship with my current banker was so strong, why did I feel the need to reach out to three others???
Reason: Because I liked my banker. He was a nice guy. He always responded when I called on him for some banking service or for a wire transfer. He gave me a line of credit a few years back to support my growing business. He came to see me one time, listened nicely, and acted interested. We had a "relationship."
Let me step back for a minute and consider the many other relationships I have had in my life. A spouse, a friend, a business partner…my feelings about these relationships obviously are much stronger and intimate than my "relationship" with my banker. These people really got to know me; they shared in the joys of my life and helped me weather difficult times. These relationships added value to my life way beyond an acquaintance.
If you think being a relationship banker means "I have known him/her for years"…"I knew his daddy before him"…"I have been to his/her business a few times, and I know what they sell"…"I send them a Christmas card every year"…then let me share with you a different perspective:
As a business owner, what I needed was a banking relationship with someone who would leave more behind than they took from me. Someone who would "invest" their time to learn how my firm operated and what risks to watch out for. Someone who would share relevant news articles or industry trends with me that I did not have time to research every day. Someone who would ask me insightful, industry-specific questions that had the potential to impact my bottom line. What I needed was a banker who I wouldn't even consider turning my back on for a couple of basis points because he/she was the best!
Creating a valuable bond with clients
So, here’s my advice to all the relationship bankers out there: Next year, save the Christmas card and skip the "drop-in" business call where you shoot the bull for an hour while adding zero value. Business owners want a relationship with their banker that adds value with each interaction, just like I wanted. Your clients deserve that. And if they find it, then they will only call YOU next time they are looking to expand.
Image courtesy of Ambro at FreeDigitalPhotos.net