CFOs Are Customer #1 for Middle Market Growth Strategy Plan
Chief Financial Officers (CFOs) are a critical decision maker for corporate banking relationships in the middle market. Depending on the company, the owner or CEO can also be highly involved.
The focus for this growth strategy plan was CFOs at middle market companies with revenues ranging from fifty to five hundred million, across a range of industries including:
- Manufacturing
- Retail
- Hospitals and nursing homes
- Software
The goal was to develop a growth strategy plan visualized as a customer value proposition. The customer value proposition starts with foundational customer drivers or needs. Then, the organization chooses to stand for benefits that deliver against the needs. Each of the benefits is then delivered by several actions that the customer or prospect experiences or sees in the market.
Service is Paramount for Bank Customers
Interviews with CFO customers at middle market companies uncovered a preference for local banks, with relatively rare switching. Traditionally, these companies rarely switched because the fee differences were too small to overcome the amount of work required to make the change. In addition, the business owner or CEO may have had loyalty to a particular bank, something the CFO is well aware of. As might be expected, poor customer service was the number one reason for CFOs to move their business.
However, in 2020, we saw much higher switching than is traditional because of PPP loans. In 2020, some of the largest banks were not able to deliver PPPs to their banking customers in all markets, and smaller, regional banks captured a higher share than they traditionally would. For example,
“Central Pacific Bank in Hawaii, Glacier Bank in Montana and Citizens Bank in Rhode Island originated more than 25% of PPP loans to small businesses in their respective states.”
For the CFOs we spoke with, the quality of the bank’s service relied heavily on the actions of the account manager. Good service included responding promptly to questions, listening to the customer’s needs and making proactive suggestions for improvement.
Growth Strategy Plan Benefits Developed Based on Needs
The growth strategy plan revolved around four key benefits that the bank would deliver to its middle market CFO customers.
Customer Need #1: “Listen, don’t tell. Understand my unique financial needs.”
Growth strategy plan benefit #1: Listen to the customer and bring the bank’s industry expertise to bear to provide a tailored solution
Key actions to deliver: Make sure that proposals reflect an understanding of the customer’s business. Train relationship managers to listen to customers and also to understand basic customer economics
Customer Need #2: “I need an honest answer fast and someone to look out for me.”
Growth strategy plan benefit #2: Demonstrate a sense of urgency and customer commitment
Key actions to deliver: Quick response standards, e.g., same day/24-hour, proactive meetings, local decision making. Reward relationship managers for outstanding service. Organize to speed problem solving
Customer Need #3: “Do what is best for me- not what is best for the bank.”
Growth strategy plan benefit #3: Deliver credit and cash management solutions that are objectively evaluated as competitive
Key actions to deliver: Openly benchmark against market indices, offer products beyond the bank’s usual services
Customer Need #4: “I need to manage my company’s finances cost effectively.”
Growth strategy plan benefit #4: Ease the burden of financial management transactions, control and problem solving through technology solutions
Key actions to deliver: Look for ways to reduce the customer’s time spent making transactions. Invest in technology solutions
Delivering Against the Growth Strategy Plan
With the value proposition growth strategy in place and the actions identified, the bank moved forward to identify the actions occurring in the first year, second year and third year, assign responsibilities to deliver, cost to deliver and moved forward with implementation.
Is a growth strategy plan in your future? Talk with the Insight to Action experts, contact us.
