Bankers should spend less time cold calling and more time cultivating referrals and cross selling to maximize productivity, suggests new research from consulting firm Greenwich Associates.

Greenwich reports that its new research into banks finds that marketing spending generates very little (less than 10%) of all new business.

Among the studies key findings:

  • bankers could improve their productivity if they stopped cold calling;
  • bankers would double new business output by calling only on existing clients;
  • bankers typically develop less than 10% of the referral potential in their markets; and
  • the top quartile of bankers generate twice the opportunities as average bankers.

Greenwich Associates benchmarked sales performance at 34 of the 50 largest U.S. banks across three functions — cold calling, cross selling and referrals. “The results of our research suggest that banks can potentially double the new business output of their existing business banking officers through better resource allocation, sales pipeline management and improved demand creation programs,” explains Greenwich Associates consultant Robert Neuhaus. “And although this research was specific to the banking industry, we feel our findings should be of interest to sales people and sales managers in many financial and service industries.”

Greenwich suggests that the easiest way for banks to improve results in their sales efforts is to reduce the time spent cold calling and concentrate more on cross-selling. Its research reveals that the average banker generates 70% of new business opportunities from existing clients but spends only 38% of his or her time developing cross selling opportunities. “Our research shows that calling on existing clients is four times as effective and five times as efficient as making cold calls,” says Stephen Diorio, research director for the Business Banking Excellence initiative at Greenwich Associates.

The research also suggests that the majority of banks are not fully leveraging one of their most valuable assets — referrals. “Calls made to referrals are five times more likely to convert into new business opportunities than cold calls,” says Neuhaus. “Over 80% of existing clients are willing to recommend their financial provider. However, the business bankers we spoke with report that they are only able to mine under 10% of the referral potential of their clients, branches, and centers of influence, and very few of the bankers interviewed had formal programs and incentives in place to support them in this endeavor. The leaders in the industry are responding by “institutionalizing” their referral generation processes by putting stronger referral measures and incentives in place, and beefing up referral programs with both internal and external stakeholders.”

In addition, the Greenwich Associates study found marketing efforts at the majority of banks are ineffective at supporting critical field sales activities such as generating referrals, setting up appointments and making sustained and scheduled calls. As a consequence, outbound marketing support is viewed as inadequate by 34% of banking executives and ineffective by bankers in the field, who report very few of their new business opportunities — less than 10% — were the result of marketing programs.

Based this research, the consultants at Greenwich Associates have identified three factors that it believes are critical to accelerating new revenue growth: focusing relationship managers more on cross selling to the best customers; creating formal programs and processes to support the referral process; and, reworking ineffective prospecting and cold calling approaches.