REFERRAL TECHNOLOGY
OFFERS AN EDGE ON MEASURING AND
MANAGING SALES LEADS
Technology Update
Gina Lauer

Gina Lauer writes the Technology column for Bank Insurance & Securities Marketing. She can be reached at glauer@bisanet.org.

EVERYBODY LOVES a referral, there's no doubt about that. But financial institutions continue to struggle with just the right way to encourage them, track them, provide incentives for them, and use them to attract more business.

Writing a prospect's name on a piece of paper and dropping it off on someone's desk in the trust, investments, or insurance department was once called "cross-selling," and it worked for many years, more or less. But now more is required.

Financial institutions still recognize the importance of referrals and referral incentives, but they realize that they also need a way to track and measure referrals throughout the bank. And instead of fumbling with three-part paper forms, they've turned to referral-tracking software or other technologies to help them manage customer and prospect information, as well as streamline the referral and cross-selling process.

Generally speaking, the big banks have proprietary customer relationship management (CRM) systems in place that incorporate referral tracking and measurement. At the other end of the spectrum, smaller banks may still not find it necessary or cost-effective to invest in technology to track referrals.

Improving a sales culture

But mid-size financial institutions that recognize the need to develop or improve a sales culture from within don't always have the resources to build or maintain their own technology. These community banks are reaching out to vendors that can offer them a software system to help with referral needs. This article explores a few of the systems available.

Determining whether a referral system is important—or necessary—at an institution is the first step.

"We started an incentive-based program for our employees to do more referrals.…And, of course, if you put something like that in place, you need to have a vehicle to track and measure what you're doing," says Ken Ward, executive vice president for Cornhusker Bank (Lincoln, NE ), which has $275 million in assets.

He recognizes that banks can't sit and wait for business to walk in through the front door.

"You have to talk to people, you have to keep track of who you talk to, [and] you have to follow up and service them," Ward says. "I guess the old saying is, ‘If you can't measure it, you can't manage it."

Several months ago, the bank started using ResourceOne, a client relationship management and sales-force automation solution from CoreTrac, Inc. (Austin, TX).

ResourceOne's tools help institutions to manage customer data, track referrals, produce reports, set and track goals, and run marketing campaigns, among other things. All information is in real time.

Alan Buhler, vice president of sales and marketing at CoreTrac, says the system is about five years old. "We had our first three customers in April 2002."

Now, close to 100 banks and credit unions ranging in asset sizes from $15 million to $7.5 billion use ResourceOne.

While the company focuses primarily on community financial institutions, 16 of its clients have more than $1 billion in assets.

Everybody loves a referral. But financial institutions continue to struggle with just the right way to encourage them, track them, provide incentives for them, and use them to attract more business.

Despite the technology available in the banking arena, Buhler estimates that 90 percent of mid-size financial institutions don't have a technology-based referral tracking system.

"They're only at the beginning of understanding the need for a sales culture within the institution," he says.

A Connecticut bank looks outside

George Herring, vice president and sales manager at $600 million-asset Savings Bank of Danbury (CT) was already sold on the benefits of a CRM system after relying on technology used at Wachovia, where he had previously worked for 12 years.

He knew that Savings Bank of Danbury, which has 12 branches, wasn't big enough to build an in-house system like Wachovia's, so he decided to look at outside vendors. He put together a task force of department heads, and they looked at four or five different companies.

"CoreTrac was the only company that actually addressed all the needs that we had in a relatively inexpensive way—and more importantly, it was easy to use," Herring said.

He knew that if a system was complicated, employees would resist using it.

"CRMs are useless if you don't get total buy-in from everyone," he notes.

Herring also found it was important to have a system that would record common customer contact history. Previously, the bank's commercial lenders were using one system to record calls, branch managers were keeping Excel spreadsheets, and tellers and platform employees "didn't have anything."

"We needed to have some way to record all the sales activities, whether it was a face-to-face visit, a letter that was written, or a phone call that was made," he says. "And this system tracks everything."

Herring says it was also important for the bank to track sales activities and referrals internally so that an incentive plan can work successfully. As a sales manager, he can use the system to see how many calls have been made, what was discussed, how many letters were written, and how many accounts were opened and products sold.

While Herring hasn't sat down to calculate the increase in referrals, he's "absolutely" seen an increase since ResourceOne was rolled out to employees in April 2004. "It's [like] night and day," he says.

Herring says he was fortunate to have complete buy-in from the branch employees and commercial/residential lenders.

Building on the service culture

"There is such a strong service culture here," Herring says. So it was just a matter of "convincing them that sales is just an extension of service, and needs-based selling is not a bad thing," he says.

Over the years, customer input has been the driving force behind system upgrades. "We do 100 percent of our product enhancement based on customer feedback," says CoreTrac's Buhler.

He says some of the main enhancements include the ability to conduct marketing campaigns; the ability to do next-best-product cross-selling—that is, offering the right product to the right person at the right time; and managing service cases within the system.

The system is browser-based and installed behind the firewall of the institution's onsite system. "We do have a number of data-center partners who are offering it in an application service provider [ASP] Web-based format," he says.

Education-based system

Truebridge Financial Marketing (Boston, MA) offers an education-based approach in its referral-tracking technology. The system is a combination of educational materials, offered both through an online Financial Answer Center on the bank's Website and at bank branches. The referral software system allows employees to set up an appointment with an investment rep who can help answer questions about the requested information.

Senior Vice President Casey Roberts, the director of retail investment services at $87 billion (assets) Sovereign Bank (Philadelphia), has been using Truebridge's Financial Answer Center for about five years. He had his eye out for another referral mechanism for the bank and was interested in the Web-based approach.

"What I found interesting about it is, the call to action wasn't for a client to self-serve and open an account online, but rather it was directing them to the person in the bank, on my team, who is best positioned to help them—and that is the financial consultant in the field," he says.

Roberts had been looking for a tool that would help licensed and non-licensed platform employees overcome the cross-sell barriers they face daily.

The Financial Answer Center removes the ‘anxiety factor' that employees face because of a lack of familiarity/comfort with investment products and topics, as well as regulatory concerns.

Stewart Rose, president of Truebridge Financial Marketing, says the Answer Center helps front-line employees create a dialogue with customers. They simply introduce a customer to the new service and offer them information about a particular investment topic, which comes in the form of an informational guide.

"Technology captures the information so you can use it, but it doesn't create the information.…To capture the information about somebody, you've got to have a dialogue with them," he says.

Truebridge's ‘just-in-time' marketing materials cover hundreds of topics, from retirement planning to saving for college to cash and debt management.

"Our technology reaches into the information—the financial library—aggregates information about a particular topic that's of interest to the customer at the time, [and] pulls it into a PDF [Adobe portable document format] file under the bank's or credit union's name." That guide can then be printed or downloaded, depending on how it is requested, and contains the name, photo, and contact information of the sales rep in the branch who can help with the information.

Once a customer or prospect has requested information, an e-mail is automatically sent to the appropriate sales rep so he/she can follow up.

The online Financial Answer Center is integrated into a bank's Website. Banks can use statement stuffers, in-branch collateral, or pop-ups or alerts on the Website itself to lead customers to the educational materials.

Roberts says that in the past, Sovereign had relied on traditional referral-training methods and sent filled-out forms over to the sales rep. "I was never really all that happy with it," he says.

Now he sees referral opportunities and business growing. "I would say that probably it's responsible for a year-over-year growth rate with respect to referrals of about 15 percent," he says.

The referral system has also been used in conjunction with e-marketing campaigns.

"We have a huge database of customers at Sovereign that allow[s] an opportunity for us to e-market or e-mail them, and very often we will attack a couple of the different issues they may be concerned about.

"Most recently, we did one specifically with respect to rolling over one's 401(k), and the call to action was simply to click on the 401(k) rollover Quick Guide, which they could either download or have snail mailed." Again, the guide was customized with the bank's and investment rep's names and information. The rep was also forwarded information on the person requesting the guide.

Sovereign is also undertaking a direct-mail campaign on retirement income, working in tandem with New York Life.

"Our call to action is twofold: It's to request a retirement income Quick Guide or a retirement income analysis, and we'll be working with New York Life to provide the analysis, and we're working with Truebridge in order to fulfill the Quick Guide," Roberts says.

Truebridge has about 30 banks and credit unions across the country that use its Financial Answer Center system. The institutions range in asset size from about $200 million to $90 billion, but most are in the $500 million to $10 billion range, Rose says.

A bank association develops tracking technology

The Virginia Bankers Association has also come out with a referral-tracking technology called "Referral Trak," which is available to member banks as well as others.

Lee Sauvain, chief operating officer for VBA Management Services, Inc., a subsidiary of the Virginia Bankers Association, says when he was hired by the Association, he went out and talked with bank members to find out what their challenges and issues were.

"One of the things we came up with was building a sales culture," Sauvain says. In addition, they all wanted some kind of referral-tracking product.

Sauvain was given the task of looking at various vendors and determining whether the Association should endorse a product. In the end, he found that the products he looked at, "while very, very good, were kind of rich," and he didn't think the typical community bank would spend the kind of money needed to purchase it.

In the end, Sauvain hired a software company to build a Web-based application and got two banks to beta test it. After getting feedback and making refinements, Referral Trak was offered to banks. The first sale was in 2004.

Sauvain says about 17 banks are now using Referral Trak. The largest is a $2.2 billion bank, and the smallest is just under $100 million in assets.

"We built it to track everything—not just investments. We also needed to track insurance referrals," he says. That's because about 50 banks in Virginia are a part of a consortium called Bankers Insurance, LLC, "which is quite interesting, because we're sending referrals outside the core of the bank," he says.

The system is also being modified so that boards of directors can use the system as well, Sauvain says, "because every CEO wants his board of directors to bring in business."

He says the product gets good reviews, "and I think because the Virginia Bankers Association is the owner/sponsor of it, our banks trust us. We're really not into it to make a lot of money. It's a service."

The system allows banks to track internal product and service referrals, produce management reports, and export data to an Excel spreadsheet for other analyses.

One of the key benefits is that it allows banks to get away from the referral paper-passing process. "They [bankers] wanted to make sure it would track incentives," he says.

Additional features are also in the works, such as modules that will act as a contact-management system, allowing bank employees to see a customer's contact history within the institution.

Increasingly, community banks are realizing that they, too, need to invest in technology that will help them compete with the big banks, which have "all become incredibly good at understanding their customers and coming up with systems that provide the appropriate next-best product, cross-sell, tracking, etcetera," says CoreTrac's Buhler.

That makes it all the more important for community banks to find the means to strengthen ties with their customers, and give employees the means to provide targeted sales and service.