Optimizing sales effectiveness in treasury management

Treasury management (TM) sales historically have historically struggled, lack planning, and been viewed as a follower product set in commercial banking. Most relationship managers (RMs) lead sales activity with loans and only cross-sell TM solutions upon loan sale completion. As a result, banks struggle with proactively growing and accelerating fee income from TM solutions. 

Upon closer inspection, the issues align with themes from two categories: organizational design and sales methodology. As we’ve moved through the economic conditions of 2021 and the continued compression of bank margins, a reality is that banks must deepen relationships with their current clients and increase share of wallet within their existing portfolio. 

Misalignment of organizational design creates inefficiencies in treasury management 

Commercial banking TM growth is often stinted by myriad organizational issues spanning from ineffective go-to-market strategies, overlapping and redundant internal roles and responsibilities, nonexistent key performance indicators, and misaligned and poorly designed incentive plans. Specifically, these issues resonate most commonly in the market and prevent banks from growing TM portfolios: 

1. Misalignment between relationship manager (RM) and treasury management officer (TMO) roles at banks, which manifests as a lack of shared vision, team culture, and trust between the two roles. Competing interests often prevents collaboration and cohesive functioning. 
2. For example, RMs serve as the primary contact for client relationships. TMOs are often prohibited by RMs to directly contact clients, unless for servicing purposes. This implies that TMOs cannot discuss product utilization or enhancements, new products or services, or even annual account analysis reviews without prior RM consent. This lack of trust leads to suboptimal and delayed sales, servicing, and client experience. 
3. RM incentive plans do not include the sale of TM solutions as specific line items. The RM, the client relationship owner, is highly incentivized to sell other products besides TM as a top priority because other products create greater revenue. 
4. Because RMs own the client relationship, TMOs are not empowered to drive initial sales or even post-closing cross-sales. 
5. RMs often lack the confidence, knowledge, and skills needed to cross-sell or even identify the need for TM services to clients. 

Redesigning and clearly articulating roles and responsibilities as well as rules of engagement and goals are critical. To drive collaboration and improve TM sales success, banks should create sales playbooks with more operational overlap between RMs and TMOs. The two roles could then work in unison and overcome ineffective organizational design features. 

Trust, cooperation, and collaboration will formulate more clearly when organizations structure cohesive RM and TMO roles and responsibilities properly—and are supported by comprehensive and unified KPIs aligned to incentive plans that drive the right behaviors.  

The key pillars of treasury management sales effectiveness that help drive value 

Once the organization aligns RMs and TMOs across culture and goals, teams should then focus on sales effectiveness within treasury management. To begin the sales effectiveness journey, RMs and TMOs must have alignment around the go-to-market strategy. With this common vision, teams may focus on developing a consistent, enterprise-wide TM sales methodology to drive portfolio growth. There are three key pillars critical to success within such a methodology: 

Data-driven client segmentation

Client segmentation has evolved to become more data-driven and holistic.   

• Segmentation should integrate a multitude of predictive data points, including annual fee revenue, product penetration, utilization, and discounts. 
• By leveraging segmentation outcomes, clients should then be prioritized based on those with the highest probability of cross-sales opportunities occurring in the next 12 months. 
• Segmentation, coupled with a 360-degree view, also provides the foundation to assign service models that accurately align effort to reward, enabling rapid mobilization and acceleration of TM fee income growth. 

Client account planning

Account planning is a cohesive process that drives sales opportunity advancement and involves TMOs, RMs, and team leaders. 

• Impactful key account plans identify high probability sales opportunities and tactical sales activities for the next 12 months, then assign ownership to activities.      
• TMOs must be empowered to proactively act and execute against the sales activities identified in account plans to drive deeper account penetration. 
• Empowered TMOs must be rewarded through alignment of KPIs and incentives which are composed of account planning achievements, self-sourced new business, and overall RM-TMO team performance.

Managerial sales process

A successful TM sales methodology requires focused sales leadership, transparency, and accountability to instill commitment and deliver consistent results. 

• Transparency of sales activity includes widely reporting progress to all stakeholders regarding leading behavioral KPIs (e.g., number of sales calls, qualified leads, etc.) and resulting KPIs (e.g, closed-won opportunities, fee income growth, etc.). 
• Accountability must be evident and delivered as sales managers for RMs and TMOs to hold their people accountable for behaviors and sales results.  
• Sales managers must exhibit full support with emphasis placed on weekly collaborative sales coaching sessions with RMs and TMOs to develop sales skills, motivation, and empowerment. 

When organizations implement the key pillars of sales effectiveness, leverage industry leading best practices, and strive to improve organizational design, success is quickly realized on multiple levels.  

For example, these organizations enjoy more effective partnerships between RMs and TMOs, which in turn enhances customer experience and drives significant results through efficiency, revenue, and profitability.

Five ways to test treasury management sales effectiveness 

• Are your TMOs empowered to directly cross-sell new services to existing clients? 
• Does your client segmentation strategy align effort to reward as well as to the ongoing service model? 
• Do RMs proactively include TM proposals with most loan proposals aimed at new clients and as appropriate? 
• Are RM’s properly incented to collaborate and cross sell TM solutions as a priority? 
• Has your account planning process led to above market average results? 

If you answered “no” to any of these questions, there’s room for sales effectiveness optimization in your institution. Through a holistic, standardized approach, leading financial institutions can design and build TM operating models that seamlessly integrate within commercial banking and optimize sales effectiveness. 

When executed well, organizations experience enhanced collaboration, empowerment of all frontline employees, and alignment of effort to reward—ultimately maximizing successes within the TM organization.