Public Workshops announced for Indy/Phoenix

As many readers know, St. Meyer & Hubbard sponsors open enrollment workshops for sales managers twice annually in Chicago. These programs have sold out 10 consecutive times. We’ll have those workshops in April and September next year. We’re branching out in 2009 with two other programs that will likely be equally well attended.

Prospecting Playbook
February 18, 2009
Crowne Plaza Indianapolis Airport Hotel
Indianapolis, Indiana
8:30 AM – 4:30 PM

See how bankers are getting in the door with cold pre-clients up to 80% of the time. Responding to popular demand, we’re holding the first public version of our popular TAPS – Trusted Advisor Prospecting System that formed the basis for our bestselling book, Conversations with Prospects. Jack Hubbard, Professor of Prospecting, teaches this workshop which provides:

• Creative sourcing methods
  
• High-impact letter and e-mail ideas
  
• Gatekeeper collaboration – not manipulation
  
• Voice mail messages that get returned
  
• Making decision makers want to appoint you
  
• Much, much more

Business bankers, branch managers, business development officers, if new client strategies are on your radar for 2009, don’t miss this practical workshop. To register click on the link below.

http://www.stmeyerandhubbard.com/links/ProspectingWorkshop.pdf

For more information, contact Mike Dillon, 815-725-9588 or mdillon@stmeyerandhubbard.com.

Sales Execution in a Challenging Economy
March 3-4, 2009
Embassy Suites, Phoenix, Arizona

Execution is the biggest issue facing financial institutions today. Execution is not just tactics – it is a discipline that must be at the heart of everything you do. It has to be built into every strategy, its goals, its processes, and into the organization’s performance culture. Attend our workshop and you’ll receive practical and proven tools, and best practices that allow your organization to build and sustain customer partnerships in good times, bad times…all the time.

Ron Buck, President, SMH Consulting Group and Jack Hubbard take participants through the discipline of execution including:

• Offering a framework for sales execution
  
• Providing a high-level overview of trust-based prospecting
  
• Holding value-focused conversations with customers and business owners
  
• Implementing executable referral, on-boarding and relationship management strategies
  
• Providing proven sales leadership and coaching routines that are aligned with management’s goals – and designed for execution

Special Lunch ‘N Learns

Each day at lunchtime a SMH strategic partner presents an overview of current strategies:

March 3, 2009 – Jed Hazlett, Vice President, First Research provides an overview of industry intelligence and how to use tools to show trust and articulate value in the marketplace

March 4, 2009 – Bruce Clapp, President, MarketMatch, shares ideas from his new book Shift Happens and how branding and marketing strategies can be made actionable in the field.

Each Participant Takes Home The Following Bonus

• A 30-day trial of First Research for the participant
  
• Signed Copy of Conversations with Prospects
  
• Signed Copy of Shift Happens
  
• Copy of 2009 St. Meyer & Hubbard Retail Sales White Paper

If you are a sales executive or a senior sales manager, this is THE workshop for you. To register electronically, click on the link below.

http://www.stmeyerandhubbard.com/workshops/arizona.html

For more information, contact Ron Buck at 212-480-6840, rbuck@stmeyerandhubbard.com or Jack Hubbard at 847-717-4328, jhubbard@stmeyerandhubbard.com.

Top Consultants Rant About 2009

This month we invited our trusted partners to look into their Crystal Ball and tell us what they see for the coming year. We appreciate their sharing their time and their talents.

Restoring Trust Is The Key For Commercial Bankers
By Nick Vaglio, CFMP, Executive Vice President
MarketMatch

As the old saying goes, "the greatest casualty of war is innocence". And the loss of trust in financial institutions is by far the greatest casualty of the current global financial crisis.

Never underestimate the power of trust when trying to build lasting relationships with commercial clients. In complex intangible services businesses, such as banking, trust is more important than differentiation. Buyers of complex intangible services are buying specialized expertise. They are seeking a “go to” professional because they don’t want to, or can’t be, an expert in the service they are buying. Given a choice, they prefer to find a qualified expert they trust, rather than evaluating the expertise of many different alternatives.

Most models of complex buying are rational and linear. But the buying of complex intangible services is a two-step process—qualification and trust assessment—neither of which is primarily rational.

When people buy an automobile, they have a fairly good idea of what they are buying. When these same people buy an architectural design, a customer relationship management system or a complex financial derivatives product, they are far less confident of what they are getting in return. Not only is success hard to define, so is the product itself.

Today’s banking lexicon is dominated by phrases like tight credit, stricter due diligence, more stringent underwriting guidelines and the like. Even customers with sound capital foundations are at the mercy of banks as we slosh though this financial quagmire. Clients are feeling alienated from their former trusted financial advisors because a reluctance to lend has turned into Relationship Manager reticence to maintain close, personal contact with their clients in times of crisis.

I am certainly not a prognosticator of the future. But I think I can state with reasonable certainty that the economy will eventually rebound and the power of choice will once again reside with the customer. And those customers will seek financial advice and services from those that have instilled the most trust.

Now, more than ever, Relationship Managers must do everything in their power to stay close to their best customers in order to maintain that level of trust and confidence though good times and bad times. Many providers of intangible services try to increase buyer confidence by stressing the differences of their particular product or service. What they forget is the biggest differentiator of all—the increased level of confidence that comes from trust.

That trust is born of personal experience – actions, not words.

About our Friends at MarketMatch

Nick Vaglia, Bruce Klapp and the team at MarketMatch are best-of-breed in the marketing space. MarketMatch is the nation’s only integrated marketing company focused exclusively on the small- to mid-sized bank and credit union segment. The help clients:

• identify unique selling propositions
  
• research the impact of future programs
  
• define the difference they will provide to the marketplace
  
• develop strategies for implementation and measurement
  
• gauge customer perception and impact
  
• track ROI

To reach Nick or Bruce go to www.marketmatch.com. And, don’t forget to register for their popular newsletter, MarketWatch.

Coaching Revenue Contributors…the 2009 difference maker
By: Patrick Stakenas, President & CEO
ForceLogix

2009 is not just another year to get ready for. 2009 means continued market turmoil, financial institutions consolidating, the automotive sector being bailed out and generally eroding confidence in virtually every sector of the economy.

The fact remains that as a senior executive or sales leader who has revenue responsibility, you are going to have to focus on getting the most out of every person on your team. As “soft” as coaching may sound, it can have the most significant impact on your results. CSO Insights, a leading industry analyst covering sales performance management, cites hard statistics based on surveys that show coaching drives as much as 17% - 30% improvement in actual results.

Companies are catching up; 2009 will be a big year for coaching, tracking and managing sales performance. Once you have made the commitment to develop a coaching culture, technology is a key enabler in supporting the process. Like many programs that have been implemented to drive revenue, coaching is only as good as the training and reinforcement it receives along the way. Coaching is not an “event” or a “training class.” It indeed must be interwoven into the total culture. Using technology allows you to know who is coaching, what they are coaching on and what the success rates are.

Successful companies know:

• Coaching programs work
  
• Coaching drives greater sales and profitability
  
• Coaching is a strategic Investment and Not Just a Cost, and,
  
• Coaching is far less expensive than the status quo

Coaching is finally becoming the “must have” and 2009 will exemplify this fact. More and more companies are moving towards leveraging the resources that they have because they see the higher productivity that results from every level of performer. They have to - they cannot afford to live with 20-30% turnover and with unexpected layoffs, yet still hit the overall revenue number which doesn’t usually go down.

Smart and successful companies are already there and the facts support it.

About our Friends at ForceLogix

Patrick Stakenas provided the first banker preview of the SalesForce Optimizer technology at our July 2008 Client Executive Council meeting. Jaws were dropping all over the room when our clients saw how this dynamic software monitors of the sales coaching process.

ForceLogix delivers OnDemand sales management process optimization solutions for leading sales organizations that are striving to attain world class status. Led by a team of seasoned senior sales executives, ForceLogix solutions enable top line revenue growth and enhanced sales organization productivity to companies in diverse industries such as Financial and Business Services, Technology, Health Care, Transportation/Logistics, and Manufacturing.

To reach Patrick go to www.forcelogix.com.

A Look Forward – Are You Sure You Want to Look?
Charles Wendel, President & CEO
Financial Institutions Consulting

2009 will be a tough year for small business sales, both internally and externally. Within the bank, loan opportunities will be looked at with a fair degree of skepticism as many banks focus on quality and reduce loan growth goals. This means that good sales people may be frustrated in making their loan goals despite strong effort.

Deposits, both from the business and the owner will increase in priority. However, shifts in the external market will also make deposit goals difficult to achieve. Many small businesses will contract in 2009. Their deposit levels will decline, and their borrowing needs may be reduced as they hunker down in a disciplined fashion for a tough year. The best companies will self-regulate their loan needs to lower levels.

We see bank management as viewing 2009 as a year of portfolio consolidation and employee rationalization. Mediocre bank performers, able to survive in a growing economic environment, will be targeted as banks look for areas of cost reduction and become more rigorous about top-grading.

About our Friends at FIC

Founded in early 1995 by Charles B. Wendel, Financial Institutions Consulting (FIC) focuses on improving productivity and growth for a variety of financial services clients. FIC’s primary work is focused on achieving practical, bottom-line results based on quantitative and qualitative research, and an in-depth understanding of industry dynamics. Their expertise spans Business Banking, Wealth Management, Retail Banking and Commercial Finance.

Charles Wendel’s no nonsense and straight forward style is in great demand at national, international and regional banking conferences. To reach Charles and team at FIC go to www.ficinc.com.

My OUTLOOK FOR 2009
By: Anat Bird, President & CEO
SCB Forums, LTD

I can’t recall a time when I felt more tentative as I sat down to write my outlook for the coming six months. While my record has been quite good, I find myself questioning every economic factum, every projection, given the unprecedented pace and magnitude of the meltdown certain industry segments have experienced. We all continue to seek the bottom, and it continues to elude us.

Further, as I ask my friends for their crystal ball picture, unmitigated gloom rules the horizon. Almost to a person, the outlook for 2009 is bleak. I, the eternal optimist, have a difficult time seeing clouds everywhere. So, in addition to the sobering news yet to come, I’ll offer some rays of hope that might warm our industry yet in 2009.

Real estate

The real estate market is at the root of our industry‘s turmoil. It is that market that built and then destroyed the CDOs, melted away up to $1 trillion, some say, of capital, and accounts for between 30-50% of our economy directly or in related industries, some say. Hence, my outlook starts with real estate: residential, commercial, builders and homeowners.

The market is supremely regionalized. While brand new, lovely homes in Merced, CA sell for 50% of their value a year ago, a 2000 sq. ft house in so-so condition in Burlingame, CA still sells at a premium to the asking price within 24 hours of coming on the market. Yet, we all know this is the exception to the rule, and such coveted markets are few and far in between.

Housing inventory looks like this:

• Housing under construction inventory has declined precipitously year over year in 3Q08, down 40%+
  
• Finished vacant housing inventory is down slightly, 3.5%
  
• Vacant developed lots are UP 8.8%
  
• Future lot inventory is also up 8%

Job formation varies widely, from 65,000 jobs created in Dallas-Ft. Worth to 8,000 jobs lost in Detroit-Warren-Livonia in Michigan. Plus, effective demand has dropped 25% since sub-prime borrowers can't obtain credit any longer.

Conclusion: while builders wised up and reduced construction and inventories are being slowly absorbed as pricing rationalizes, finished and future lot inventories, a.k.a future houses, continue to grow.

The economy

Deteriorating consumer confidence permeates our country. Despite the optimism associated with a new president, consumers are holding back spending for fear of lost jobs and worse news to come. Unemployment is rising steadily, well north of 6% at this point, with no end in sight.

I anticipate bad news will continue. Unemployment will continue to rise, home inventory will also grow as consumers’ intention to buy a new home is not keeping pace with the resale market, and the housing construction slowdown continues to drag the national economy into a recession that will blossom in 2009.

The regulators

The regulators and the FDIC, alarmed by the precipitous deterioration of real-estate intensive banks with no relief in sight, coupled with the huge IndyMac loss, are ready for battle. They are determined to ensure that such losses will not occur again, and are working nationwide to force loan and securities write-downs to realistic and below levels. No one is spared, and current appraisals are used to accurately reflect today’s deeply depressed markets.

The regulators also redefined what adequate risk-based capital is, and in effect require 12% (some say 14-15%), not 10%, as their acceptable ratio. This puts further pressure on the already straining capital markets, increases the cost of raising capital, and pushes many banks to reduce their lending in order to manage their risk-based capital to these new expectations.

The regulators also intensify their liquidity examinations, looking for scenarios, tertiary liquidity plans, and, for the first time, commenting on wholesale funding as a percent of total funding. Municipal deposits, CDars, brokered deposits and FHLB advances are now looked upon as non-core, and stress tests are expected to verify bank liquidity more vigorously in 2009.

Capital

It is at times like these that capital and liquidity become kings, and indeed they are. In excess of $200 billion of capital has been issued in the first six months of the year (mostly to the mega-banks), and they melted away like a drop in the bucket. Ever TARP money is assumed to be insufficient by many, and the bogey seems closer to a trillion dollars.

Understanding the credit "hole" has been an issue, which resulted in longer lag times for capital raises, stricter due diligence by investors and heavy discounts to market.

TARP will change the landscape in 2009. Those who don't have capital generally won't be able to raise it, not even with the vulture funds, and those who do will use the money to facilitate consolidation. We'll see at least 500 banks consolidated or taken over in 2009.

Liquidity

The definition of liquidity and its secondary and tertiary sources has become a moving target, not just by the regulators but also by industry participants. Municipal deposits, for example, have become less popular given the intensive price competition and their classification as institutional funds and non-core. Instead, some banks have turned on their Internet Bank spigot, gathering deposits at similar or even higher prices; internet bank deposits "count" as core retail deposits.

The competition for deposits continues to be fierce, as fears of depositor panic and funding shortage press banks to lower deposits rates much more slowly than loan rates.

As the Fed lowers rates, earnings credit for checking accounts declines rapidly. In addition, their value appears to be marginal, since average deposit size is small relative to money market, internet and other deposit categories. Banks have been trapped in this quandary in the past, pursuing wholesale funding as the value of interest-free deposits declined with lower rates. I urge you all not to repeat past mistakes, and remember that checking accounts are ALWAYS beautiful, not just because of the huge margins they create, but also since they anchor the customer relationships and are a great source of fee income.

People

The human aspect of our industry crisis is rarely mentioned these days, when capital and liquidity rule our minds. Nonetheless, the question needs to be asked: how do you lead when there is little light at the end of the tunnel, and when the length of the tunnel is unknown? Stamina is critical in these tough times, which are expected to last at least 18 more months by the most optimistic outlooks. How do you retain, pay and motivate your staff? Management will be facing new and unique challenges in managing its human capital during 2009 and beyond.

Fee income

Capital scarcity makes fee income even more critical in 2009 than ever before. At the same time, traditional fee income sources that generated growing Capital-free income for ages, such as overdraft and ATM fees, are on the decline. New fee income tactics and sources are needed for all major bank lines of business: commercial, retail, wealth management etc.

In summary:

The next 18 months will be very tough for almost all of us. Are there any bright spots on the horizon?

• The excesses are being wrung out of the system. We have consistently increase capacity for the past 40 years. Branch numbers are at an all time high. I believe 2009 will show that we’re decelerating the rate of branch growth, which is good for all of us. This, coupled with some bank failures, will rationalize somewhat our delivery system. I anticipate at least 500 banks will be taken out of the system in 2009.
• Scarce capital weeds out imprudent lenders. Reckless loan practices are on hold as banks continue to write down their portfolios. New loans are better priced, and, more importantly, enjoy better terms. We still aren’t fully paid for the risk, but we’re doing better. Floors, prepayment penalties and prime-based rates are becoming the norm.
• Non-core businesses are being shed. With capital scarcity comes discipline and better capital allocation practices, including more rigorous analyses of RAROC. Banks are looking at non-core businesses with a more critical eye and will employ their capital more wisely.
• Cost discipline is coming back. This could be a double edged sword, but, as a general practice, is a good thing.
• Acquisitions will reheat up, especially assisted deals. The second half of 2009 will bring us more bargains as the government will intervene to facilitate distressed sales by limiting the downside risk as it has done in the past.
• Margin landing is back in a big way. Lack of credit availability and banks' liquidity challenges have brought back better pricing and terms. Borrowers are learning to spell "Prime Rate" again and are not bulking at cross guarantees etc. in many markets.
• Overall, 2009 will be a very tough year. While opportunities abound, the economy is in a serious decline, and community banks reflect their local economy. Even the huge capital infusion into the financial system won't revive the sagging real estate market. In 2009 we'll finally see "floors" established by the market in some geographies, but not is all.

What can you do?

• Strategic clarity. Know who you are, and, more importantly, who you are not. Stick to your successful business model, tweak and modernize, but don't veer too far afield away from your core strength.
• Core deposits. They might not look as pretty today in your transfer pricing system, but they are always beautiful in my book. Treat them today and tomorrow, no matter how low rates get, as indispensible elements and a core foundation to your business.
• Build customer relationships. Ultimately, predictability of growing, quality earnings is what we are all looking for. The way to get there is with reliable customer relationships where the value proposition offers win-win combinations for your shareholders and clients alike. Product design and effective pricing aside, solid execution is the real key here, one customer at a time.
• Hire good people. There are more good people available than in past decades, and their expectations are reasonable. Making the investment in strong bankers is worthwhile at any time, including today.

In sum, my outlook for 2009 is: The strong will get stronger, and the weak will get weaker.

About our Friend Anat Bird

Anat Bird has served as a bank CEO and senior executive of both SuperCommunity and megabanks. Anat has authored seven books (some translated to Japanese and Spanish), more than 500 articles and is on the podium of every best-of-breed banking conference. Her firm, SCB Forums arranges and facilitates peer group meetings for bankers in every executive position of the industry, from CEOs and CFOs to commercial banking, wealth management and to technology, risk management, human resources and operations. SCB Forums sponsors 44 meetings a year and the SMH clients that attend rave about the information and best practices sharing.

To reach Anat, go to www.anatbird.com.

Use Email Marketing to Strengthen Customer Ties
By Susan Wall, Vice President/Marketing
Bronto Software

What role will email marketing play in your marketing efforts with current customers in 2009? If you don’t have a clear answer to this question, you are likely missing a compelling, cost-efficient and highly effective tool for growing your current customer relationships. And, we all know that in this challenging economy, holding on to what you have is job one.

Successful banks already recognize email marketing is much more than blasting out a generic, product-focused message to every address in their database. Financial institutions that try this tactic learn quickly how it can backfire. Our banking clients have built relationships based with their clients based on trust, and that trust carries over to their email relationship. Once you understand this primary tenet of email marketing, you can use it extremely effectively as a tool to fortify current relationships and nurture their growth.

In this time of economic uncertainty, our client banks are making a concerted and continuing effort to communicate with their customers to instill confidence in the stability of the institution. This will likely continue into the first half of 2009. In addition, they use the opportunity to talk to their customers about changes in legislation that might affect their financial planning.

For example, how are you keeping your customers apprised of the changes in FDIC insurance limits? They might feel more comfortable consolidating their assets with you if they become familiar with the expanded limits. But with a message like this, you should communicate it differently to different classes of customers. It might be a very light message to any customer who never even approached the former $100,000 limit but a more robust explanation of the options to upper tier customers. In other words, tailor your message based on the information you already know about the customer.

The same thinking applies to cross-selling (“Cross-Solving” – with a hat’s off to SM&H) efforts. Use the profiling information you have been able to glean through sales conversations to choose products that are most appropriate for their current needs. Email offers an easy way to use dynamic content to quickly and inexpensively tailor a personalized message to every customer.

Based on increased costs of mass media and direct mail, email marketing is an excellent and inexpensive way to reach both consumer and business customers. All indications are that email will continue to explode in 2009. Jupiter research suggests that spending on email marketing was $1.2billion in 2007 and it is anticipated to rise to more than $2billion by 2012. An October 2008 new study from ExactTarget reports that 18-34 year olds say they're more likely to respond to marketing efforts via email or direct mail than they are social networking campaigns.

About our Friends at Bronto

We were introduced to Bronto by a great friend of SM&H, Darren Pierce. Many of you remember Darren as the Senior Vice President of First Research. Darren’s career has taken a new turn and he has joined Bronto as Partner Development Executive. Darren’s new phone number is 919.226.9363 x151.

Bronto Software is an industry-leading email marketing service provider based in Durham, NC. Since its’ founding in 2002, Bronto has simplified email marketing for businesses and organizations by offering a powerful, easy-to-use, email marketing solution together with industry-leading client services. To learn more go to www.bronto.com.

ABA Stonier National Graduate School of Banking

How do you know a product, company, service holds a place of pre-eminence? You know greatness when people recognize it by hearing one word. In our industry, that word is “Stonier.” More than 20,000 bankers representing 45 states and 15 foreign countries have experienced Stonier’s legacy of unparalleled education, actionable knowledge and the creation of lifetime friendships.

Once again this year the school will be held at University of Pennsylvania and the dates are June 13-19, 2009. As many of the previous articles indicated, it is likely the next 12 months will be challenging in many ways. There is clearly a downside risk to spending money in this type of environment. The upside to providing education, tools and resources to your top people far outweighs the expense. When people ask SM&H associates about THE school to attend, we say one word; Stonier.

For more information about the Stonier National Graduate School of Banking and contact Ann Friedman at the ABA. She can be reached at 202-663-5285 or at afriedman@aba.com.

Thanks for Reading Us for Five Years

In the fall of 2003 Brian O’Connor, a great friend of our company, suggested we start a newsletter. Who knew how brilliant the suggestion was. Conversation Signposts has gone from less than 100 initial subscribers to more than 13,000 in the past five years. We appreciate Brian’s foresight and we thank you all for the way you respond to our rants, our articles and for allowing us to enter your email boxes every month.

In 2009 we’ll continue to make you think, help you grow and provide resources to help your people, help their customers.

Register below - it’s FREE!

http://www.stmeyerandhubbard.com/signup.html

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Jack Hubbard Chief Experience Officer 847.717.4328 jhubbard@stmeyerandhubbard.com Bob St. Meyer President 847.717.4322 bstmeyer@stmeyerandhubbard.com