When Should A Bank Outsource Outbound Sales?

The CMO of a financial institution told me about a meeting she had with a firm regarding outsourcing her firm’s outbound sales calls. Which got me thinking:

When should a bank outsource its outbound sales efforts?”

My answer: Never.

Sure, I can envision arguments for outsourcing sales. And I know that many firms are highly qualified and do a great job of selling. But there are three reasons why you shouldn’t succumb to the lure of outsourcing sales:

1) Relationship considerations. For certain kinds of financial products and for certain types of consumers, financial services decisions are high emotion, high involvement. In these situations, what customers are buying isn’t just the firm, but the person. Who are they buying if the salesperson isn’t someone who they can interact with and develop a relationship with on an ongoing basis? If your firm’s competitive differentiation is the “service difference” you’d better realize that “service” starts with the initial sales experience — not after it.

2) Retention considerations. Some consumers defect because of unanticipated life events, while others experience an horrendous service interaction which precipitates their attrition. But there’s another reason, often overlooked: Unmet expectations. Expectations established during the sales process about what a relationship with the firm will be like. Expectations that aren’t realized when customers find out that they were sold the wrong checking account package, or that their CD rate — which they thought was competitive — is two points lower than the bank across the street. An outsourcer may be great at closing sales, but can they set the right relationship expectations?

3) Capacity considerations.
Maybe you’re thinking “we hear your concerns, Ron, but we can establish arrangements with an outsourcer to deal with the issues raised in the first two points. The bottom line is that we have more calls that we need to make than our internal capacity can deliver.”

Then reduce the number of calls you think you have to make.

You might think that a customer has a need for a product you offer, but do they have the inclination to buy from you? Purchase intention varies among consumers — and investing in building purchase intention may be a wiser long-term investment than trying to drive up short-term sales volume.

This isn’t just a matter of making more “service” calls. My account manager at my bank calls me every quarter to ask “Is everything OK?” Being the jerk that I am, I respond “Why? Is something wrong? Did you guys make another transaction error?” Which, of course, sends him into a tizzy backtracking and assuring me that nothing’s wrong. The CEO where I used to work always told the salespeople “make every touch a smart touch — don’t call clients for the sake of calling them.” I wish my bank would learn that lesson.

So rather than hire a firm to pump out sales calls, reallocate resources to develop campaigns and programs that engage customers — educational seminars, blogs, for example — and that increase their emotional attachment to you. Is there an immediate ROI? No. It’s an investment. You don’t expect the investment in a new branch to pay itself off in a 90-day window do you? Of course not. So why should marketing campaigns have to?

You can reduce the number of outbound calls you think you have to make by calling only those customers who are already highly engaged — and therefore more likely to buy more products. Even if you think your salespeople aren’t as good as the outsourcers’, you’ll have a higher than expected close ratio. But you have to make the investment in the relationship first.

[Disclaimer: I’m not trying to disparage the outsourcers, or hurt their business. I’m already in the doghouse with Verity CU and comScore, I don’t need to add anyone else to the list.]

But — and this is especially true for small to medium sized financial firms — the importance of the sales experience goes well beyond closing the deal at hand. Outsourcing the sales function to improve short term results may lead to less than optimal long term results. You can’t simply expect to succeed in the long run by selling as many new customers as you can and then worry about “servicing” them later. It doesn’t work that way.

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