30 Dec PPP (Paycheck Protection Program) Loans and The Emotional Sales Pitch
What Went Wrong and How To Turn PPP Loan Customers Into Customers For Life
When it comes to who handled PPP loans the best, the clear winners were the Community Banks.
Community Banks know their customers, they are invested in their community and their staff put in the blood, sweat, and tears needed to make the PPP program work for their neighbors. Meanwhile, the Commercial Banks put all their efforts into helping their largest customers, by creating an environment full of roadblocks, hindering their ability to move fast and get the much needed money deployed, in the quick timeframe a pandemic required, but the Community Banks did it.
What Community Banks found, after working with all of their existing clients, was a gap in the community. The small businesses, sole proprietors, and even some of the larger employers in their own back yard were underserved by their Commercial Bank relationships and were struggling to get their PPP loans. The Community Banks could have taken a breath and celebrated their success in helping their clients survive the pandemic, but that was not enough for them. They felt they had a duty to help those that were still underserved in their community, so they rolled up their sleeves and started funding non-bank clients. The Community Banks helped many customers during round one and saw this number grow exponentially in round two of the PPP process.
For many of these businesses, PPP was the lynchpin and the difference between failing or surviving. The Community Banks saved the day for these businesses, and you would have assumed, these saved businesses would have “jump over themselves” to support the Community Bank. Unfortunately, there were many deposit and loan relationships that stayed with the Commercial Bank. Why didn’t they move these relationships to the banks that helped them in their time of need?
These businesses that the Community Bank bailed out, are still with the Commercial Banks because they were sold on the idea of the Commercial Bank, sold by a good business development officer, or sold by a compelling marketing campaign. We hear time and time again that these businesses opened a checking account with their Community Bank in order to receive the PPP loan. That account continues to have the minimum balance, with no transactions and no loans transitioned over. Community Banks are excellent stewards of the community and when push comes to shove, they get the job done, but as a sales organization, they don’t always execute.
Emotion sells and the Community Bank must act while the emotion lingers. For most community bankers selling is an uncomfortable feeling. They want to be the solutions people, not salespeople. People buy on emotion more than any other reason. The Community Bank was in the driver’s seat. The non-bank client, that small business or sole proprietor in your community was sold on using the Community Bank because of the emotion of fear. The Commercial Bank continues to have their business because they sold them based on the emotion that comes with safety.
Branch and business development staff need to stop being intimidated by selling by approaching their customers with a solutions based selling technique. Keep it simple, go after the low-hanging fruit first and establish why they should start using your bank.
Operating deposits, for example, are a great place to start. Kick off the conversation with “Hi, Local Business Owner, I am so happy we were able to help you get funded for your PPP loan, we value our relationship and would really like to see it grow. Hopefully, a global pandemic never happens again, but if you are ever in need, for any reason, our bank is here for you. Is there a chance we can look at your merchant services to see if we can match or beat your current rates? We could even set you up with remote deposits, in order to make using our bank that much easier.” This statement plays to their emotions, it brings them back to that panicked feeling when they had an emergency and their Commercial Bank wasn’t there for them, to that sigh of relief when their Community Bank saved them. It reminds them that they need to be proactive with a bank that goes to bat for them no matter the circumstances. Take the proactive approach so they know they have a solid foundation and they won’t have to be reactive in an emergency situation again. Move these clients now, so a PPP loan service shortage does not happen again.
Kyle Morgan Is CEO and Head of Product for Mercantile Processing Inc. He has spent 16 years working with Financial Institutions to parallel business banking products like Merchant Services, Payroll, and ATMs to help agent banks align deposit and lending goals for growth. MPI provides free cross-selling training for its partnered Financial Institutions.