It didn’t surprise me one little bit when I read an article in the Australian Financial Review on 9 June 2011, titled ‘Big Banks deluded about small business’.  The article surmises that the vast majority of small business bankers are nothing more than product floggers trying to sell a product rather than providing consultation expertise to their SME clients, on their specific needs and working with them to get the best out of their business banking relationships.

Most disturbing is the bank’s illusion of their customers’ satisfaction with the service they’re receiving. The reality is of course entirely the opposite. Are the banks deluded about what they think they do for small business in Australia?

The answer is ‘Yes,’ if the research by Ian Freeman, of the business Non Executive Management, is anything to go by.  His research highlights the chasm between what banks think and the reality with their customers.

From a SME’s perspective desirable attributes of a business banker include:

1. understanding and supporting my business when help is required
2. being readily available
3. Providing sound and constructive banking advice
4. Interest in a long term relationship
5. Understanding of key growth drivers of my business and ability and willingness to tailor products and services accordingly

The banks claim agreement with these attributes but their actual deliverables are very different.   For instance, banks thought 80 per cent of SMEs would agree with the first statement; ‘understanding and supporting my business when help is required’, when in reality the figure is less than 30 per cent.

These figures are backed by Ernst & Partners and research states that to engender loyalty the figure needs to be 90%+.

Worse still is that when SMEs were asked if the business bankers ‘Provide sounds constructive banking advice’ and ‘Understand the key growth drivers of the business and tailors products and services accordingly’ less than three per cent of SME’s agreed, yet the banks thought that 75% would agree.

Roy Morgan Research states the area of poorest performance across the banks is in understanding SMEs’ industry and poor knowledge of their business.

I’ve had experience working with business bankers and developing their consultative selling skills and sales capabilities. However, my work has been with corporates and with the upper end of SME business bankers, where investing in more professional business and sales practices is mainly supported, yet these same skills and capabilities are also needed at the small business end of the market where business are more vulnerable and in need of expert guidance and advice.

Many of the business bankers I have worked with are business savvy, experienced and able to work in a more consultative manner with their business clients.  For small business banking roles however, recruitment is mainly limited to young graduates with little business experience and often far less aware about how businesses are run.  Many are under-skilled or in a weaker position to offer real advice and experience about how to run and manage a business which makes me wonder why banks think they are doing the right thing by their small business clients.

Freeman’s research also finds that the small business banking sector is too ‘income’ focused while SME’s are ‘outcomes’ focused.  The banks think that because companies bought their products they were happy and loyal yet in reality many SMEs have nowhere else to go to have to buy their products and loyalty is not common place.  Simply because SMEs have no other choice than to buy their products from the banks does not necessarily mean they are happy with their service or loyal to the bank.

Worst of all, one of the banks performed a 10 week trial where their small business bankers were asked to genuinely model the ideal attributes listed above and find out what their clients really need rather than talk about product. Even though the result found the bank would boost sales by 94 per cent by working this way and customers were much happier with the approach, the bank in question abandoned the trial and went back to what they always did.

With 95 per cent of all businesses in Australia in the SME category, don’t we deserve better than this?  Banks would do well to rethink their strategy in serving the small business sector and transform their small business bankers from product floggers to consultative business practitioners. SMEs will thrive and grow from a consultative approach with bankers who know how to understand a client’s needs and business strategy, work with ambiguity and business complexity and facilitate access to the right business banking products and advice.  We would then see what a difference this could make to our business community and success.

Remember everybody lives by selling something.

Author: Sue Barrett, MD of www.barrett.com.au

‘Should I sell and distribute my own products or another company’s products?’  This is the question I really needed to answer back in 1995 and should have answered by 1999 however, it took me a further two years to understand what I really needed to do if I was to achieve my goals and fulfill my ambitions.

When I launched my consulting business in 1995 I had no actual product to speak of, other than myself.  I didn’t know much about the world of distributorships nor did I know how long it would take to build my own product portfolio.  In hindsight I had many lessons to learn. Lessons about being a product distributor, lessons about being a product manufacturer, and lessons about trying to do both at the same time.

Back to 1995 with no tangible product of my own to speak of but with the intention of building my own product range, I was approached by the SPQ*Gold assessment creators who asked me if I would like to become a distributor of their product.  As a new business it seemed an offer too good to refuse, especially as I had experience using their assessment before.  I knew that this product was a quality product and would give me a competitive edge. I also felt that it would give me the revenue boost I needed to get further more quickly and buy me some time to build my own product content.   So I signed the distributor license even though it favoured the product manufacturer more than it favoured me.

Because Barrett did such a great job distributing and selling SPQ*Gold we were approached by other assessment providers to sell their products too. So in and around 1998 I was faced with the opportunity of being specialist in assessments and becoming a distribution business.  It seemed attractive because money was coming in, and we knew a lot about assessments which our clients and sub-distributors valued. Yet something didn’t feel right for me. While everything seemed to be going well I revisited business goals i.e. the desire to build my own product and brand. I then looked at my distribution arrangements and agreements and realised I was trying to be both and it wasn’t working.  The demands of being a distributor had certain obligations while the demands of being a product developer had other requirements.  I then had another realization.  I could be both.   I also realised that in my haste to sign those distribution agreements I hadn’t protected my future earnings because at any time these product suppliers could come in and take over my distribution channels and I would be left with nothing.

What would I have to show for my efforts if I went the way of distribution or product development?  While harder in the short term and less profitable I chose the path of product development.

The challenge of productising knowledge

Like many consultants before me, my challenge has been to productise my knowledge, processes and experience, making them tangible, salable and able to be transferred and taught by others.  My experience in doing this has proved to be a very time consuming and difficult task, although well worthwhile.  Many consultants before me and many since have achieved this and captured their wisdom in the form of books. In 1995 there was no such thing as online learning, blogs, apps and other ways to capture content so I began building my own product content in the form of sales programs and sales management training programs which then expanded into things like Australia’s very first Sales & Service Competency dictionary (2006), Sales Recruitment Kits (2006), Sales Performance Management System (2007) and many more products since.  Now Barrett has an IP assets register with over 200 product items. However this has taken me 16 years to build and refine into salable and commercially functional products.

I still use other people’s assessments but not as a distributor.  I use them to supplement my work but not BE my work.  As it turns out in 2006 one of those assessment companies did what I predicted; they came in and took over mine and other licensed distributors territory.  It was a bitter pill to swallow. I’m glad I trusted my instincts and began building my own product portfolio because if I hadn’t, Barrett would not be the business it is today. I would have been left empty handed with nothing to show for my 11 years of hard work.  It may not be fair but in business things like this happen every day. So what lessons can we learn from this?

Some questions to consider and lessons learnt

• Being a Distributor: If you’re selling and distributing other companies’ products make sure you check your licensing agreements and contracts. Also check the type of people you are dealing with and make sure you know what you are getting yourself into.   Some questions to consider about distribution licenses and arrangements:

o   Does the licensing arrangement allow the product owner to come in take over your licensing and sublicensing arrangements without warning?

o   Can they secure your client base off the back of your hard work with no compensation?

o   Are they set up so they can access your client data base?  If so, can they make direct contact with your clients to try to win them over?

o   Does the distribution license fairly balance your needs with their needs?

o   Can they guarantee supply and quality?

o   Are they open to new ideas and suggestions and are they willing to work with you in your market space?

o   Are they open, consistent and easy to deal with or difficult, inconsistent and secretive?

o   Is pricing clear and easy to work with or overly complicated or subject to change without notice?

o   Is the product supplier competing directly with you in the market place?

These are some of the questions I wish I knew to ask when I first went into distribution arrangements.

• Building your own product: don’t underestimate the time it takes to build new product, especially in the knowledge space.

o   Create an IP assets register from the start and make sure you keep a log of all the products, ideas, and processes you develop.  I wish I had done this from the start as it’s much harder later on to recall everything and document it.  Truth be known I probably have 500+ items that could be on my IP assets register.

o   Create employment contracts that ensure you protect your IP.  I did do this from the start and this has been worthwhile.  They can’t protect you completely but set the expectation with employees from the start.

o   Be wary of constantly innovating – you have to get something to market and it will never be perfect.  Develop different versions as you upgrade just like they do with software.

o   Know how your product can be made to work across various applications i.e. online, physical product, publications, apps, etc.  You need to learn a lot about how products can be made in different formats especially in the consulting and learning space.

o   Know that it will take some time for your product to get traction and become a standard or benchmark. This is especially true if you’re up against international brands. They may not be as good as yours but have the cache or brand presence.

These are some of the lessons I have learned and I am sure there are experts who can advise you more than I can in this space.  However if you do want to make your own product from scratch you really need to believe in what you are doing and remember that it takes about 15 or more years to be an overnight sensation and excellence doesn’t happen by chance.

Remember everybody lives by selling something.

Author: Sue Barrett, MD of www.barrett.com.au