Innovation | 01.31.19
Referrals Down? Look to the Gatekeeper
Have referral skills deteriorated?
Kehrer Bielan has documented how branch referrals to investment advisors are plummeting. Although the industry has generally attributed the shortfall to the decline in branch traffic and consequent branch closings, new research from Sales Quality Research Group (SQG) points to an additional reason — sagging propensity of branch staff to refer.
During the fall of 2018, SQG, in conjunction with Kehrer Bielan, conducted 50 mystery shops by telephone to test the ability and motivation of gatekeepers in financial institutions to refer prospects to financial advisors. In 36 of the shops, the caller posing as a customer called a bank or credit union branch. In the remaining 14 shops, the caller reached a financial institution call center. The shoppers inquired about CD rates and reported on whether, and under what circumstances, the gatekeeper mentioned the availability of investment products, and if the caller was referred for investment advice. The calls were spread across 17 banks and credit unions of various sizes throughout the country.
Before quoting rates, 83 percent of the gatekeepers generally asked at least one question, such as the length of term (83 percent), how much the shopper wanted to invest (67 percent) and where the money was currently deposited (2 percent). These results were in line with SQG’s extensive experience with asking questions or assessing needs in a mystery shop by telephone. But from there, the process hit speed bumps.
Only 14 percent of the gatekeepers mentioned that the institution also offered investment services — what SQG calls a “spontaneous” referral — well below SQG’s average of 27 percent obtained from dozens of similar studies conducted between 1995 and 2015.
If the gatekeeper did not refer spontaneously, the shopper then provided a clue asking whether the institution had anything with a better rate. Just 4 percent of the gatekeepers picked up on the clue to say that the institution also offered investment services. That is a huge variance from SQG’s experience, where 43 percent of gatekeepers offered a referral after a clue was given.
The shoppers who had not yet been told about the institution’s investment offerings then provided a prompt (e.g., do you offer investments?) That resulted in another 62 percent of the gatekeepers describing the institution’s investment offerings. At this point, 80 percent of the gatekeepers had referred the shopper to investments, but SQG is quick to point out that in real life, many or most real customers would not offer a prompt. And even more noteworthy, 20 percent of the gatekeepers did not indicate that the institutions sold investments or refer the shopper to an investment person even after both a clue and a prompt.
What is going on here? Of course, turnover on the bank platform and teller line has always been a problem, with banks needing to train new cohorts of customer-facing staff on basic operations, let alone referral protocols. And referrals sag when there is advisor turnover or during periods when banks are pushing to grow deposits. But the current low tide of the referral flow is troubling, because the branch-based advisor model is so dependent on referrals.
In its 30 years of supporting product sales in financial institutions, AMS Financial Solutions Group has found that a structured approach, such as its From Roadblocks to Referrals, gives client-facing branch staff the competence and confidence to identify and refer potential customers to licensed bankers or advisors. The tools needed to resuscitate branch referrals include in-branch training, sales ideas, steps to making solid referrals, workbooks, exercises, teller tip cards and leader’s guides.
Sales Quality Research Group is expanding this study to include more shops with additional institutions and will present the updated findings at the BISA 2019 Annual Convention in March.