To offset the impact of soft loan demand, banks are segmenting commercial customers by their purchasing behaviors.  Cross selling - selling more to existing customers - is faster and cheaper than prospecting.  No wonder bankers focus so intensely on it today.

    But not all current customers are equally susceptible to cross selling.  It depends upon whether they are so-called relationship or transaction buyers.  The buying habits of these two basic segments differ greatly.

     All companies would like their banks to provide the latest leading-edge financial products with the very best service at the cheapest price. These are “wants.” Smart owners, however, evaluate which wants are true needs, essential for their business to succeed.

Are you a transaction buyer?

    Of all bank products, the one most critically needed is usually the loan. If you abhor debt and cannot foresee borrowing, regardless of the economic climate, consider being a transaction buyer.

     First, you’ll have to hone your bid-solicitation capability and efficiency. Then count on scheduling more visitations by bankers, because attracting more bidders requires entertaining more visitors. And because of your nonrelationship status, expect higher account officer turnover.

     This works well for companies like General Electric, which has stronger credit ratings than its banks. GE’s finance staff spends no time worrying about access to bank credit.

     By putting all banking purchases out for bid, transaction buyers may be able to obtain better, faster, and cheaper solutions. Regardless, they certainly will be busy writing, distributing, and evaluating requests for proposals (RFPs).

     All their financial purchases are truly toss-ups. The winner is the banker who jumps the highest--or stoops the lowest--on price. That’s fine for transaction buyers because there are many possible suppliers for the non-credit services they need. Bank debt is not their lifeblood.

Seeing total picture

     But if loans are the foundation of your company’s capital structure, what you need most is a rock-solid banking relationship. Become a relationship buyer.

     You can accomplish this by educating your banker about your industry and your company. Get to know all those who vote on your loan requests. You’ll want many advocates at the bank who understand why you’ll be able to honor your debts.

     A great banking relationship can be like a fine painting. Each individual shape, shading and brush stroke of a masterpiece may not be perfect. The total picture is, however, powerfully satisfying.

     Similarly, a banking relationship can be strong overall even though each separate component is not flawless. Relationship buyers look at the total canvas and not just each facet.

     They send out an RFP only when the total picture is no longer pleasing. For them the bidding process is painful.

Is creditworthiness enough?

     Relationship buyers know that just being a good credit risk does not guarantee their bank’s support. They also must be a good source of bank revenue.

     Bankers shun accounts which are neither large nor lucrative. After all, providing their shareholders an acceptable return is their greatest need.

     If you are generating an insignificant level of revenue for your bank, you don’t warrant special consideration. When your banker pitches additional financial solutions to you, listen closely. Remember that when the bank reviews your next credit request it will undoubtedly analyze the size and trend of your relationship’s total revenue.

ACTION STEP: Although transaction buyers and relationship buyers use different approaches, one is not bad and the other good. The only bad approach is not to have an approach.

     Deciding which you should be starts with a dispassionate review of your company’s financial necessities. Distinguish between mere wants and critical needs. Then determine whether your current approach empowers your banker to satisfy these needs.