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No More Rate Matching

By: Roxanne Emmerich

Do not look now, but everybody wants the same good credits — and they are willing to create tomorrow’s profitability headaches by offering absurd pricing.

Even worse than the rate matching are the long terms at fixed rates offered by Farm Credit that will cause the next bloodbath of otherwise solid banks that decide to follow that move.

Enough already! It is time to remember those words your parents used to repeat, “If all of your friends jumped off the cliff, would you?” Of course not. So given that your most desperate competitors are likely to continue offering low pricing on long fixed terms, you have three choices:

Only one problem remains — your lenders do not think it is possible to do the business without matching the rate. And you know what? With that belief system, they are right.

Not only do they have to shift their belief systems, but they also are going to need to radically shift their marketing and sales processes or they will prove that they can only do the business if they match the rate.

It is hard work to create a system that commands premium pricing from good credits. But as your mama used to say, a little hard work never hurt anybody — especially if it is something worth doing. And let’s face it — collecting on bad loans is even harder work and not very life affirming.

So, what is the magic formula followed by lenders who are consistently getting 150 basis points more in this market against the craziest competitive moves?

Three Profit-Rich Loan Pricing Secrets of Banks Growing Net Interest Margin

Find the high-quality targeted psychographic markets that are least likely to be price sensitive. Let’s be clear — you want the marquee customers — the ones everybody wants. And you want them at premium pricing. Period.

Where do you start? With psychographics. Define your ultimate best customers. Maybe it is second-generation farmers with more than 1,000 acres of owned land. Or maybe it is community-minded leaders with four-year degrees in agriculture. You can have several targets, but they must be tightly defined or the process does not work.

Please do not turn this “top 100” definition process into a Mongolian goat rodeo. I recently talked with an executive who told me his bank had spent over a year in meetings with an outside firm at a substantial cost to determine its psychographic target markets. After a year, they still had not identified them and had not closed any business.


It should not take more than four hours to determine the psychographics of your current most-profitable customers. Then you just need to determine the vertical and horizontal markets that match that list.

The point is to determine the list and start adding value to that list within a week so that you can close 30 percent of that list of top 100 within a year.

That brings us to the next step … Create unique selling propositions for each of the niche target markets.

If you do not have great unique selling propositions that speak to major ROI where you can get the prospect to tell you that what you have is potentially worth thousands or more in cost savings or additional revenue, you can expect to have your lenders come back with their tails between their legs sharing war stories of defeat while whining, “They said we can have the deal if we match the rate of our competitor.”

The purpose of a salesperson is to change the conversation to that of premium pricing. A computer can take a loan application — it takes extreme talent and abilities to transform the conversation to one where premium pricing is a given.

You do not get there talking about amounts, terms, how long you have been in business or how good your service is. It is delusional to think that those are differentiators that will generate more business.

If you are sending your people out without a boatload of power-packed USPs for each clearly defined target market that rock your prospect’s world, you can expect to do a lot of rate matching until your net interest margin is on life support. And if they have the USPs but do not know how to use them in the sales process, it is just as bad as not having any.

This is the ABC formula for premium pricing — and it is nearly impossible without following the formula explicitly.

Follow a proven step-by-step sales process designed to get 100–150 basis points more every time.

The days of consultative selling are over. Almost no sales training in banks today even begins to make a dent in what needs to happen to get 150 basis points more.

It is not about traditional sales processes — your people need to know how to get the prospect to tell you why your USPs can either save them or make them 10 times the premium pricing you are about to charge or more.

People never argue with their own logic. When they define the cost of not doing business with you and the financial impact of not having your USPs — well let us just say that the competition does not stand a chance.

The beauty of following a clearly integrated marketing and sales process designed for premium pricing is that you will never hear those ugly little words, “You will need to match the rate” again.

Roxanne Emmerich is the author three books including New York Times and Wall Street Journal bestseller Thank God It’s Monday and Profit-Growth Banking. Get a step-by-step look at the proven, premium-pricing sales formula in her book Profit-Rich Sales. Download a free chapter at Contact Emmerich at Roxanne(at)

Copyright (c) December 2013 by BankNews Media