Bulking up flabby financials. (Feature).

When Cape Savings on the New Jersey seashore was figuratively getting and kicked in its face; it decided to improve its fiscal fitness.

The institution refocused, realigned and reoriented itself with a strong customer relationship management program. Now, the thrift is showing off its spectacular new financial figures.

It sounds like a dream: A bank CEO announcing that year-end deposits had increased by 781 percent--and loan production by 73 percent. After a long stretch of flat growth, Cape Savings in Cape May Court House, N.J., actually reported these astronomical financial improvements in 2001. President and CEO Herbert L. Hornsby made the announcement.

How did the savings bank achieve such positive results? Through the teamwork of Hornsby and Jeff Ropiecki, the vice president of sales and marketing, and the commitment of Cape Savings' employees to a new sales and marketing culture throughout all departments and the 12 branches, according to consultant Diane Gertsner of Alex Sheshunoff Management Inc., Austin, Texas. Gertsner facilitated and guided the transition for Cape Savings. She points out that the "redefined" institution today is more focused on sales and customer relationship management.

Steeped in tradition

Cape Savings, which is 80 years old, is located in a scenic seashore community. The $425 million savings institution is "a local business steeped in tradition and grounded in our community," says Hornsby. Many employees participate in fundraising for local and national charities. Cape Savings is so community oriented, it followed naturally that the bank would want to expand its relationship and create an ongoing dialogue with its customers.

The impetus for a change came in 1999. "The bank was becoming cumbersome to manage, both operationally and culturally," says Hornsby. "Sales was a buzzword, but we didn't want to integrate sales processes without taking a look at the whole picture." Hornsby and Ropiecki discussed implementing a sales management culture. Hornsby attended a peer group forum and came back committed to the concept. He decided to enlist the help of a consultant.

"It all begins at the executive level," says Gertsner. "Management needs to buy into and support the changes that need to be made." And at Cape Savings, there is a very committed CEO, as well as a vice president of sales and marketing who serves as a tireless mentor for the employees and champion of the program, she says.

To begin, Gertsner and several colleagues came into the bank to analyze every procedure and department. Team members met daily to discuss their findings and compare notes. As a part of the fact-finding process, the consultants conducted confidential interviews with senior management. Hornsby indicated he wanted a bankwide cultural change, not just an updated sales and marketing approach.

Ropiecki concedes that the bank's culture had been very transaction oriented--excellent at cashing checks and originating accounts. Both he and Hornsby agreed they wanted to focus on customers' needs by listening to each person instead of just listing services and products. To meet this goal, the entire organization had to be retooled to support customer service and sales.

The consultants recommended changing several key areas. First, operational areas were separated from sales, delivery and marketing. That entailed a change in leadership: Ropiecki (formerly the vice president of sales) added marketing to his title. The branch managers now all report to him. Together they set goals for individual branches that dovetail with the bank's overall goals and the marketing and strategic plan. Second, the institution addressed procedural issues like streamlining loan processes, reducing documentation and automating lending. These changes lightened the operational burden and allowed the bank's focus to shift to a sales management culture. Third, the institution introduced regular employee training as a way of reinforcing the new culture.

The consultants conducted some of the training. They recommended that Cape Savings launch its own training department. The institution quickly hired a full-time training director and later added a training staff. Cape Savings also has an on-site conference center that accommodates 100. The training director can run the same session five or six times in one- or two-day sessions. Having an on-site director also allows the bank to send smaller groups more regularly for training. The bank has implemented a retraining program as well.

Focus groups yield critical information

To analyze customer as well as employee needs, the consultants recommended that Cape Savings create focus groups. The two internal focus groups were referred to as "action teams" and included representatives from key areas: branch officers to back office workers, auditors to tellers. The consultants facilitated the two teams: One was headed by Ropiecki; the other, by Kathy Steiger, head of residential lending. Each team had the authority to approve anything that stayed within one department and did not require budget or policy changes. The teams reviewed thousands of operational and delivery topics from cashing checks to holds on funds to fee structures. The consultants assisted in aligning and designing products by gathering information from focus groups--including both customers and noncustomers.

One action team instituted a proposal paying insufficient funds checks up to $300 and charging a specific fee instead of returning the check and charging overdraft fees. As a result of this one change, Cape Savings received a number of customer compliments.

It took lots of training to get the new culture launched. The starting point was to provide everyone--from accountants and auditors, to tellers and managers--a solid foundation in product knowledge, buying cycles, customer behaviors and customer service. "We looked at customer service and sales as interrelated," says Ropiecki. "We sell to service, and service to sell."

What was the effect on the staff?

Ropiecki says there was some internal resistance to the culture change, but overall, employees accepted the new strategy and worked hard to apply their new knowledge. "In some instances, we rewrote job descriptions to accommodate changes in responsibilities," says Ropiecki.

Changes in staff were not part of the original plan. But 10-12 percent of the staff left or other arrangements were made for them during the first six to 12 months of the program. "We brought in some positive people and they made it popular to be positive and nice to customers," says Ropiecki. Overall, Ropiecki says he has received lots of positive feedback from employees. "Change always brings pain, but the secret is to get people excited--to recognize benefits to customers and to be in it for the long haul," says Gertsner. Ultimately, it took 18-24 months to really see and feel the change in culture and attitude.

A primary failing of many management teams is expecting dramatic results within three months. "If there are no remarkable results quickly, sometimes management believes there won't be any further results and they stop the program--ensuring failure," says Gertsner. "You must be willing to commit to the long term."

She says you can expect small results within six months from an action plan like the one used at Cape Savings. Usually the first 90 days are filled with action teams implementing new procedures and getting employees up to speed. You can expect to see a 10 to 25 percent increase in deposit/loan production within 180 days, says Gertsner. "Cape Savings results were atypical--incredibly high results in a short time. I think those results can be attributed to making the vice president of sales/marketing head of the branches and coordinating efforts across 12 branches instead of working independently." Ropiecki confirms that new level of coordination, partnership efforts and teamwork were key in making huge results quickly.

How can you sustain an action plan like this? Through monitoring and tracking, says Gertsner. Branch managers attend weekly meetings with Ropiecki to set goals and make plans and as well as to discuss client focus. The consultants also developed self-management sessions that were held over six months. These sessions taught managers how to develop sales plans and assess the marker, then return and discuss how to deploy and track results, all the while coaching and rewarding employees for their effort and results. Then the branch managers meet to debrief on what's working and what's not.

There are ongoing programs for internal recognition, formal recognition, sales training, as well as procedures and software. Ropiecki says they have not tried mystery shopping yet. "The training and programming have been up and running only 18-24 months," he says. "We wanted to encourage and coach employees at the outset--nor intimidate them with mystery shopping." Ropiecki is currently planning a measurement system to track the sales and marketing strategy's progress and success.

Operating more like a retail business

As a direct result of the information the bank learned from the action teams and focus groups, bank hours have been extended to 8-6 Monday through Saturday. Ropiecki says there are plans for a call center in the near future. The consultants helped with technology action plans, and the bank has just implemented an MCIF system Adding new dimensions to marketing and sales and more dialogue between sales and marketing and finance has led to increased profitability. The bank is now quantifying growth and potential growth and rolling that information back into business goals. "We're trying to run the bank more like a retail business overall," says Ropiecki. The five-year business plan that was outlined at the beginning of the program has already been through three or four cycles and will be revisited in January 2003, according to Ropiecki.

Creating the new culture was costly, but the tremendous results in the first 24 months have more than paid for the investment in consultants and training, Ropiecki says.

Ropiecki also has seen an increase in communication and cooperation between departments that previously were autonomous and isolated in silos. "We have networked all branches with a LAN/WAN and now there is e-mail for all employees," says Ropiecki. Cape Savings also holds quarterly employee meetings after hours to keep everyone up to date on new developments. Key department heads and the sales and marketing council make presentations and answer questions.

President Hornsby continues to support the new culture. In an effort to improve communication with and support for employees, he holds fireside chats regularly to talk to 10-12 employees at a time. Hornsby's goal is to meet with everyone in the bank at least once during the year. "The most significant changes are those that relate to people," says Hornsby. "Basically, you tell them where the bank is going and you invite them on the journey. The challenge for employees is living with change."

Cape Savings: Improvements in Deposit and Loan Production

(Figures in millions of dollars.)

                     1999   2000    2001

Deposit Production   $9.2   43.7   $32.6
Loan Production     $82.2  $70.0  $121.0

Tanja Lian Sablosky is a former editor of ABA Bank Marketing magazine.