Many community banks have seen their deal pipelines grow over the past several years as the effects of the recession and lending meltdown have faded. Today, new financing opportunities are abundant, and many lenders need to do little more than answer the phone to find a business owner in need of financing. Nevertheless, it is very important to plan beyond the present surge in loan demand and continually focus on building and maintaining a database of prospective business customers.

Most commercial lenders rely on networking sources and centers of influence for new business referrals with no complementary strategy implemented to generate new customer relationships when market demand softens, or the referral flow dampens.

One alternative to finding new business outside of networking and utilizing referrals is the implementation of a Lead Generation Program designed to target business owners within a lender’s targeted geographical markets that meet specific criteria based on well-defined metrics such as revenue size, SIC or NAICS codes and industry focus (such as manufacturers, distributors, service companies, professional services and specialty industries – including hotels/motels, self-storage, healthcare). This targeted approach to new business development enables banks to reach hundreds or even thousands of quality prospects and build a valuable prospect database over time. By outsourcing to a qualified lead generation company (service provider), banks can cost-effectively reach new prospects when a full calling campaign is conducted with the goal of setting new in-person appointments with borrower decision makers.

When using these service providers, all of the prospect’s data is captured, managed and maintained by the service provider, and the program information and metrics gathered are property of the bank – available on demand. Program costs vary depending on the size of the universe of prospects and the term of the Lead Generation Program. A typical 200-hour pilot program will require approximately 90 days to complete and can be expected to generate up to 36 new in-person appointments at a cost of approximately $15,000. Ideally, this cost will be offset through the success of the program. By sourcing a single $500,000, 5-year mortgage loan amortizing over a 20-year schedule and priced at 5% fixed with a ½% facility fee, a bank will generate year one interest income of approximately $25,000 plus $2,500.00 in fee income. This single transaction will more than offset the cost of the Lead Generation Program.

With this in mind, the question is: Can your community bank afford NOT to invest in a Lead Generation Program?

We think it is wise to spend the time, effort, energy and money to evaluate Lead Generation Programs based upon the following rationale:

  • The Bank is seeking to build new, high-quality, profitable, long-term client relationships.
  • The market remains highly competitive for new commercial loan growth and related interest and non-interest fee income. There is constant pressure to grow the loan portfolio.
  • Internal bank resources are constrained with no consistent, reliable and sustainable approach to new business development.
    Adding new seasoned lenders is expensive and results can be inconsistent and unreliable.

For more information on how to implement a Lead Generation Program, please call or e mail Michael Ryan at (610) 733-9955