Saturday, January 10, 2009

Sales techniques for loan officers

Marketing studies have shown that while a product’s attributes are important to borrowers, what people really buy are the benefits of a product. However, too often loan officers focus on attributes – e.g. the interest rate, loan terms, etc. – when they’re selling the loan product.

These attributes are, of course, important and loan officers need to be clear and upfront about them for the benefit of the client and of the MFI. After all, these loans need to be repaid. But a strong loan officer informs the client of the product attribute while selling the benefits, (also known as the core product -- see slide 6 for more information on the core vs. actual vs. augmented product).

So what are the benefits of your microfinance product? Does it enable the borrower to build assets? Increase income? Send her children to school?

It might do all of these things and more, but discussing these benefits will only have an impact on sales if they actually matter to your client. Someone who doesn’t have children probably won’t care much about being able to send kids to school. At an individual level, loan officers should be aware of product benefits and should pay attention to what the potential client responds to. In short, the loan officer should ask open questions to get a feel for what benefits the potential client actually cares about.

At an institutional level, the MFI should segment its borrowers, developing client profiles which address which benefits matter to the client.

Action item: Conduct the below sales training with your loan officers.

Training: Selling the benefits

Time: 20 - 30 minutes

Purpose: Enable loan officers to understand the difference between a product’s benefits and attributes, and how to sell the benefits of the MFI’s products.

Materials Required: White board/large paper and markers.

Notes to Trainer: Make sure the benefits listed are benefits to the CLIENT, not to the MFI!
One key benefit of a microloan should be an increase in the client’s income, however, loan officers should consider how this increase will positively change the client’s life – what the client really wants to do with the extra income. For example, some clients may think of the increased income in terms of better education for their children, the ability to improve their home, better healthcare, or the ability to expand their business.

Training Step 1: Explain: Over and over, marketing studies have shown that while attributes are important, what clients really respond to in marketing are benefits. Ask: What are benefits and attributes? Attributes are the physical features of the product, e.g. a laptop computer might weight 2 kilos. But the benefits are how those features make the client’s life better. E.g., the computer is light enough to easily carry to meetings.

Step 2: Display an object (e.g. a calculator) to participants. Ask what are its attributes? Its benefits?

Step 3: Ask: What are the attributes of our loan products (Note: discuss by type of loan product – loan products will offer different benefits!)

Draw a line down the middle of the board or large white paper. List responses down one side of the board or large white paper.

Step 4: Explain: Clients want to hear how our loan products will benefit THEM, how the loans will make their lives easier or better. Ask: How can we describe these attributes as benefits? List answers next to the attributes listed earlier, e.g. Delivery of the loan to the client’s business saves the borrower time.

Step 5: Ask: How can you find out what benefits matter to the client? I.e., how do you know what the client cares about? Discuss, listing answers on the white board.

Step 6: Emphasize to the credit staff that next time they are meeting with potential clients, they need to sell these benefits!

1 comment:

  1. It must be more specific but it is useful.