Editor’s Note: Before the Wells Fargo phony-accounts scandal, the seeds of Wells’ sales strategy were planted at Norwest Corp. In June 1998, Norwest announced plans to merge with Wells, expanding the reach of the Minneapolis bank’s sales culture. Key figures at the center of recent questions over Wells’ culture — including John Stumpf and Carrie Tolstedt — had come from Norwest.
This article from March 2, 1998, about three months before the merger was announced, described Norwest’s plans for employee sales quotas and cross-selling. Employees were required to be more assertive. Yet industry observers said the bank must avoid “turning off customers.” The bank acknowledged the need not to push employees too far. “There are potential cultural potholes,” one executive said.
Norwest Plans Sales Quotas, Eyes In-Market Acquisitions
By KAREN TALLEY
Norwest Corp. will start setting sales quotas for employees as part of a bankwide effort to dramatically step up contact with customers and increase value to investors, the company’s president, Leslie S. Biller, said.
“We want to be able to say, ‘All things being equal, Norwest people can sell and service better'” than the company’s bank and nonbank competitors, Mr. Biller said.
Mr. Biller also declined to discuss specific acquisition plans, but he did say the Minneapolis-based company plans in-market expansion and more growth in the West and Southwest-in such states as California, Kansas, Oklahoma, Utah, and Washington. Norwest shares fell 6.25 cents, to $41, on Friday.
Mr. Biller’s statements came late last week as bankers emphasized selling and expansion strategies at the NationsBanc Montgomery Securities annual financial services conference in Marina Del Rey, Calif.
Bank of New York Co. chairman Thomas A. Renyi said he expects this year’s revenues from securities operations, which include processing, custody, and clearance, to top $1 billion for the first time ever. This spring the company is also rolling out an index fund tied to Americandepositary receipts to take advantage of the burgeoning market, Mr. Renyi said. Shares of Bank of New York Friday rose 87.5 cents, to $59.5625.
Wachovia Corp. has begun a new program that uses “predetermined product suggestions” to approach customers, said chief executive L.M. Baker Jr.
When the initiative is fully in place by yearend, 1,200 employees will be making 5,000 calls a day to expand customer contact, Mr. Baker said. “This is relationship selling derived from a better understanding of consumers’ financial service and product needs.” He said about 25% of calls are resulting in sales.
Shares of Wachovia rose 12.5 cents, to $79.50, on Friday.
Norwest’s own selling efforts include aggressive steps to increase its already ambitious cross-selling efforts. To expand its average to eight products or services per customer from four, the company has begun setting “minimum standards” that require many employees to be more assertive, Mr. Biller said.
Norwest will roll the sales program out bankwide this year to retail customers and then expand the drive to trust and other customers, Mr. Biller said.
The company is also using its automated teller machines, statements, and banking-by-phone services to make more product pitches, Mr. Biller said. “We want to generate sales from electronic interactions that used to provide just services.”
But in adopting a more aggressive strategy, Norwest must avoid turning off customers, industry observers said.
The company “has to make sure it continues giving customers good service,” said Diane L. Merdian, an analyst with NationsBanc Montgomery Securities who rates Norwest shares a “buy.”
Mr. Biller said the bank recognizes the challenge and has been talking with customers about the best ways to step up contact without becoming annoying.
The company also acknowledges that, while encouraging employees to be more proactive, they must not be pushed too far or too hard.
“There are potential cultural potholes” to the more proactive strategy, Mr. Biller said. “We want to step in without breaking our ankle.”