The following is a guest post by Paul Smith, author of Lead with a Story: A Guide to Crafting Business Narratives That Captivate, Convince, and Inspire. The lessons from this story and Paul’s book can help the reader in any career or industry to communicate more effectively.
Experience has always been the best teacher. But a good story is a close second. All the other forms of communication leaders use at work, like email, policy memos, and PowerPoint slides—they’re a distant third. To illustrate the point, consider the story below, which is legendary in the banking industry. It teaches an important lesson about understanding your customer, and the value of a well-told story in the toolkit of the smart executive.
There are over 23,000 banks, savings & loans, credit unions, and other financial institutions in the U.S. Each one of them constantly has to find ways to invest their customer deposits. As a result, there’s a whole cottage industry of bond brokers who specialize in selling these institutions exactly the kind of securities they need. A typical such firm has two main departments: a trading floor that holds and manages the inventory of bonds; and a sales floor, which calls on the banks to sell that inventory.
In the mid-1980s, before everything was computerized, a typical sales desk had only two things on it. One was a telephone. The other was a collection of red hardbound books that looked like a small set of encyclopedias—the McFadden American Financial Directory. Those books contained a listing of every financial institution in America. Among other things, they showed the names of the officers, the size of the institution, and the type of investments they owned (corporate bonds, municipals, treasuries, etc.)
Those red books were priceless because the lore in the industry is that a banker will decide in the first 15 seconds of a call whether or not he or she will buy from the salesperson. If you can demonstrate you know the bank and their needs, you’ve got a decent shot at making a sale. A salesman who hasn’t done their homework doesn’t have a chance.
A familiar tale in the industry describes a rookie on the sales floor of one brokerage firm. Flipping through the red books, he went from page to page, outpacing his peers at making sales calls. It turns out he could make more calls because he wasn’t taking the time to study the background on the banks he was calling—just dialing the phone numbers. On one call, he surprised even himself when he got the bank president to agree to buy a $3 million bond! The broker almost jumped out of his skin. In the 1980s, the commission on a $3 million sale could equal a typical year’s pay. As protocol dictated, he told the banker he would check to see that he had the inventory and call him right back to confirm the sale. He hung up the phone and raced to the trading floor. Looking up at the inventory listed on the chalkboard, he saw exactly the bond he needed, with just enough to cover the whole $3 million sale. He excitedly told the head trader to take the bond off the board, yelling, “I sold it!” The trader smiled and congratulated the impetuous young salesman, and then said, “Just give me the name of the bank and I’ll record the sale.”
The broker stood motionless, with a blank expression on his face. In his excitement, he’d forgotten the name of the bank whose president he was just talking to. He ran back to his desk. There sat his book, squarely in the middle of his desk—closed! He must have shut it in his haste. He stood there, staring at the 900-page tome without a clue as to what page he had been on. Fear and anguish churned his stomach; as he realized he had just lost the biggest sale of his career.
Andy Smith is vice president and principal of Vining-Sparks, a brokerage firm of exactly the kind described above. Today, of course, computerized call sheets and a redial button on the phone would keep this particular tragedy from recurring. But he still tells this story to new salespeople to teach them the importance of understanding the customer.
Of course, he could just tell them about the 15-second rule, and that it’s important to understand the customer. But he finds the story far more effective, which is the second lesson this story teaches.
Master the art of storytelling, and you’ll be a far more effective leader no matter what line of work you’re in.
Paul Smith is director of Consumer & Communications Research at The Procter & Gamble Company and a highly rated leadership and communications trainer for P&G’s management training colleges. He lives in Cincinnati, Ohio.