Developing a Client Selection Strategy

Editor's Note: This is the first of two articles. The second article will discuss how to exit existing relationships that do not conform to the client selection strategy.

Whether your bank is large, small, regional or international, it is imperative to have a stated client selection strategy. A strategy will define which clients are appropriate to engage and retain based on the institution's risk assessment. The strategy will contain attributes such as desired industries, acceptable geographies and range of products which are offered. By developing a client selection strategy, executive management can clearly define which clients fall inside and which fall outside the acceptable range. In addition, the strategy guides sales and relationship management, informs operations and underwriting, and supports the efforts of compliance and audit. This article is a guide for sales management, but can be informative to those who are in the role of compliance or audit since their partnership is critical to the sound development of the strategy.

Designing a Client Selection Strategy

A well-designed client selection strategy has several components that drive line of business growth. These components define the parameters of a desired client. Each component parameter includes a score which, when compiled, provides an overall score. For example, each parameter is measured using metrics such as high, medium or low risk. Prospective clients who fall outside the acceptable range when scored should not be pursued by the sales teams. Components may include the following:

  • Client size (sales, revenue, asset size)
  • Client segment (small businesses, middle market, large corporate, international)
  • Products used (varies with treasury management products available, credit, investment banking)
  • Country where the client is headquartered and has additional operations (identifies countries which bank policy may not support)
  • Client location (in footprint or out of footprint)
  • Credit rating (from industry rating agencies as well as internal bank credit ratings)
  • Risk rating (as determined by the bank's internal risk rating process)
  • Industry (limits industries to those which conform to the bank's risk appetite)
  • Reputational risk to the bank (identifies clients who have civil or regulatory violations, offer unusual product, are part of a risky industry or may have underdeveloped policies or inadequate regulatory controls)

Once these parameters are defined, the second line of defense (compliance) can review how each parameter is weighed and the criteria for how each parameter is scored. With parameters defined and scored, the conversation dramatically changes between the second line of defense and the first line of defense (sales and relationship management). Now the conversation becomes one centered around the risks associated with each component of the score. Imagine discussing the risk/reward scenario of clients in a particular industry. Sales can share its revenue projections and the second line can discuss how expansion into that particular industry will impact the financial institution's risk appetite. It is critical for sales to continually review the strategy once it is in place to monitor changes in the landscape.

Sales management can leverage the strategy to define criteria when creating databases of prospective clients. These prospect lists are then distributed to the sales teams to begin the sales process. Without a client selection strategy, the sales organization may bring in relationships with little regard to the bank's risk appetite.

In addition, knowing and understanding how sales has developed its client selection strategy will enable compliance to support and refine the strategy. Compliance management can offer input as the client selection strategy is developed to identify components of higher risk. A well-defined strategy identifies which clients are desired and also allows the second line of defense to ensure compliance with regulations and regulatory guidance.

Implementing a Client Selection Strategy

Once a client selection strategy has been developed, it is imperative to quickly implement it. Sales management uses this opportunity to communicate the importance of the strategy, develop the tools sales will use to identify clients and define an escalation process for policy exceptions. Reporting tools will be developed to show adherence to the strategy.

Sales management begins by developing a project plan and a high-level communication document. Use this as an opportunity to identify the key stakeholders to include representation from sales, compliance, legal, marketing, audit and sales support. Set a timeline that includes check point meetings with the key stakeholders to measure and report on progress of the implementation. At the end of the project timeline, include steps to review the effectiveness of the implementation and a step to fine-tune the strategy's parameters and scoring tools. The audit teams, as the third line of defense, can request the client selection strategy document prior to launching a review. The strategy demonstrates to audit teams that the line of business has a plan to pursue desired clients, segments and industries and shows a deliberate business growth and expansion plan which is supported by compliance.

Work with the marketing team to cull prospects from publicly available data sources which reflect the desired parameters in the strategy. The marketing team should refine the list to eliminate prospects which are marginally aligned to the strategy. This is followed by a meeting with sales management to review the prospect lists, estimate potential revenue and assign prospects to individuals on the sales teams. Sales support uses its existing tools to load the prospect lists, track calls, proposals and closed deals. Once the initial lists are developed, sales should engage with the compliance team and the credit underwriting team to review the lists. Compliance will provide input into the risk/reward balance. Credit underwriting will reforecast its exposure and revenue projections based on anticipated sales forecasts.

As soon as the prospect lists are developed and approved, begin the sales training process. Using sales training resources, create a training plan which includes a message from the sales executive outlining the purpose of the client selection strategy. The training plan will include a training schedule which allows multiple opportunities for each sales officer to attend, so that they can work around their client meetings and travel schedules. Capture the names of attendees at each training session in order to demonstrate adherence to the strategy. Monitor the list of attendees to ensure all sales officers are trained. Immediately following the training, sales management should roll out the client prospect lists to the sales officers and begin tracking sales calls and new deals.

As the strategy is rolled out to the sales teams, develop an escalation process. There will be instances when a sales officer will identify a prospect who is not on the approved calling lists and is a client who may marginally fail on one or more of the parameters. The escalation process design includes identification of key decision makers in sales management. The process should outline the specific steps a sales officer follows and will indicate who in senior management needs to approve an exception to the strategy. Reporting is developed in order to track each requested exception, the rationale for the exception, who approved the exception and the reason the exception was approved or denied. Sales management can reach out to its compliance partner when additional input will balance the risk/reward equation.

The last major step in implementing the client selection strategy is to create reporting tools which will measure the effectiveness of and adherence to the strategy. Several metrics support the strategy including sales officers trained, exceptions granted/declined to the strategy and number of sales deals closed from the approved prospect lists.


In summary, the benefit of developing a client selection strategy is to define how sales will adjust new client prospecting to align with the institution's risk appetite. Over time, the risk profile of the bank's portfolio of clients will begin to more closely align to the risk appetite. The strategy provides the sales organization a road map with guardrails to guide new client acquisition. With a client selection strategy in place, the sales team can pursue clients who fit the bank's risk appetite; partner groups, such as compliance and credit underwriting, are able to participate in the process; and audit is able to measure adherence to the strategy. Desirable clients are onboarded and undesirable clients are not pursued. This ultimately leads to a reduction in exposure to the risk of regulatory violations or illegal activities.

Kathleen Gowin, CAMS, president, K Gowin Consulting LLC, Hilton Head Island, SC, USA,

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