Revenue Enhancement through Cross-Selling. Decrease Costs 10-30% Increase Revenues 70-90% Increase...
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Transcript of Revenue Enhancement through Cross-Selling. Decrease Costs 10-30% Increase Revenues 70-90% Increase...
Revenue Enhancementthrough Cross-Selling
DecreaseCosts
10-30%
IncreaseRevenues
70-90%
Increase in Overall Value
Valuing Customer Centricity
Cross/up-selling, target customer retention and target pricing strategy are the greatest value creators in retail banking
Source : Accenture
The critical value driver path
The critical value driver path
Increase Revenueper Relationship
60-80 %
IncreaseRevenues
70-90%
Grow Customer Base
20-40%
Cross/up-selling, target customer retention and target pricing strategy are the greatest value creators in retail banking
Source : Accenture
Increase Customer Referrals
20-40%
Improve Marketing Effectiveness
60-80%
Improve Customer Satisfaction
70-90%
Set-up Switching Costs for Customers
10-30%Increase TargetCust. Reactivation
20-40%
Increase TargetCust. Retention
45-65%
Attract New Customers
5-25%
Grow Customer Base
20-40%
Valuing Customer Centricity
Cross/up-selling, target customer retention and target pricing strategy are the greatest value creators in retail banking
The critical value driver path
Source : Accenture
Increase Revenueper Product
Increase # of Products p. Cust.
60-80%
Develop Targeted Pricing Strategy by Customer
Segment50-70%
Increase Cross/ Up-Selling
50-70%
Foster Bundling Concepts with External Partners
5-25%
Develop Personalized Product Offerings
20-40%
Improve Sales Channel Efficiency
5-25%
Increase Overall Price Level
20-30%
Increase Revenueper Relationship
60-80 %
Increase Volume per Customer
10-20%
Valuing Customer Centricity
Cross/up-selling, target customer retention and target pricing strategy are the greatest value creators in retail banking
The critical value driver path
Source : Accenture
20-40%
Valuing Customer Centricity
Cross/up-selling, target customer retention and target pricing strategy are the greatest value creators in retail banking
Increase Revenueper Product
20-40%
Increase # of Products p. Cust.
60-80%
Increase Customer Referrals
20-40%
Improve Marketing Effectiveness
60-80%
Improve Customer Satisfaction
70-90%
Set-up Switching Costs for Customers
10-30%
Develop Targeted Pricing Strategy by Customer Segment
50-70%
Increase Cross/ Up-Selling 50-70%
Foster Bundling Concepts with External Partners
5-25%
Develop Personalized Product Offerings
20-40%
Improve Sales Channel Efficiency
5-25%
Increase Overall Price Level 20-30%
Reduce Marketing Cost
Reduce Selling Cost
Reduce Servicing Cost
Reduce Credit Risk Cost
Increase Revenueper Relationship
60-80 %
Increase TargetCust. Reactivation
20-40%
Increase TargetCust. Retention
45-65%
Attract New Customers
5-25%
DecreaseCosts
10-30%
IncreaseRevenues
70-90%
Increase Volume per Customer
10-20%
Increase in Overall Value
Grow Customer Base
20-40%
The critical value driver path
Source : Accenture
• To date, cross-sell remains a case of more heat than light for most institutions – only a few banks have successfully created a systematic capability to grow their business in this way
• Leading banks are using specific tactics to increase share of wallet
Offering tightly integrated product bundles Using financial planning as a sales tool Knowing what to offer and when based on life and other key events Using a local market planning approach to drive cross-sell efforts
Revenue Enhancement through Cross-Selling
Source : McKinsey
Retail banks are executing a variety of sales tactics to increase customer penetration
1. Account Opening
1. Account Opening
2. Product Bundling
2. Product Bundling
3. Financial Planning
3. Financial Planning
4. Event-based Targeting
4. Event-based Targeting
5. Local Market Planning
5. Local Market Planning
Revenue Enhancement through Cross-Selling
Source : McKinsey
… and design optimal bundles to sell at
3.4
3.2
1.9
1.7
Consumer loanConsumer loan
MortgageMortgage
Investment
products
Investment products
Savings accountSavings account
over time…
Product combinations customers buy over time
Number of products cross -sold within
2 years if the first product is a …
Number of products cross - sold within 2 years if the first product is a …
Source : McKinsey
Revenue Enhancement through Cross-Selling
Deepening customer relationships through financial planning
* 30% of AEFA new clients come from American Express card holder base
Share of wallet Percentage• Leverage credit card transaction
information and other corporate data to maximize customer knowledge and tailor financial planning approach* (e.g., corporate card, purchasing card, corporate travel)
• Focus on client advice and matching customer needs by offering proprietary and third party products
• Cater to consumer demand for advice during economic downturn
Client retention (4 years)Percentage
Plan
No plan
Plan
No plan
80-90
40-50
>90
~70
Source : McKinsey
Revenue Enhancement through Cross-Selling
Financial planning creates sales opportunity
Citigroups' average
cross -sell ratio is 3.6
rising to 6.7 when
Citipro is used
Citigroups' average
cross -sell ratio is 3.6
rising to 6.7 when
Citipro is used
Targets all mass market customers
Uses multiple channels to reach new clients• Statement inserts• Call center (inbound, outbound)• Internet
Client provides his/her financial information• Account statements• Tax statements• Debt statements –
Mortgage/Education• Proof of Assets – Car/Home• Insurance
Systems generate customized plan and propose Citibank products to fulfill it
Source : McKinsey
Revenue Enhancement through Cross-Selling
11,712,000 3,229,402
Total working population
Tax-paying population
Nedcor Retail Bank’s current target market is estimated at 3.2m individuals, constituting 28% of the total working population
Revenue Enhancement through Cross-Selling
Source : SARS (2001)Labour Force Survey (Sep 2000)
Nedcor Retail Bank – Derivation of Client Base (as of May 2001)
Derivation of Nedcor Retail Bank Client Base
1,197,819 213,007
219,987
764,825
0
200
400
600
800
1,000
1,200
1,400
Unique clients Non-Active Dependents Total clientbase
Num
ber
of
clie
nts
(thousa
nds)
Source : Nedcor
Revenue Enhancement through Cross-Selling
Nedcor Retail Bank’s overall penetration into the 3.2 million tax-paying universe is 24%
Nedcor Retail Bank Penetration into SARS Universe
Nedcor Retail Bank
SARS Universe
0 -<R75K R75K-<R150K
R150K-<R250K
R250K-R500K
R500K-<R1m
>R1m
Income categories
Num
ber
of
people
(th
ousa
nds)
(% penetration)
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
21%
15%22% 45%
60% 40%
Nedcor clients = 588 945 Nedcor clients = 93 876
Revenue Enhancement through Cross-Selling
Source : Nedcor
1) PRIMARY CLIENTS 3) SECONDARY INTO PRIMARY CLIENTS
+ +
2) SECONDARY CLIENTS
Primary Client
Average TOTAL
REVENUE POTENTIAL
The potential is the sum of primary and secondary average wallet depth and converting secondary clients to primary clients
Source : Nedcor
Revenue Enhancement through Cross-Selling
• Within customer segments
• Between corporate and individual
• Through third party relationships
Cross-SellMacro Opportunities
• Current / Savings Account• Term Deposit• Mortgage• Asset Finance• Credit / Debit Card• Personal Loan• Garage Card• Insurance• Assurance• Asset Management / Fiduciary
Cross-SellWithin Customer Segments
Nedbank Retail 1.7 to 4.4(Wealth Management Products Add 2.5)
Cross-SellWealth Management
Assets Under Management
Assets on Balance Sheet
WillsTax
TrustTransactions
• BoE• NIB Syfrets• Cape of Good Hope Bank• Nedbank• Old Mutual
Cross-SellWealth Management
High net worthTop 300 listed corporates,government, institutions
Businesses
Medium size listed,unlisted, professionals
Owner managed
Informal sector
Individuals
Middle income
Mass market