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


Increase Revenueper Relationship

60-80 %

IncreaseRevenues

70-90%

Grow Customer Base

20-40%


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%




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%


60-80 %

Increase Volume per Customer

10-20%




Source : Accenture

20-40%



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


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%


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


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


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


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


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


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


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


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


• 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

Revenue Enhancement through Cross-Selling. Decrease Costs 10-30% Increase Revenues 70-90% Increase...

Documents

Transcript of Revenue Enhancement through Cross-Selling. Decrease Costs 10-30% Increase Revenues 70-90% Increase...