Revenue Enhancement through Cross-Selling

Transcription

1 Revenue Enhancement through Cross-Selling

2 Valuing Customer Centricity The critical value driver path Cross/up-selling, target customer retention and target pricing strategy are the greatest value creators in retail banking Increase Revenues 70-90% Increase in Overall Value Decrease Costs 10-30% Source : Accenture

3 The critical value driver path Cross/up-selling, target customer retention and target pricing strategy are the greatest value creators in retail banking Grow Customer Base 20-40% Increase Revenues 70-90% Increase Revenue per Relationship % Source : Accenture

4 Valuing Customer Centricity The critical value driver path Cross/up-selling, target customer retention and target pricing strategy are the greatest value creators in retail banking Increase Customer Referrals 20-40% Attract New Customers 5-25% Improve Marketing Effectiveness 60-80% Grow Customer Base 20-40% Increase Target Cust. Retention 45-65% Improve Customer Satisfaction 70-90% Increase Target Cust. Reactivation 20-40% Set-up Switching Costs for Customers 10-30% Source : Accenture

5 Valuing Customer Centricity The critical value driver path Cross/up-selling, target customer retention and target pricing strategy are the greatest value creators in retail banking Develop Targeted Pricing Strategy by Customer Segment 50-70% Increase Revenue per Relationship % Increase Revenue per Product 20-40% Increase Overall Price Level Increase Volume per Customer Increase Cross/ Up- Selling 20-30% 10-20% 50-70% Increase # of Products p. Cust % Foster Bundling Concepts with External Partners 5-25% Develop Personalized Product Offerings 20-40% Source : Accenture Improve Sales Channel Efficiency 5-25%

6 Valuing Customer Centricity The critical value driver path Cross/up-selling, target customer retention and target pricing strategy are the greatest value creators in retail banking Attract New Customers 5-25% Increase Customer Referrals Improve Marketing Effectiveness 20-40% 60-80% Increase Revenues 70-90% Grow Customer Base 20-40% Increase Target Cust. Retention Increase Target Cust. Reactivation 45-65% 20-40% Improve Customer Satisfaction Set-up Switching Costs for Customers Develop Targeted Pricing Strategy by Customer Segment 70-90% 10-30% 50-70% Increase Revenue per Product 20-40% Increase Overall Price Level 20-30% Increase in Overall Value Increase Revenue per Relationship % Increase Volume per Customer 10-20% Increase Cross/ Up-Selling 50-70% Decrease Costs 10-30% Reduce Marketing Cost Reduce Selling Cost Reduce Servicing Cost Reduce Credit Risk Cost Increase # of Products p. Cust % Foster Bundling Concepts with External Partners Develop Personalized Product Offerings Improve Sales Channel Efficiency 5-25% 20-40% 5-25% Source : Accenture

7 Revenue Enhancement through Cross-Selling 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 Source : McKinsey

8 Revenue Enhancement through Cross-Selling Retail banks are executing a variety of sales tactics to increase customer penetration 1. Account Opening 2. Product Bundling 3. Financial Planning 4. Eventbased Targeting 5. Local Market Planning Source : McKinsey

9 Revenue Enhancement through Cross-Selling Product combinations customers buy over time over time Number Number of of products products cross cross - sold - sold within within 2 years if the first product is a 2 years if the first product is a and design optimal bundles to sell at Consumer loan loan 3.4 Mortgage 3.2 Investment products 1.9 Savings account 1.7 Source : McKinsey

10 Revenue Enhancement through Cross-Selling Deepening customer relationships through financial planning 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) Share of wallet Percentage Plan No plan Focus on client advice and matching customer needs by offering proprietary and third party products Client retention (4 years) Percentage Cater to consumer demand for advice during economic downturn Plan No plan ~70 >90 * 30% of AEFA new clients come from American Express card holder base Source : McKinsey

11 Revenue Enhancement through Cross-Selling Financial planning creates sales opportunity 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 Citigroups' average cross - sell ratio is 3.6 rising to 6.7 when Citipro is used Systems generate customized plan and propose Citibank products to fulfill it Source : McKinsey

12 Revenue Enhancement through Cross-Selling Nedcor Retail Bank s current target market is estimated at 3.2m individuals, constituting 28% of the total working population Total working population Tax-paying population 11,712,000 3,229,402 Source : SARS (2001) Labour Force Survey (Sep 2000)

13 Nedcor Retail Bank Derivation of Client Base (as Revenue of May 2001) Enhancement through Cross-Selling Derivation of Nedcor Retail Bank Client Base Number of clients (thousands) 1,400 1,200 1, ,197, , , , Unique clients Non-Active Dependents Total client base Source : Nedcor

14 Revenue Enhancement through Cross-Selling Nedcor Retail Bank s overall penetration into the 3.2 million tax-paying universe is 24% 1,800 1,600 Nedcor Retail Bank Penetration into SARS Universe Nedcor clients = Nedcor clients = (% penetration) Number of people (thousands) 1,400 1,200 1, % Nedcor Retail Bank SARS Universe % 0 -<R75K R75K- <R150K 22% 45% 60% 40% R150K- <R250K R250K- R500K R500K- <R1m Income categories >R1m Source : Nedcor

15 Revenue Enhancement through Cross-Selling The potential is the sum of primary and secondary average wallet depth and converting secondary clients to primary clients Primary Client Average + + TOTAL REVENUE POTENTIAL 1) PRIMARY CLIENTS 2) SECONDARY 3) SECONDARY INTO CLIENTS PRIMARY CLIENTS Source : Nedcor

16 Cross-Sell Macro Opportunities Within customer segments Between corporate and individual Through third party relationships

17 Cross-Sell Within Customer Segments Current / Savings Account Term Deposit Mortgage Asset Finance Credit / Debit Card Personal Loan Garage Card Insurance Assurance Asset Management / Fiduciary Nedbank Retail 1.7 to 4.4 (Wealth Management Products Add 2.5)

18 Cross-Sell Wealth Management Wills Assets Under Management Tax Transactions Assets on Balance Sheet Trust

19 Cross-Sell Wealth Management BoE NIB Syfrets Cape of Good Hope Bank Nedbank Old Mutual

20 Cross-Sell Between Corporate and Individual Top 300 listed corporates, government, institutions High net worth Investment Managemen t Business Corporate Banking Services Medium size listed, unlisted, professionals Owner managed Middle income Informal sector Mass market Retail Banking Services Businesses Individuals BoE main areas of focus

21 Cross-Sell Joint Ventures Imperial Bank Pick n Pay JD Group Old Mutual Bank

22 Conclusion Nedbank is uniquely positioned to: Extract value through cost reduction and synergies Cross sell to significant client bases previously untapped

23 Thank you Questions?