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Revenue Enhancement through Cross-Selling. 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.

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Revenue Enhancement through Cross-Selling

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Revenue enhancement through cross selling l.jpg

Revenue Enhancementthrough Cross-Selling


Valuing customer centricity l.jpg

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

IncreaseRevenues

70-90%

Increase in Overall Value

DecreaseCosts

10-30%

Source : Accenture


Slide3 l.jpg

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%

IncreaseRevenues

70-90%

Increase Revenueper Relationship

60-80 %

Source : Accenture


Valuing customer centricity4 l.jpg

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%

5-25%

Attract New Customers

Improve Marketing Effectiveness

60-80%

Improve Customer Satisfaction

70-90%

Increase TargetCust. Retention

45-65%

Grow Customer Base

20-40%

Set-up Switching Costs for Customers

10-30%

20-40%

Increase TargetCust. Reactivation

Source : Accenture


Valuing customer centricity5 l.jpg

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 Overall Price Level

20-30%

Increase Revenueper Product

20-40%

Increase Volume per Customer

10-20%

Increase Revenueper Relationship

60-80 %

Increase Cross/ Up-Selling

50-70%

Foster Bundling Concepts with External Partners

5-25%

60-80%

Increase # of Products p. Cust.

Develop Personalized Product Offerings

20-40%

Improve Sales Channel Efficiency

5-25%

Source : Accenture


Valuing customer centricity6 l.jpg

Increase Customer Referrals

20-40%

5-25%

Attract New Customers

Improve Marketing Effectiveness

60-80%

Improve Customer Satisfaction

70-90%

Grow Customer Base

20-40%

Increase TargetCust. Retention

45-65%

Set-up Switching Costs for Customers

10-30%

20-40%

Increase TargetCust. Reactivation

Develop Targeted Pricing Strategy by Customer Segment

50-70%

IncreaseRevenues

70-90%

Increase Overall Price Level

20-30%

20-40%

Increase Revenueper Product

Increase Volume per Customer

10-20%

Increase Revenueper Relationship

60-80 %

Increase in Overall Value

Increase Cross/ Up-Selling

50-70%

Foster Bundling Concepts with External Partners

5-25%

60-80%

Increase # of Products p. Cust.

Develop Personalized Product Offerings

20-40%

Reduce Marketing Cost

Improve Sales Channel Efficiency

5-25%

DecreaseCosts

10-30%

Reduce Selling Cost

Reduce Servicing Cost

Reduce Credit Risk Cost

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

Source : Accenture


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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


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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.Event-based Targeting

5.Local Market Planning

Source : McKinsey


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Revenue Enhancement through Cross-Selling

3.4

Consumer loan

Consumer loan

3.2

Mortgage

Mortgage

1.9

Investment

Investment

products

products

1.7

Savings account

Savings account

Product combinations customers buy

over time

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 …

… and design optimal bundles to sell at

Source : McKinsey


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Revenue Enhancement through Cross-Selling

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

Deepening customer relationships through financial planning

Share of wallet

Percentage

Plan

80

-

90

No plan

40

-

50

Client retention (4 years)

Percentage

>90

Plan

~70

No plan

Source : McKinsey

*

30% of AEFA new clients come from American Express card holder base


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Revenue Enhancement through Cross-Selling

Targets all mass market

customers

Uses multiple channels to

reach new clients

Statement inserts

Call center (inbound, outbound)

Internet

Citigroups' average

Citigroups' average

cross

-

sell ratio is 3.6

cross

-

sell ratio is 3.6

Client provides his/her financial

rising to 6.7 when

rising to 6.7 when

information

Citipro is used

Citipro is used

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

Financial planning creates sales opportunity

Source : McKinsey


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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)


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Revenue Enhancement through Cross-Selling

Nedcor Retail Bank – Derivation of Client Base (as of May 2001)

Derivation of Nedcor Retail Bank ClientBase

1,400

1,197,819

213,007

1,200

219,987

1,000

764,825

800

Number of clients

(thousands)

600

400

200

0

Unique clients

Non-Active

Dependents

Total client

base

Source : Nedcor


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Revenue Enhancement through Cross-Selling

Nedcor Retail Bank

SARS Universe

Nedcor Retail Bank’s overall penetration into the 3.2 million tax-paying universe is 24%

Nedcor Retail Bank Penetration into SARS Universe

1,800

Nedcor clients = 93 876

Nedcor clients = 588 945

(% penetration)

1,600

1,400

1,200

Number of people

(thousands)

1,000

800

600

21%

400

15%

200

45%

22%

40%

60%

0

0 -<R75K

R75K-

R150K-

R250K-

R500K-

>R1m

<R150K

<R250K

R500K

<R1m

Income categories

Source : Nedcor


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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 CLIENTS

3) SECONDARY INTO PRIMARY CLIENTS

Source : Nedcor


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Cross-Sell

Macro Opportunities

  • Within customer segments

  • Between corporate and individual

  • Through third party relationships


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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 Retail1.7 to 4.4

(Wealth Management Products Add 2.5)


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Cross-Sell

Wealth Management

Wills

Tax

Assets Under Management

Assets on Balance Sheet

Trust

Transactions


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Cross-Sell

Wealth Management

  • BoE

  • NIB Syfrets

  • Cape of Good Hope Bank

  • Nedbank

  • Old Mutual


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Investment Management Business

Corporate Banking Services

Retail Banking Services

Cross-Sell

Between Corporate and Individual

Top 300 listed corporates,

government, institutions

High net worth

Medium size listed,

unlisted, professionals

Middle income

Owner managed

Mass market

Informal sector

BoE main areas of focus

Businesses

Individuals


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Cross-Sell

Joint Ventures

  • Imperial Bank

  • Pick ‘n Pay

  • JD Group

  • Old Mutual Bank


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Conclusion

  • Extract value through cost reduction and synergies

  • Cross sell to significant client bases previously untapped

Nedbank is uniquely positioned to:


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Thank youQuestions?


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