Cross-selling Financial Services: Profit through Retention

Cross-selling Financial Services: Profit through Retention published by Datamonitor in December, 2009. This report consists of 66 pages and the price starts from US $ 4495.

Introduction

Abstract

Introduction

The industry assumption that simply improving multiple product holdings will boost retention rates no longer holds. Changing needs of consumers as well as ongoing technological advancements mean that providers must reassess their cross-sell strategies in order to drive profit through a more holistic approach to retention.

Scope of this research

• Using data from our global FSCI survey, this report evaluates the drivers of customer retention
• The report discusses trends and developments in consumer needs and providers' capabilities and how these can drive a successful strategy
• The report provides concrete actions for providers to create a holistic approach to customer engagement in order to boost retention levels

Research and analysis highlights

In assessing the impact that multiple product holdings have on a consumers' likelihood to change their primary bank, Datamonitor has found that contrary to industry assumptions a direct and simplistic link between product holding and intention to stay with a bank cannot be made.

While it is understandable that those who believe that economic conditions have worsened are more likely to now shop around more for their FS products, it is those who believe that economic conditions in their country have actually improved who are the most likely to shop around more now.

Generations X and Y have grown up in an increasingly technological world and this has had many implications for the way they view the FS space, both in the commoditization of products, but also in their personal interaction and communication preferences.

Key reasons to purchase this research

• Access the results of Datamonitor' s Global FS Consumer Insight survey in order to identify the drivers of customer retention
• Identify why cross-selling strategies must be reassessed as a result of changing consumer needs
• Identify strategies you can take to create a more holistic approach to customer engagement and effectively gain greater share of wallet

Table of Contents

OVERVIEW

• Catalyst
• Summary
• Methodology

INTRODUCTION

• Customer retention is vital for providers to boost profits
  • Customer retention is not cheap, but it is cheaper than losing customers
  • CRM technology remains a vital part of any retention strategy
  • FS providers have been notoriously slow to acknowledge the value of creating a 360 degree view of the customer

THE FUTURE DECODED

• Trend: The perception that increasing consumers' product holding boosts customer value does not hold
• Insight: High product holdings do not automatically translate into greater customer retention
  • Consumers with high product holdings are prone to research opportunities elsewhere
  • The influence of product holding on consumers' likelihood to switch is similarly low in all countries

• Insight: Without trust, cross-sell does little to increase retention
  • Trust plus high product holding is the holy grail for minimizing switching
  • The link between trust and product holding varies widely across different countries

• Insight: Switching behavior is naturally higher among some consumer groups
  • Consumers in China, Spain and India are most likely to change their primary bank
  • Consumers aged between 25 and 34 are at the greatest risk of switching
  • More financially intelligent consumers are more prone to switching

• Trend: Economic conditions are making consumers more selective about where they buy their FS products
  • Consumers who believe that economic conditions in their country have remained the same over the last year are the least likely to shop around more
  • The influence of economic conditions on the likelihood to change varies considerably across different countries
  • Likelihood to shop around more stems from concern in all product areas

• Insight: Primary bank loyalty is not necessary linked to consumers' more general perceptions of worsening economic conditions
  • The influence of wider perceptions of economic views on primary bank loyalty appears to be stronger in emerging countries

• Insight: Savings products represent the biggest cross-selling opportunity for primary banks
  • Cross-country findings highlight key differences in the popularity of different products held with the primary bank

• Trend: Technology has brought advantages and disadvantages to customer retention
  • Technological capabilities in data collection and analytics are entirely advantageous
  • Technology is worthless if not employed properly
  • A holistic approach combining technology and culture is key

• Insight: Generations X and Y have grown up to see FS products as ' goods' rather than ' services'
  • Younger consumers are less loyal and less trusting
  • Connecting with generation Y requires a different set of tools

ACTION POINTS

• Action: Integrate CRM and Web 2.0 to create a holistic customer retention strategy
  • Banks should use the recession as an opportunity for innovation in communication and interaction via the web
  • Experiment boldly with Web 2.0

• Action: Any customer retention strategy is worthless unless accompanied by a committed company culture
  • (Untitled sub-section)

APPENDIX

• Data tables
• Methodology
• Definitions
  • The Datamonitor Financial Services Consumer Insight Megatrend Framework

• Further reading
• Ask the analyst
• Datamonitor consulting
• Disclaimer

TABLES

• Table: Likelihood of changing primary bank in the next six months segmented by country
• Table: Likelihood of investigating the banking products and services available from other banks according to number of products held with primary bank
• Table: Likelihood of researching whether money is safe where it is over the next six months according to number of products held with primary bank
• Table: Likelihood of changing primary bank in the next six months according to product holding, segmented by country
• Table: Extent to which consumers feel their bank has reassured them that their money is safe, and corresponding trust levels
• Table: Trust in primary bank and average number if products held with primary bank segmented by country
• Table: Likelihood of changing primary bank in the next six months, segmented by country
• Table: Likelihood of changing primary bank in the next six months, by age segment
• Table: Indicators of financial intelligence according to those with no, and those with five or more, other products held with the primary bank
• Table: Frequency of reading newspapers according to number of products held with primary bank
• Table: Likelihood of changing primary bank in the next six months, according to indicators of financial intelligence
• Table: Change in economic conditions in your country over the last twelve months and likelihood to now shop around more
• Table: Perceptions of the worsening in economic conditions over the last year, by country
• Table: Likelihood of changing primary bank in the next six months, according to the change in economic conditions over the last year, segmented by country
• Table: How current levels of concern in a number of product areas are affecting likeliness to now shop around more
• Table: Percentage of consumers who believe economic conditions to have ' worsened a lot' in the last 12 months, and percentage of total products which are held with primary banks, by country
• Table: Percentage of total products in each product area which are held with the primary bank
• Table: Percentage of total products in each product area which are held with the primary bank, segmented by country
• Table: Number of non-current account products held with primary bank, by age segment
• Table: Trust in primary bank, by age segment

FIGURES

• Figure: Consumers are unlikely to change their primary bank over the next six months
• Figure: High product holdings cannot be assumed to increase customer retention
• Figure: Customers with high product holding are likely to investigate products from other providers over the next six months
• Figure: Customers with high product holding are more likely to research whether their money is safe where it is over the next six months
• Figure: US and Australian consumers with high primary bank product holding were particularly more likely to switch
• Figure: Trust plus high product holding is the holy grail for minimizing switching
• Figure: Reassuring consumers that their money is key to rebuilding trust
• Figure: The link between trust and product holding varies widely across different countries
• Figure: Consumers in China, Spain and India are most likely to change their primary bank
• Figure: Younger consumers are most likely to change their primary banks in the next six months
• Figure: Customers with high product holding are financially intelligent
• Figure: More financially intelligent consumers are more prone to switching
• Figure: Customers with high product holding are read the paper far more often than those with low product holding
• Figure: Consumers who believe that economic conditions in their country have remained the same over the last year are the least likely to shop around more
• Figure: India holds the highest number of consumers who believe that economic conditions in their country have improved
• Figure: The influence of economic conditions on the likelihood to change varies considerably across different countries
• Figure: Likelihood to shop around more stems from concern in all product areas
• Figure: There is little correlation between primary bank loyalty and perception of worsening economics
• Figure: Savings products represent the biggest cross-selling opportunity for primary banks
• Figure: Product popularity is similarly diverse in all European countries, but the US profile differs
• Figure: Primary bank product popularity differs widely across Asia Pacific
• Figure: Brazilians are more than average likely to hold every product with their primary bank, except mortgages
• Figure: Younger consumers are less loyal
• Figure: Younger consumers are less trusting
• Figure: Providers must harness the advantages of a social and technological approach to consumers in equal measure
• Figure: Bank of America' s Small Business Online Community successfully pioneered the use of Web 2.0 in a customer-driven engagement and cross-selling strategy

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