Combination of touchpoints the new sales channel for banks

Combination of Touchpoints: The New Sales Channel for Banks

February 2014

Table of Contents Combination of Touchpoints – The New Sale Channel for Banks .................................................... 3 Overview ................................................................................................................................................. 3 Benchmarking Advertisement Channels .................................................................................................. 4 Cross-Sell Effect of Promotion Campaign ................................................................................................. 5 Analytics in Cross-selling .......................................................................................................................... 6 Pairing the Right Product – Channel Mix .................................................................................................. 6 Conclusion ............................................................................................................................................... 6

Combination of Touchpoints – The New Sale Channel for Banks Overview To remain competitive, banks across the world are embracing new channels of doing business, mainly digital channels including the internet and mobile which helps communicate and promote product offerings better. Banks are putting a high value on these new technologies to revolutionize the way they attract and retain customers.

Today, customers expect their banks to provide them access to their financial information irrespective of time and location, and that too across all customer touchpoints (banking channels).

Figure 1: Customers’ Preferred Channels Credit Card lnformation

Local Branch Personal Loan Application

Mortgage lnformation

Telephone Banking Internet Cell Phone/ Smartphone

Mortgage Loan Application

Personal Loan lnformation

Other

Credit Card Application Source: Sutherland Secondary Research

Banking channels including a branch, internet, mobile phone, ATM and call centre are some of the prominent touchpoints used by banks to provide products and services as well as to communicate with their existing and prospective customers. Based on the product category and customer profile, customers’ preferred channel may differ. Figure 1 above gives good understanding about channel preference as per the service category.

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A bank customer might use more than one mode of communication in his lifetime and hence the bank has to promote its offerings across channels. A multiple channel promotion campaign or multiple channel delivery model increases visibility of the products and services offered by banks and at the same time poses a new challenge of success accountability for retail banks.

Benchmarking Advertisement Channels Figure 2 below provides a pictorial comparison of various channels banks use for product advertisement.

The channels are benchmarked against each others on reach, cost and effectiveness in reaching the target audience. Though television, out-of-home (OOH) and targeted outbound calls are the most effective platforms for reaching out to customers, they are the costliest of all options.

An advertisement channel should be carefully picked based on the purpose of advertising. To promote a bank brand, a far-reaching advertisement mode of television or radio is generally used. On the other hand, to sell a specific product or service like credit card and mortgage, targeted channels like outbound calls, OOH media and print media including business magazines or newspapers are commonly used.

High

Figure 2: Advertisement Channel Benchmarking

Targeted Outbound Calls

OOH

Cost

Television

Internet

Low

Size of Bubble indicates effectiveness in communicating to target customers

Low

Reach

Prints/ Newspaper/ Magazine

Radio Email

High

Source: Sutherland Analysis

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Cross-Sell Effect of Promotion Campaign For a bank, cost of acquiring a new customer is multifold compared to selling an additional product to an existing customer. This explains why there is a strong push by banks to increase cross-selling. Increasing the number of products or services sold to a customer reduces the probability of the customer opting to close the relation with the bank.

Figure 3: Benefits of Cross-selling

Reduced the per customer cost of operations Provide more satisfaction and value to customer

Expand Business Helps in building brand value Improved Customer Churn A multi-channel promotion strategy covers all distribution channels, including physical, digital, and voice. This strategy help banks focus on the best way to acquire and service customers across all of these channels to maximize revenue and profits for the whole bank, including the branch network.

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Bancassurance is an ideal and the most successful example of cross-selling in the finance industry with involvement of banks. In its full holistic form, it realizes the full potential of the customer database of the bank to develop an excellent customer focused service for consumers, and the highest value on returns for the bank and insurer.

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Several studies have also confirmed that online promotion campaigns directly impact offline sales.

The purpose of online promotions and campaigns is thus not just to increase digital transactions but also to facilitate the growth of bricks-and-mortar (branch or face-to-face) distribution channel.

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Moreover, presence on social media is now a standard practice for banks, though at present this is restricted to the leading social media services like Facebook, Twitter and YouTube and is majorly used for marketing communications and monitoring of complaints and issues. Currently, social media is generally looked upon by banks as a platform to lead customers back to the bank’s proprietary online and mobile services, where security can be ensured and better services can be provided. Digital channels also produce significantly more data which can be used to profile customers, understand their needs, and target them with appropriate offerings.

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Measuring promotion campaign performance of one channel in silo gives a distorted picture of marketing channel success, and hence a holistic view of the bank’s growth should be considered to measure the success or impact of a promotion campaign.

Most banks currently miss a significant opportunity for cross-selling to their existing customer base.

Expansion of the middle class and digitally-literate customers in emerging markets combined with digital channels making it easier to purchase products has created a huge opportunity for banks to cross-sell.

Analytics in Cross-selling Analytics is often used by banks to track online transactions of a customer, which are analyzed in combination with the past data to present relevant offering to the customer. Based on the outcome of the analysis the customer is then contacted through the most relevant sales channel to provide further information about the product and if possible sell the product. Sometime a combination of channels is used to pitch a new product to the customer. For instance, an email is used with a link to the website page or a contact number to call or enter contact information for bank’s executive to reach back.

Analytics has also played a big role in defining the role of social media in product cross-selling in banking. Banks can track customers’ likes, dislikes, preferences, recommendations from friends, and products used by friends to spot possible cross-selling opportunities.

Pairing the Right Product – Channel Mix Banks are increasingly appreciating that certain products sell better through a particular channel, and they orient their sales and marketing accordingly. For example, mortgage or any other complex product is not sold online but the same is marketed across all sales channels like online, print media, etc.

However, for optimum utilization of investment made on several sales channels, the number of products that can be effectively sold through a channel should be increased. Though it is not an easy job to change the buying pattern of customers overnight, the same is possible by applying analytics on the vast amount of the data captured by banks. If implemented successfully, banks can achieve large cost savings with minimal additional cost.

Conclusion There is no second opinion on the fact that online engagement is valuable to banks and so are other emerging banking channels. They not only provide customers the convenience of banking as per their choice but also help banks in showcasing their product or service offerings on multiple platforms, thereby increasing both brand and offering visibility.

Increasing number of customers are using internet to gather information about products and services offered by banks. Some of these customers impressed by the offerings proceed to online transaction, while the rest may close the purchase either partially online and partially through branch or fully through branch.

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Thus directly or indirectly, multiple channels work in tandem towards a single objective of improving marketing and distribution of bank products and offerings. Banks can gain a lot from improving their channel-integration capabilities, which often require integrating their back-end and front-end office systems. In this era of multi-channel banking, banks must leverage all possible channels to reach out to prospective and existing customers to remain competitive.

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