Cross-selling Financial Services: Profit through Retention

Published by: Datamonitor

Published: Dec. 23, 2009

Table of Contents

Overview

Catalyst

Summary

Methodology

INTRODUCTION

Customer retention is vital for providers to boost profits

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

Insight: Without trust, cross-sell does little to increase retention

Insight: Switching behavior is naturally higher among some consumer groups

Trend: Economic conditions are making consumers more selective about where they buy their FS products

Insight: Primary bank loyalty is not necessary linked to consumers' more general perceptions of worsening economic conditions

Insight: Savings products represent the biggest cross-selling opportunity for primary banks

Trend: Technology has brought advantages and disadvantages to customer retention

Insight: Generations X and Y have grown up to see FS products as 'goods' rather than 'services'

ACTION POINTS

Action: Integrate CRM and Web 2.0 to create a holistic customer retention strategy

Action: Any customer retention strategy is worthless unless accompanied by a committed company culture

APPENDIX

Data tables

Methodology

Definitions

Further reading

Ask the analyst

Datamonitor consulting

Disclaimer

TABLE OF FIGURES

Figure 1: Consumers are unlikely to change their primary bank over the next six months

Figure 2: High product holdings cannot be assumed to increase customer retention

Figure 3: Customers with high product holding are likely to investigate products from other providers over the next six months

Figure 4: Customers with high product holding are more likely to research whether their money is safe where it is over the next six months

Figure 5: US and Australian consumers with high primary bank product holding were particularly more likely to switch

Figure 6: Trust plus high product holding is the holy grail for minimizing switching

Figure 7: Reassuring consumers that their money is key to rebuilding trust

Figure 8: The link between trust and product holding varies widely across different countries

Figure 9: Consumers in China, Spain and India are most likely to change their primary bank

Figure 10: Younger consumers are most likely to change their primary banks in the next six months

Figure 11: Customers with high product holding are financially intelligent

Figure 12: More financially intelligent consumers are more prone to switching

Figure 13: Customers with high product holding are read the paper far more often than those with low product holding

Figure 14: 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 15: India holds the highest number of consumers who believe that economic conditions in their country have improved

Figure 16: The influence of economic conditions on the likelihood to change varies considerably across different countries

Figure 17: Likelihood to shop around more stems from concern in all product areas

Figure 18: There is little correlation between primary bank loyalty and perception of worsening economics

Figure 19: Savings products represent the biggest cross-selling opportunity for primary banks

Figure 20: Product popularity is similarly diverse in all European countries, but the US profile differs

Figure 21: Primary bank product popularity differs widely across Asia Pacific

Figure 22: Brazilians are more than average likely to hold every product with their primary bank, except mortgages

Figure 23: Younger consumers are less loyal

Figure 24: Younger consumers are less trusting

Figure 25: Providers must harness the advantages of a social and technological approach to consumers in equal measure

Figure 26: 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

TABLE OF TABLES

Table 1: Likelihood of changing primary bank in the next six months segmented by country

Table 2: Likelihood of investigating the banking products and services available from other banks according to number of products held with primary bank

Table 3: 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 4: Likelihood of changing primary bank in the next six months according to product holding, segmented by country

Table 5: Extent to which consumers feel their bank has reassured them that their money is safe, and corresponding trust levels

Table 6: Trust in primary bank and average number if products held with primary bank segmented by country

Table 7: Likelihood of changing primary bank in the next six months, segmented by country

Table 8: Likelihood of changing primary bank in the next six months, by age segment

Table 9: Indicators of financial intelligence according to those with no, and those with five or more, other products held with the primary bank

Table 10: Frequency of reading newspapers according to number of products held with primary bank

Table 11: Likelihood of changing primary bank in the next six months, according to indicators of financial intelligence

Table 12: Change in economic conditions in your country over the last twelve months and likelihood to now shop around more

Table 13: Perceptions of the worsening in economic conditions over the last year, by country

Table 14: 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 15: How current levels of concern in a number of product areas are affecting likeliness to now shop around more

Table 16: 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 17: Percentage of total products in each product area which are held with the primary bank

Table 18: Percentage of total products in each product area which are held with the primary bank, segmented by country

Table 19: Number of non-current account products held with primary bank, by age segment

Table 20: Trust in primary bank, by age segment

Abstract

• 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

• 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

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