Revenue growth through cross selling Roy Andersen 14
- Slides: 22
Revenue growth through cross selling Roy Andersen 14 October 2002
Is cross selling a winning strategy? Cross selling has triggered financial services consolidation but analysts sceptical about benefit
Content Forms of cross selling Why cross sell? Bancassurance Ø Ø Ø Models International experience Liberty experience Conclusion
Cross selling is marketing additional products based on current client relationships Products could be manufactured by different entities
The perfect service Investment product Pension plan Homeowners’ cover Life Policy (to cover bond) Home loan Credit card Current account
Direct cross selling Agent exposes client to wider range of products Can alienate client if: Ø Ø Feels pressurised One product fails Indirect cross selling Client informed of additional products via statements or mail shots Downside “junk mail anger” Detracts from original point of contact
Why cross sell? Reduction in customer acquisition cost: Ø Ø Costs shared over many more products Electronic banking lowers costs even further
Why cross sell? Protection from competitors: Ø Ø Locks them out from clients Avoids defection to other one-stop providers Leverages off reputation: Ø Clients trust certain institutions/ brands
Why cross sell? Client convenience: Ø One-stop service Ability to leverage all distribution channels: Ø Channel must suit the economics of the product
Bancassurance: Selling of insurance products by banks Assurbanking: Selling of banking products by assurers
Bancassurance Answer to: Ø Commoditisation of banking products Ø Squeezing of insurance/investment product margins But margin is shared
Bancassurance models [1] Bank provides leads to insurers [2] Insurer provides products to banks Common to Europe Also common in Europe High advice products best Low advice products best Liberty / Stanbank hybrid of 1 and 2
Bancassurance models [3] Joint venture Closer to assurbanking [4] Full merger Risks high compared to benefits Don’t have to buy the cow All 4 models work
International trends Well established in Spain, France and Italy Becoming relevant to Scandinavia, Belgium and Netherlands In USA restricted by previous Glass Steagall Act Hopeful signs from L & G/Barclays, Irish Life/Irish Permanent Building Society, CGNU/RBOS Analysts sceptical
Markets where bancassurance succeeds High savings/pension reform Immature demand for financial services Absence of well developed IFA network High savings/growth in disposable income Low SA savings levels do not bode well (15% of GDP) - but. Rich are getting Richer
Ingredients for success bancassurance Large bank client base Smaller low cost insurer Commitment by bank to open client base The insurer manages the bank sales force (SBFC +18%)
Ingredients for success bancassurance Client profile synergy “Embed” the simple products Aligning employee incentivisation It’s all about relationships
Stanbank / Liberty model Stanbank Products STANLIB/Ermi- Liberty/Char-ter tage Products Bank branches SBFC e-Bank Call centres Liberty agents/franchises IFAs Website
Motivation for creation of STANLIB Scale Ø Ø AUM R 135 bn Biggest unit trust company Pooling of talent Leveraging of distribution channels using bank and insurance licences for product development
CRM - Liberty experience Delivering more for retention than for new sales
Conclusion No one model Success and profitability depend on attitude and relationships
- Personal selling skills
- Introduction to personal selling
- Marginal revenue
- Benefits of cross selling in banks
- Relative growth rates
- Eudicot
- Growthchain
- Primary growth and secondary growth in plants
- Chapter 35 plant structure growth and development
- Geometric vs exponential growth
- Neoclassical growth theory vs. endogenous growth theory
- Organic growth vs inorganic growth
- Growth through reinvestment
- Growth mindset cartoon
- Growth through reinvestment
- Breaking through a growth barrier
- Test cross and back cross
- Test cross and back cross with example
- Incomplete dominant inheritance
- Difference between dihybrid and monohybrid cross
- In the cross, in the cross be my glory ever
- Lingualized occlusion vs balanced occlusion
- What change took place in hinduism during the gupta empire?