Strategic Analysis of Cross Sell Critical Success Factors January 2015
the market analysis consultants www.whitespaceanalysis.com
Contents
• Introduction
• The Importance of Cross Sell • Critical Success Factors • Cross Sector Analysis • Key Take Outs
January 2015
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the market analysis consultants
Introduction
White Space have conducted in-depth research across 3 sectors to understand the CSFs for successful cross sell activity…
Why is cross sell perceived as being important?
What are the key questions to be answered?
How have we answered these key questions?
Customer retention and increasing revenue per customer are more important than ever. Cross selling products to customers is a potential route to achieve increases in both
Is cross sell actually important to the different sectors?
Interviews with senior staff who have worked for leading providers in…
WS set out to investigate how cross selling is used in 3 different sectors and what lessons could be learned from different cross selling strategies
Which, if any, CSFs are important across all 3 sectors?
What are the key CSFs in each sector?
Why are these CSFs crucial?
Why and how are these CSFs applicable to all 3 sectors?
Insurance
Retail Banking
Telecoms
Why are there sector specific CSFs?
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Contents
• Introduction
• The Importance of Cross Sell • Critical Success Factors • Cross Sector Analysis • Key Take Outs
Is cross sell important in Insurance, Retail Banking and Telecoms?
January 2015
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Importance of Cross Sell
Cross sell is seen as important as it drives customer retention, mitigating the expense of acquiring new customers…
Insurance “Cross sell in insurance is growing increasingly important. As the cost of acquiring customers is becoming so high, companies have to find way to win back these costs. Additionally, as the first year of a product is often designed to be loss leading, customer retention through additional products is crucial”
Retail Banking “Cross sell is very important for improving customer retention. We often entice customers in with good deals for an initial period, but after this they may lose interest. Therefore we use cross sell to rope the customer back in by using another product” Global Marketing Campaign Manager, Major U.K. Retail Bank
Former Strategy Director, Major U.K. Insurance Provider
Telecoms “Cross sell is crucial to the sector. Being good at cross sell means you don’t have to pump as much resource into the customer acquisition strategy, therefore it is more cost effective. Acquiring new customers is expensive and it is just easier to add more product onto those customers you have already worked really hard to acquire” Analyst, Major U.K. Telecoms Provider
Cross sell is seen as important in all three sectors considered. As the costs of acquiring new customers are high, being able to effectively sell more products to existing customers, ‘get the most bang for your buck’, is an effective means of mitigating these costs
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Contents
• Introduction
• The Importance of Cross Sell • Critical Success Factors Insurance Retail Banking
Telecoms • Cross Sector Analysis • Key Take Outs What are the Critical Success Factors within each of the 3 sectors? Why are these factors so important to each sector? January 2015
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Critical Success Factors: What are the CSFs within each of the 3 sectors?
In Insurance, data can be used to predict the customer’s likelihood to buy further products, in turn building customer relationships…
Insurance
Critical Success Factors in Insurance
“The insurance sector suffers from a lack of trust and this is an issue for cross selling. A customer needs to have a connection with the seller, and currently this is rarely the case in insurance”
Data: Two different types of Data are crucial
Former Strategy Director, Major U.K. Insurance Provider Life Cycle Information
Life Stage Understanding
Customer Trust
“In insurance, cross sell is about knowing the customers, knowing what is happening in their life and when they are due for renewal. It is about knowing the perfect time the customer might want to buy the product. If the time is not right, the customer will not want or need to buy” Former Business Improvement Manager, Major U.K. Insurance Provider
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Critical Success Factors: Why are these factors so important to each sector?
Targeted communication with customers is crucial to understand a customer’s propensity to buy…
Life Cycle Information
Insurance
“To be able to cross sell successfully, a company needs to know a customer’s propensity to buy. If a customer already has home insurance and this is not up for renewal, or if they do not own a home, then the customer will not buy home insurance. Cross sell in insurance is about approaching a customer when they would be most likely to purchase a product, with a proposition that relates to them” Former Business Improvement Manager, Major U.K. Insurance Provider
Life Stage Understanding
“Insurance companies should genuinely understand a customer. If a customer is thinking about buying a car, that’s when we should be contacting them to sell them motor insurance. Analytics do not give a true understanding of the customer but merely provide interesting anomalies. For example, three men, all 45 years-old, living in the same area buying home insurance at the same time does not, necessarily, represent a trend; there needs to be further context” Former Strategy Director, Major U.K. Insurance Provider
Customer Trust
“If a customer does not trust a company, they will not buy another product from them. In this area, Mutuals (such as NFU Mutual) have the golden key: as they are perceived to be more trustworthy. Other companies have tried to replicate this in different ways. This can be seen by LV’s ‘love’ campaign and when they allowed customers to claim on their insurance during the volcanic ash cloud, even though this was not covered by the terms of the insurance” Former Business Improvement Manager, Major U.K. Insurance Provider
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Critical Success Factors: What are the CSFs within each of the 3 sectors?
In Retail Banking, first product experience was highlighted as the most important CSF, with data and staff viewed as secondary… “In a nutshell, the most important critical success factor for cross sell is the first product experience. You must deliver a high quality first product to hook the customer in. If they love it, they will keep buying more”
Excellent First Product Experience
Global Marketing Campaign Manager, Major U.K. Retail Bank
“Data tells you who it is worth cross selling to. However, it is the initial customer experience that makes the customer responsive to cross selling”
Strong Data Analytics Well Trained and Motivated Staff
Global Marketing Campaign Manager, Major U.K. Retail Bank
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Retail Banking
“Unless the salesperson is highly skilled, we will not try to cross sell until after the first three months of a new customer’s contract. It becomes easier to cross sell for all staff once the customer is hooked in” Global Marketing Campaign Manager, Major U.K. Retail Bank
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Critical Success Factors: Why are these factors so important to each sector?
Without addressing each CSF, retail banks do not have the necessary demand, knowledge, or capability to cross sell well…
First Product Experience
Retail Banking
“We consider the first three months of the customer being with us to be sacred. We focus on ensuring that the customer has an outstanding experience and so is very engaged with that first product. Only after this initial period do we try to cross sell. The first three months allows us to hook the customer in and increase their propensity to buy further products” Global Marketing Campaign Manager, Major U.K. Retail Bank
Data Analytics
“You must have strong data capabilities to successfully cross sell. You need to have the proper data to know that your products are matching your cross sell demographics. For example, when cross selling credit card products you need to know whether the individual falls into the ‘active’ or ‘dormant’ category and if they fall into the ideal age range of 25 – 35. If the customer does not fit the necessary demographic it is not worth your time and resources attempting to cross sell to them” Global Marketing Campaign Manager, Major U.K. Retail Bank
Well Trained and Motivated Staff
“Your staff must be good sellers. We only allow cross sell at acquisition if our branch managers and sales people are excellent; well trained. Furthermore, if you are cross selling products across different business silos, salespeople must be incentivised to sell both sets of products, not just their own. If they are not, naturally people will not care as much and only focus on selling their own items, for which they receive additional rewards” Manager, Major U.K. Retail Bank
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Critical Success Factors: What are the CSFs within each of the 3 sectors?
With increasing competition in the Telecoms market, addressing cross sell CSFs correctly is becoming even more crucial… “Having the right array of products, being effective at engaging with customers, messaging effectively against competitors and having the data to know when and where to act are crucial to being successful at cross sell in the telecoms industry. These are the basics that everyone in the industry looks to get right” “The importance of having customers with multiple products is only going to grow as more providers come into the various telecoms spaces. Providers from other spaces looking to diversify will create more competition in these areas and therefore we are going to be squeezed by even more potential threats”
Telecoms
CSFs: Holistic Product Offering
Well Trained and Motivated Staff
Consistent Consumer Messaging
Data Capabilities
Analyst, Major U.K. Telecoms Provider
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Critical Success Factors: Why are these factors so important to each sector?
A failure to act on all four CSFs, will mean that Telecoms providers will struggle to effectively cross sell…
Holistic Product Offering
Well Trained and Motivated Staff
Telecoms
“Getting the product right, while tough, is absolutely crucial. In the telecoms space more than any other, providers are prepared to throw so much into the mix to try to attract the customer. Customers are looking for the easiest solution that meets their needs, so having products that can be easily cross sold and bundled in with others is essential” Analyst, Major U.K. Telecoms Provider “All of our teams, sales, service, complaints and the rest, are crucial to ensuring we are able to successfully cross sell to existing customers. We look to equip all of our staff with the ability to engage with the customer on a one-to-one basis, empathise with them, and convince them that they ought to have all of their telco products with us. Every engagement can then become a cross sell opportunity” Analyst, Major U.K. Telecoms Provider
Consistent Consumer Messaging
“Explaining the comparability of competitor products to customers is fundamental. Customers might see that another provider offers twice as many television channels as we do, but we need to ensure most consumers, individuals themselves potentially, understand that they only watch a handful and therefore the products are actually the same. Getting the messaging right and consistent is therefore vital” Analyst, Major U.K. Telecoms Provider
Data Capabilities
“The final CSF is having a strong set of data on the customer: timing is key. If we catch a customer at a time that their existing contract is coming to an end and they are a little annoyed with their existing provider, they are far more likely to switch than when they are in a middle of the contract term, in which case we are basically wasting our time and resource” Analyst, Major U.K. Telecoms Provider 12
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Contents
• Introduction
• The Importance of Cross Sell • Critical Success Factors • Cross Sector Analysis • Key Take Outs
What Critical Success Factors are important across all 3 sectors? Why and how are these Critical Success Factors important to all sectors? Why are some Critical Success Factors sector specific? January 2015
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Cross sector Analysis: What Critical Success Factors are important across all the 3 sectors?
The effective use of Data Analytics is the only constant CSF across all 3 sectors considered… “You must have strong data analytics in order to cross sell effectively. You have to know which products sell well together and you need good data to know that your products match your key cross sell demographics” Manager, Major U.K. Retail Bank
Insurance Customer Affinity/Brand Loyalty
Data Analytics Excellent First Product Experience
Well Trained and Motivated Staff
Retail Banking
Consistent Consumer Messaging
Holistic Product Offering
Telecoms
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Cross sector Analysis: Why and how are these Critical Success Factors important to all sectors?
All firms need data to build ‘customer profiles’ to cross sell effectively, but the data points used to profile varies across the sectors… Data Analytics is important in all sectors because in order to cross sell effectively companies have to have a good understanding of their customers. However, the necessary information to understand regarding the customer varies across the sectors, except for customer life cycle data
Number of sectors data type is relevant to Customer Product Engagement Firms across Retail Banking
all three sectors need data analytics to understand…
Only in Retail Banking is product engagement a good indicator of the likelihood of a successful cross sell Unlike in telecoms where customers continually use the product, or in insurance where customers rarely use the product, in retail banking customers may or may not be engaged with the item
Customer Life Stage Data
Customer Life Cycle Data
Retail Banking
Retail Banking
Insurance
Insurance
Telecoms
In Retail Banking and Insurance, individuals only think about purchasing new products at certain stages of their lives
In all three sectors it is important to know where the customer falls in relation to acquisition or renewal in order to get the timing of the cross sell correct
People of all ages use telecoms. Therefore, knowing the customer demographic does not significantly impact Telecoms providers’ ability to cross sell
You have to know whether the consumer has had enough time to become ‘engaged’ with the product, or if they are at a renewal point when they would consider alternate providers
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Cross sector Analysis: Why are some Critical Success Factors sector specific?
Differences in cross sell CSFs are explained by differing industry norms and expectations… CSF
Insurance
Retail Banking
Customer Trust
Excellent First Product Experience
Consistent Consumer Messaging
Why is it a CSF in this industry? As insurance is used in times of need, if a customer trusts a company will provide help, they will be more receptive to cross sell
If customers receive great service in their first product, they are more likely to sign up for another
Telecoms: Customers primarily care about the product and do not require the same trust level Retail Banking: Customer trust is regarded as a hygiene factor Insurance: The same level of interaction is not expected. Therefore, product experience is not prioritised Telecoms: Quality of experience is taken for granted
Allows consumers to understand benefits of product offering
Insurance: There is not as much complexity in products: it is clearer what the offering is and how much it costs
Allows customers to bundle products in a convenient way
Retail Banking: Lack of ambiguity. Clear what product is being offered and the cost
Telecoms Holistic Product Offering
Why it is not a CSF in other industries?
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Contents
• Introduction
• The Importance of Cross Sell • Critical Success Factors • Cross Sector Analysis • Key Take Outs
January 2015
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the market analysis consultants
Key Take Outs
White Space have identified 4 Key Take Outs for successful cross sell activity…
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Recognition of Importance: With pressure on the need to ensure customer retention levels and increase revenue per customer, the importance of successful cross sell cannot be understated and is likely to grow with increased competition in sectors. Those who want to stay ahead of the competition must recognise its importance and value and act accordingly
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Uniqueness: Each of the 3 sectors considered has unique CSFs that influence cross selling practices, including demographics, products offered, perception of sector and service approach. As a result, trying to develop a successful, single pan sector cross sell model is not possible
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Data: The only CSF found to be important to all sectors is Data Analytics. However, data is used in different ways. Telecoms uses data to time cross selling activity to the customer life cycle. Retail Banking and Insurance use data to elucidate both customer life cycle and life stage to optimise cross selling activity. Getting Data Analytics right, regardless of sector is crucial to successful cross sell activity
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Discounting: Rather interestingly, and perhaps contrary to popular belief, heavily discounting additional products sold is not a CSF. It may well be something that further entices customers, but according to those interviewed, is not something that companies have to get right immediately to cross sell effectively
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Key Take Outs
Successful cross sell activity consists of a number of core CSFs, however, offering customers multi product discounts is not one…
Core Model Be Liked
‘Right Time, Right Place’
Get Data Right
Excluded
Sector Specific CSFs
Cross Sell Success
Effective Staff Good First Experience
Multi Product Discounts
Sector Specific CSFs
Consistent Messaging
Multi product discounts is not a CSF Having a product that customers want, a brand that is trusted, and being able to engage with the right customer at the right time, along with 1-2 sector specific CSFs, are the core components to successful cross sell activity 19
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Contents
• Introduction
• The Importance of Cross Sell • Critical Success Factors • Cross Sector Analysis • Key Take Outs
• Appendix: About White Space
January 2015
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About White Space
WS is a market analysis consultancy, specialising in new market entry, proposition development support and customer experience optimisation.…
• Established 2005, with over 80 international Consumer and B2B clients who come to us to support their revenue growth challenges • Oxford-based with 15 staff primarily from Oxbridge backgrounds, drawing on a wide range of proprietary techniques, databases and IP • Experts in holistic market analysis • >80% of clients repeat purchase within 2 years • We have delivered projects across >50 countries, and are on long term frameworks partnerships with the US and Canadian embassies
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