Transcription
Customer Life Cycle Marketing:OnboardingJanuary 20, 2012Toll free: 1-877-820-7831Participant Passcode: 475462 2012 Harland Clarke Corp. All rights reserved.
Today’s -cesandExperience2
Challenging Market ConditionsFDIC Statistical Graph Book 3 Q 20113
Challenging Market ConditionsFDIC QBP 3 Q 2011 Graph bookKeefe, Bruyette & Woods (KBW). www.kbw.com4
Onboarding ImpactAverage First-Year Household Attrition RateSource: Harland Clarke Marketing Services Industry Database 20115
Onboarding a Portion of Life Cycle Marketing6
Basic Onboarding Roadmap7
Sophisticated Onboarding Roadmap8
A Strategic Approach To Onboarding StrategyBrad Strothkamp, Vice President & Principal AnalystForrester ResearchJanuary 20, 2012 20092010 Forrester Research, Inc. Reproduction Prohibited
Agenda The goals of onboarding Obstacles to onboarding success Best practices in effective onboarding strategy 2010 Forrester Research, Inc. Reproduction Prohibited10
Agenda The goals of onboarding Obstacles to onboarding success Best practices in effective onboarding strategy 2010 Forrester Research, Inc. Reproduction Prohibited11
Over a third of US consumers open a new financialaccount in a twelve month periodDid you open a new financial account/product in thelast twelve months?36%64%YesNoBase: 57,924 US online adultsNorth American Technographics Online Benchmark Survey, Q3 2011 (US, Canada 2010 Forrester Research, Inc. Reproduction Prohibited1212
Credit cards, deposit products and auto insurancetop the list of products purchased/openedPercentage of accounts opened by product type29%Credit card23%Auto insurance22%Checking account21%Savings account14%Auto loan12%Home insurance9%Certificate of Deposit401(k), 403(b) or other employer-sponsoredretirement account8%Life insurance8%7%Renter's insuranceBase: 57,924 US online adults who have opened at least one account in the last twelve monthsNorth American Technographics Online Benchmark Survey, Q3 2011 (US, Canada) 2010 Forrester Research, Inc. Reproduction Prohibited1313
First year attrition rates for newcustomer range from 25-30%.- Dove Consulting 2010 Forrester Research, Inc. Reproduction Prohibited14
The goals of onboardingEffective onboarding affects three areas of the business: Reducing attrition (increasing retention)– Improve activation. Specifically, for deposit accounts, activation means getting anew customer to deposit money into the account, use a debit card or set up directdeposit; for investment accounts, activation includes aspects like making trades orutilizing advice.– Increase utilization. Utilization is most often associated with credit products sinceprofitability of those products hinges on credit utilization, but utilization is important toany service where profit or cost savings are associated with frequency of use. 2010 Forrester Research, Inc. Reproduction Prohibited15
The first 90 days are the most important 2010 Forrester Research, Inc. Reproduction Prohibited16
Breakdown on the sales and fulfillment processescause early stage attritionBAI Research* determined attrition happens due to: Selling the wrong product Failure to execute on fulfillment After-purchases surprisesSource: BAI report The Quest For Deposits 2010 Forrester Research, Inc. Reproduction Prohibited17
Consumers have on averageless than a third of financialproducts with a single provider 2010 Forrester Research, Inc. Reproduction Prohibited18
The goals of onboardingEffective onboarding affects three areas of the business: Reducing attrition (increasing retention)– Improve activation. Specifically, for deposit accounts, activation means getting anew customer to deposit money into the account, use a debit card or set up directdeposit; for investment accounts, activation includes aspects like making trades orutilizing advice.– Increase utilization. Utilization is most often associated with credit products sinceprofitability of those products hinges on credit utilization, but utilization is importantto any service where profit or cost savings are associated with frequency of use. Driving cross-selling. Cross-selling takes two forms in onboarding. Forchecking, cross selling of products includes selling a savings account tochecking customers; cross selling of services to checking account customerswould include digital services like online and mobile banking. 2010 Forrester Research, Inc. Reproduction Prohibited19
Consumers average seven financial productsAverage number of products owned8.57.66.8US online adultsActive onlinebankersActive online billpayersBase: US online adultsSource: North American Technographics Financial Services Online Survey, Q4 2010 (US)**Products included in analysis: checking account, savings account, investment account, money market account, credit card, home equity, mortgage, auto loan, homeinsurance, auto insurance, life insurance, CD, personal loan, student loan, high interest savings account, IRA, 401K, 529, Trust services, brokerage, annuity, small businesschecking account, small business credit card, small business loan/loc)***Excludes disability and long term care insurance, mutual funds, stocks, bonds, debit cards, health savings accounts, other 2010 Forrester Research, Inc. Reproduction Prohibited20
Consumers have on average 30% of products with asingle providerAverage number of financial products owned, by firmUSAANavy Federal Credit UnionCitiBoeing Employees CreditBank of AmericaState Employees Credit UnionFifth Third BankWells Fargo/WachoviaHarris BankChaseU.S. BankBB&TPNC/National Bank3.53.13.02.82.82.72.72.62.62.62.52.42.4Key Bank2.3Citizens Bank2.3SunTrust Bank2.3Capital One2.3Regions Bank2.3Sovereign Bank2.2M&T Bank2.2Charter One Bank2.2BBVA Compass Bank2.1Huntington Bank2.1Total Average2.1Base: US online adults who are primary banking customers of each firmSource: North American Technographics Online Benchmark Survey, Q3 2011 (US, Canada) 2010 Forrester Research, Inc. Reproduction Prohibited212.4M&I Bank
Cross-sell drives retention; retention encouragescross-sellSource: Wells Fargo 2010 Investor Conference: The Vision That Works 2010 Forrester Research, Inc. Reproduction Prohibited2222
73% of cross-selling takes place in the first 60 days 2010 Forrester Research, Inc. Reproduction Prohibited23
The goals of onboardingEffective onboarding affects three areas of the business: Reducing attrition (increasing retention)– Improve activation. Specifically, for deposit accounts, activation means getting anew customer to deposit money into the account, use a debit card or set up directdeposit; for investment accounts, activation includes aspects like making trades orutilizing advice.– Increase utilization. Utilization is most often associated with credit products sinceprofitability of those products hinges on credit utilization, but utilization is importantto any service where profit or cost savings are associated with frequency of use. Driving cross-selling. Cross-selling takes two forms in onboarding. Forchecking, cross selling of products includes selling a savings account tochecking customers; cross selling of services to checking account customerswould include digital services like online and mobile banking. Enhancing the customer experience. 2010 Forrester Research, Inc. Reproduction Prohibited24
Attention during and after account opening increasessatisfaction and cross sales 2010 Forrester Research, Inc. Reproduction Prohibited25
A quality customer experience means reducing reasonscustomers leave and What are the two most important reasons why you closed your lastprimary checking account?24%I movedToo many fees or too strict minimum balancerequirements12%11%Previous bank merged with anotherLocation of branches or ATMs9%The bank charged me a fee I felt was unfair orunjustified9%Poor customer service9%7%Got marriedChanged jobs5%6%Other (please specify)I don't know3%Base: US online adults 18 (online monthly or more) who switched checking accountproviders in the last twelve months 2010 Forrester Research, Inc. Reproduction ProhibitedSource: North American Technographics Financial Services Online Survey, Q4 2011 (US)
reinforcing why they stayWhat are the two most important reasons why you have stayed solong with your primary checking account bank?37%Locations of branches31%Quality of the customer serviceLow fee or account maintenanceminimums25%18%Loyalty to my bank17%Too much trouble to switch14%Locations of ATMsQuality of the online or mobile bankingservices11%6%Not sureBase: US online adults 18 (online monthly or more) who have checking accounts andhave had the account for two years or longerSource: North American Technographics Financial Services Online Survey, Q4 2011 (US) 2010 Forrester Research, Inc. Reproduction Prohibited27
Agenda The goals of onboarding Obstacles to onboarding success Best practices in effective onboarding strategy 2010 Forrester Research, Inc. Reproduction Prohibited28
The obstacles to effective onboarding Lack of consistent programs. Most firms lack a single person responsiblefor onboarding activities across the organization. The results are inefficientprograms and processes. Data availability. Data is the lifeblood of an effective onboarding campaign,and while data is generally available for onboarding activities, the timelinessand robustness of the data hinders success. Customer/channel blindness. Onboarding strategies often fail tounderstand and take into account information about the customers in termsof why they do/don't do certain activities as well as the channels they useearly in their tenure. Misaligned goals. The metrics that underlie effective onboarding activitiesinclude retention and cross selling effectiveness, but many productprofessionals are goaled on sales. Additionally, onboarding teams often lackconsistent or cross-functional/cross channel goals. 2010 Forrester Research, Inc. Reproduction Prohibited29
Agenda The goals of onboarding Obstacles to onboarding success Best practices in effective onboarding strategy 2010 Forrester Research, Inc. Reproduction Prohibited30
Onboarding is a cross-functional, cross-channel activity Centralized strategy and management. These individuals should beresponsible for developing the business case for funding, makingrecommendations for enterprise onboarding goals, working with internal/external resource (i.e., IT, marketing agencies), and setting up metrics tomeasure onboarding activities. Enterprise funding. Delivering on a centralized strategy requires providingsome level of enterprise funding to encourage disparate lines of business,channels and functions to engage. This funding should focus less onexecution and more on the infrastructure and processes needed to supportonboarding efforts. Benchmarking the status quo. The onboarding team should engagecustomer intelligence teams to create reliable benchmarks of the status quo.Key metrics include the cross sell rate, customer tenure, customerprofitability, and product and service frequency of use/interaction. 2010 Forrester Research, Inc. Reproduction Prohibited31
The “simple” business case for onboarding STEP One: The universe. If a bank acquires 40,000 branch-based newdeposit accounts in a 12-month period. Assuming 25% attrition, 10,000accounts could attrite in a twelve month period. STEP Two: The cost. Multiply that by the combination of 1) the cost ofacquiring the account 2) the operational cost of opening the account 3) thelost revenue from losing a customer. Let's conservatively assume this costis 200. STEP Three: The ROI. Assuming an onboarding campaign cost 7 per newaccount, the cost for 40,000 would be 280,000. A positive ROI would beachieved by reducing attrition during the first twelve months by just over 3%.This does not include additional revenue benefits of increased cross-sell orhigher balances. 2010 Forrester Research, Inc. Reproduction Prohibited32
Onboarding is a cross-functional, cross-channel activity Strategizing across channels and touchpoints. The channels are often inthe best position to execute an onboarding strategy. Most financial servicecompanies engage via the branch and phone channel, but the mosteffective onboarding will utilize mail as well as digital channels since theyhave the most frequent interactions with most customers today. 2010 Forrester Research, Inc. Reproduction Prohibited33
The alternative channels should play a key role inonboarding execution 2010 Forrester Research, Inc. Reproduction Prohibited34
How should you approachdefining and setting anonboarding strategy? 2010 Forrester Research, Inc. Reproduction Prohibited35
You must consider People,Objectives, Strategies andTechnologies 2010 Forrester Research, Inc. Reproduction Prohibited36
Investigate product open and service activation obstacles Research initial channel touches for new customers and users Understand potential data quality and latency issues 2010 Forrester Research, Inc. Reproduction Prohibited37
Benchmark customers who attrite and those who do not Set objectives that bridge the gap between the two groups Includes onboarding goals across channels, functions andteam 2010 Forrester Research, Inc. Reproduction Prohibited38
Consider all channels and touchpoints in the strategy Provide a visual timeline of the onboarding strategy Set organizational standards across key processes 2010 Forrester Research, Inc. Reproduction Prohibited39
Outline systems and processes for benchmarking results Outline existing technologies for key onboarding activities Engage external vendor to improve flexibility and time to market 2010 Forrester Research, Inc. Reproduction Prohibited40
Zions Bank Onboarding Story41
Path to Success Start with end in mind– Establish goals so all decisions are made in line with these goals Identify an owner– Find somebody to take ownership of the process—someone who embraces thevalue of customer onboarding and can communicate that vision to others Align with a respected advocate– Find an executive who will be an advocate for your vision and work hard tomaintain that support Start small– Select a test segment, even just 10 percent of your customer base – showcase yourresults – you don’t need to start with everyone at once42
Key Metrics Household Retention Lift – 2.5 percent over Control Group Account Retention Lift – 6.7 percent over Control Group Balance Retention Lift – 6.4 percent over Control Group Incremental Balance Lift – 46 percent43
Onboarding Roundtable44
Panelists Brad Strothkamp, Vice President and Principal Analyst, Forrester Research Matthew Wilcox, Director Interactive Services, Zions Bancorporation Stephenie Williams, Senior Market Strategist, Harland Clarke45
Thank youQuestions:SmartMarketing@HarlandClarke.com46
OnboardingAleadingproviderofbest- ‐in- ngagement,reten3on,andcross- d- erinsight,consul3ng,events,andpeer- ‐to- aderssuccessfuleveryday.47
Jan 20, 2012 · retirement account Certificate of Deposit Home insurance Auto loan Savings account Checking account A
