strategic analysis of cross sell critical success...

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Strategic Analysis of Cross Sell Critical

Success Factors

January 2015

2the market analysis consultants

Contents

January 2015

• Introduction

• The Importance of Cross Sell

• Critical Success Factors

• Cross Sector Analysis

• Key Take Outs


White Space have conducted in-depth research across 3 sectors to

understand the CSFs for successful cross sell activity…

Introduction

Why is cross sell perceived

as being important?

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

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

Telecoms

Insurance

Retail Banking

What are the key questions

to be answered?

How have we answered

these key questions?

Is cross sell actually important

to the different sectors?

What are the key CSFs in

each sector?

Why are these CSFs crucial?

Which, if any, CSFs are

important across all 3 sectors?

Why and how are these CSFs

applicable to all 3 sectors?

Why are there sector specific

CSFs?

Interviews with senior staff

who have worked for leading

providers in…


Contents

January 2015

• Introduction




• Key Take Outs

Is cross sell important in Insurance, Retail Banking and Telecoms?


Cross sell is seen as important as it drives customer retention, mitigating

the expense of acquiring new customers…

Importance of Cross Sell

InsuranceRetail

BankingTelecoms

“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 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”Former Strategy Director, Major

U.K. Insurance Provider

“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

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


Contents

January 2015

• Introduction



Insurance

Retail Banking

Telecoms


• Key Take Outs

What are the Critical Success Factors within each of the 3 sectors?

Why are these factors so important to each sector?


In Insurance, data can be used to predict the customer’s likelihood

to buy further products, in turn building customer relationships…

Critical Success Factors: What are the CSFs within each of the 3 sectors?

“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”Former Strategy Director, Major U.K.

Insurance Provider

“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

Insurance

Critical Success Factors in Insurance

Life Cycle Information

Life Stage Understanding

Data: Two different types of Data are crucial

Customer Trust


Targeted communication with customers is crucial to understand

a customer’s propensity to buy…

Critical Success Factors: Why are these factors so important to each sector?

“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 Cycle

Information

“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

Life Stage

Understanding

“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

Customer

Trust

Insurance


In Retail Banking, first product experience was highlighted as the

most important CSF, with data and staff viewed as secondary…


Retail Banking

Excellent First Product Experience

Strong Data Analytics

Well Trained and Motivated Staff

“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”Global Marketing Campaign Manager,

Major U.K. Retail Bank

“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

“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”Global Marketing

Campaign Manager,

Major U.K. Retail

Bank


Without addressing each CSF, retail banks do not have the

necessary demand, knowledge, or capability to cross sell well…


“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

First

Product

Experience

“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

Data

Analytics

“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

Well Trained

and

Motivated

Staff

Retail Banking


With increasing competition in the Telecoms market, addressing

cross sell CSFs correctly is becoming even more crucial…


Telecoms

Holistic Product Offering

Well Trained

and Motivated

Staff

Consistent Consumer Messaging

Data Capabilities

“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”Analyst, Major U.K. Telecoms Provider

CSFs:


A failure to act on all four CSFs, will mean that Telecoms

providers will struggle to effectively cross sell…


“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

Holistic

Product

Offering

Telecoms

“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

Well

Trained and

Motivated

Staff

“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

Consistent

Consumer

Messaging

“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

Data

Capabilities


Contents

January 2015

• Introduction




• 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?


The effective use of Data Analytics is the only constant CSF across all 3

sectors considered…

Insurance

Retail

BankingTelecoms

Excellent First

Product

Experience

Data

Analytics

Well

Trained

and

Motivated

Staff

Customer

Affinity/Brand

Loyalty

Consistent

Consumer

Messaging

Holistic Product

Offering

Cross sector Analysis: What Critical Success Factors are important across all the 3 sectors?

“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


Customer Life Cycle Data

All firms need data to build ‘customer profiles’ to cross sell effectively, but

the data points used to profile varies across the sectors…

Cross sector Analysis: Why and how are these Critical Success Factors important to all sectors?

Firms across

all three

sectors need

data analytics

to

understand…

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

Customer Life Stage Data

Customer Product

Engagement

Retail

Banking

Retail

BankingRetail

BankingInsuranceInsurance

Telecoms

In Retail Banking and Insurance,

individuals only think about

purchasing new products at

certain stages of their lives

People of all ages use telecoms.

Therefore, knowing the customer

demographic does not

significantly impact Telecoms

providers’ ability to cross sell

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

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

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

Number of sectors data type is relevant to


Differences in cross sell CSFs are explained by differing industry norms

and expectations…

Cross sector Analysis: Why are some Critical Success Factors sector specific?

Why is it a

CSF in this

industry?

Why it is not a CSF in

other industries?

Insurance Customer Trust

Retail

Banking

Telecoms

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

Telecoms: Customers primarily

care about the product and do

not require the same trust level

Consistent Consumer

Messaging

Excellent First

Product Experience

Allows consumers to

understand benefits of

product offering

Allows customers to

bundle products in a

convenient way

Holistic Product

Offering

Retail Banking: Customer trust

is regarded as a hygiene factor

If customers receive

great service in their

first product, they are

more likely to sign up

for another

Insurance: The same level of

interaction is not expected.

Therefore, product experience

is not prioritised

Telecoms: Quality of

experience is taken for granted

Insurance: There is not as

much complexity in products:

it is clearer what the offering is

and how much it costs

Retail Banking: Lack of

ambiguity. Clear what product

is being offered and the cost

CSF


Contents

January 2015

• Introduction




• Key Take Outs


White Space have identified 4 Key Take Outs for successful cross sell

activity…

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

3

Key Take Outs

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

1

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

2

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

4


Successful cross sell activity consists of a number of core CSFs, however,

offering customers multi product discounts is not one…

Key Take Outs

Be Liked

‘Right Time, Right Place’

Get Data Right

Sector Specific CSFs

Cross Sell

Success

Core Model

Effective Staff

Good First Experience

Consistent Messaging

Sector Specific

CSFsMulti Product Discounts

Excluded

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


Contents

January 2015

• Introduction




• Key Take Outs

• Appendix: About White Space


WS is a market analysis consultancy, specialising in new market entry,

proposition development support and customer experience optimisation.…

About White Space

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market which is

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primarily from Oxbridge

backgrounds, drawing on a wide

range of proprietary techniques,

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strategic analysis of cross sell critical success...

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