www.whitespaceanalysis.com
the market analysis consultants
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
3the market analysis consultants
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…
4the market analysis consultants
Contents
January 2015
• 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?
5the market analysis consultants
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
6the market analysis consultants
Contents
January 2015
• 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?
7the market analysis consultants
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
8the market analysis consultants
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
9the market analysis consultants
In Retail Banking, first product experience was highlighted as the
most important CSF, with data and staff viewed as secondary…
Critical Success Factors: What are the CSFs within each of the 3 sectors?
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
10the market analysis consultants
Without addressing each CSF, retail banks do not have the
necessary demand, knowledge, or capability to cross sell well…
Critical Success Factors: Why are these factors so important to each sector?
“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
11the market analysis consultants
With increasing competition in the Telecoms market, addressing
cross sell CSFs correctly is becoming even more crucial…
Critical Success Factors: What are the CSFs within each of the 3 sectors?
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:
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A failure to act on all four CSFs, will mean that Telecoms
providers will struggle to effectively cross sell…
Critical Success Factors: Why are these factors so important to each sector?
“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
13the market analysis consultants
Contents
January 2015
• 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?
14the market analysis consultants
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
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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
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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
17the market analysis consultants
Contents
January 2015
• Introduction
• The Importance of Cross Sell
• Critical Success Factors
• Cross Sector Analysis
• Key Take Outs
18the market analysis consultants
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
19the market analysis consultants
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
20the market analysis consultants
Contents
January 2015
• Introduction
• The Importance of Cross Sell
• Critical Success Factors
• Cross Sector Analysis
• Key Take Outs
• Appendix: About White Space
21the market analysis consultants
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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