There are certain projects that are well designed to fit in the end-of-year push to improve results and set up the next year for a running start. We share a few of these “Q4 specials” as food for thought.
As we discuss with clients their priorities for next year engagements, some ask for quick win ideas to deploy rolling year budgets against.
We have executed projects in the last couple years based on the ideas below. They can each be completed in 8-10 weeks:
1. Monitoring Face-to-Face Customer Interactions
The problem
Monitoring CX in the branch has always been problematic. Unlike call centers that have near-perfect monitoring mechanisms, the branch remains a “black hole” that the occasional mystery shop tries to peek into.
The solution
Delos Advisors has partnered with a technology firm to install an in-branch monitoring platform. Customer and employee acceptability has been successfully managed. The ability to monitor, provide feedback / coach, enforce scripts, and other desired behaviors increased NPS within weeks. Sales effectiveness has also benefitted.
The project
Design took 4 weeks and the pilot in a handful of branches another 4 weeks. Pilot results were outstanding: NPS grew 22% and script compliance rose by 54%. In the end, bank management asked for a proposal for national roll-out.
The outcome
National roll-out is not complicated as our pilot was operated as BAU; it is literally a “copy-paste” effort. Pilot results expected to replicate nationwide across entire branch network.
2. Developing a Cross-Sell Strategy
The problem
Low share of wallet is the most obvious opportunity for retail banks. For most banks, barely 20% of customers have their primary checking / operating account with them, along with their main savings and loan accounts. When we analytically measure the opportunity, it is often 3-5 times the size of the bank’s balance sheet!… And all this is in the wallets of the bank’s customers.
The solution
There are three parts in the solution. First, proper householding allows to see the full size of the opportunity. Second, advanced analytics can paint the picture of the “missing wallet” and in certain cases even the competitors who hold it. Thirdly, targeted cross-sell offers must be designed and made.
The project
In our most recent cross-sell project, we reviewed 2 million customers of the bank and calculated the opportunity for each. Targeted messages were designed to be used directly with customers and through the front line.
The outcome
A customer-level model was put in place for the retail bank, and the front line as well as the bank’s marketing area now have powerful insights to make targeted offers (or to avoid certain customers where the opportunity was limited). The front line was trained on using the right cross-sell scripts, so they could leverage the new information.
3. Designing a Retention Tactical Toolkit
The problem
Even the best financial institutions tend to lose more than 10% of their balances per year through defections and diminishment. The worst can hit 30% (usually combined with branch closures, particularly when related to recent mergers). This attrition of balances often masks successes in sales performance, as sales are absorbed to fill this “hole” before being able to deliver visible growth.
The solution
We have developed methodologies and models to help banks accomplish two objectives: (a) identify customers who need to be prioritized for retention based on their contribution to shareholder value, and (b) develop tactics that can be deployed against this prioritized group.
The project
Using our standard analytics toolkit (point 4 below), we identified the most profitable customers across a base of over 5 million consumers. Retention tactics were developed including a special “shadow” relationship-model for the highest value customers. Retention tactics included “soft” tactics based on relationship recognition and higher-touch, “hard” tactics based on adding hooks to the relationship and increasing barriers to switch, and lastly “reactionary” tactics, trying to prevent defection when certain leading indicator red flags were raised. These retention tactics were piloted during the project.
The outcome
Our client, the target of constant attack from smaller players, adopted our customer model and has been in the process of nationally deploying the various retention tactics.
4. Developing Customer Analytics Capabilities
The problem
“Systematic Management” is a much needed, but still missing, business practice among many retail banks. Absent this capability, many decisions are misdirected, customers are mis-prioritized, and necessary corrections are not made.
The solution
We have developed an approach for calculating profitability at the account level, allowing senior leadership to have visibility into the contribution to profitability of each account, each customer, each branch, each product, each RM, etc.
The project
We designed all the components for profitability calculating models, beginning with analytics tools and prototypes of static reports and dynamic “query-able” databases. We quarter-backed the implementation of all models, methodologies, tools, and reports in the client’s IT environment under BAU standards. Finally, we established the governance environment necessary to maintain/update methodologies and parameters.
The outcome
Based on these analytics, our client can actively manage branches, RMs, and business units and guide them to customer-level actions (e.g., retain, grow, fix) – aiming to continuously increase growth and profitability. Everyone from the Board to the front-line have a crystal-clear view of what is driving (or dragging) shareholder value.
5. Developing an SME Strategy
The problem
SMEs can be the crown jewels of banking. They don’t have the negotiating power of larger corporations, so pricing on loans and deposits is rational. They generate fee revenue because they have broader needs. They are a gateway to the personal banking account relationships of the owner(s), their families, and their employees. Yet banks often fail to serve them well. SMEs are frequently the “orphan” between consumer and corporate banking. Corporate bankers ignore and look down upon them, while consumer bankers often feel intimidated and unprepared to serve them.
The solution
This “SME opportunity” can be captured by systematically approaching this segment. At Delos Advisors, we have developed a 12-component SME Strategy Model that can enable any bank to become a strong player in this segment. The 12 components range from Sales Approach, HR, Marketing, Reporting and Analytics, to aspects of Product and Channel.
The project
For banks in the US, Mexico, and Central America, we have designed all 12 components over the years. In a recent project, we particularly focused on the underwriting process and the sales / marketing / customer profitability / share of wallet & cross-sell / customer management aspects.
The outcome
The bank positioned itself as the “SME Bank” in its markets, with specific proof points around underwriting speed, and a more engaged customer management model that recognized the uniqueness of the segment.
6. Redesigning the Collections Strategy
The problem
The classic collections approach is driven by a risk management mindset. We find this to be sub-optimal because it fails to recognize the true root causes of the problem which are almost always based on customer personal and/or financial issues.
The solution
A more effective approach to collections is to adopt a marketing mindset and work with the borrower to resolve the problem. An even more effective approach is preventative actions. Loans tend to be “low-engagement” products, particularly if the customer does not have a broader relationship with the bank. There are mechanisms to create such “engagement”. The higher the engagement, the higher the probability that the customer will (a) communicate, (b) discuss alternatives, and (c) pay.
The project
For a major lender we designed and implemented a consultative collections model including a new workout product, new advice-based scripts, new training material for collectors, new collector scorecards, and KPIs. This model extended to third-party collections agencies. Collections effectiveness for customers treated under the new model was almost 2x higher than the traditional previous approach.
The outcome
The new model immediately proved to be far superior than the pre-existing one. Management decided to roll-out nationwide and apply this model to all its borrowers.