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Channel strategy, v1, 2011


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This presentation encompasses the Channel Strategy pertinent to the Banking industry

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Channel strategy, v1, 2011

  1. 1. MULTI-CHANNEL APPROACH FOR FINANCIAL INSTITUTIONSPresented by: Kevin ChettyCommercial Director
  2. 2. ‘ Strength lies in Differences NOT Similarities’ – Stephen Covey ‘The achievement of an organisation are the results of the combined effort – Vincent Lombardi
  4. 4.  Topic Presenter Delegates Workshop Ground Rules Workshop Expectations & Objectives 4
  5. 5. AGENDA
  6. 6.  Day 1  Session 1: Customers, Landscape, Strategy Case Study & Exercise  Session 2: Mobile Strategy (Mobile Sales Strategy & M – Commerce) Case Study & Exercise  Session 3: Branch Strategy Case Study & Exercise  Session 4: Alternative Strategy Case Study & Exercise 6
  7. 7. SESSION 1: Customers, Landscape, Strategy
  8. 8. The Alchemist – Paulo Coelho “It’s the possibility of having a dream come true that makes life interesting”
  9. 9. 1. BackgroundRETAIL BANKING A REALITY The traditional retail bank is at an inflection point. The needs and expectations of customers are changing as quickly as the competition. Customers are demanding seamless, multi- channel sales and service experiences. Simultaneously, other financial institutions and non-traditional players are looking for opportunities to invade this space or to redefine it through disruptive innovation. The result is forcing banks to examine a more balanced, integrated approach to customer experience and growth 9
  10. 10. 1. BackgroundAN EVOLUTION FIND YOUR SPACE 10
  11. 11. 1. BackgroundTHE CHANGING FACE OF BANKING In view of several developments in the 1990’s, the banking industry is changing … Global banking more competitive The IT revolution Information explosion Rationalisation of branches in 1990’s Banks are trying to become one-stop financial supermarkets How did banks respond? o Distribute financial services through other ways and channels … o … proliferation of non-traditional banking channels o Growth in usage of MOBILE selling agents
  12. 12. 1. BackgroundA COMPETITIVE LANDSCAPE eg SOUTH AFRICA Market landscape Banking environment Key macro econ trends Competitors becoming Macro economic increasingly aggressive environment outlook is Alliances and joint ventures moderate Customers Use a wide range of Regulation financial products Tier 2/3 legislation Proliferation of National Credit Act distribution Competition alternatives Commission Lower commission earnings
  13. 13. 1. BackgroundWHAT DO CUSTOMERS WANT? NOT WHAT BANKS…… Booz Allen’s consumer research reveals that despite the development of alternative channels, customers still prefer to purchase in the branch. However, the importance of the branch is in decline, and the mass affluent form the group leading the march away from branches, and towards mobile banking, mobile sales force and the Internet. When it comes to alternative channels, customers prefer online to telephone transactions, particularly when the product and the transaction itself are relatively simple. One area in need of significant development is the mobile sales force, which at present is limited or nonexistent in all but a few countries. Source: Reference Booz/Allen/Hamilton - Striving for Growth, Best Practices in Retail Banking Sales and Service Channels 13
  14. 14. 1. BackgroundRAISING THE GAME IN RETAIL BANKING Booz Allen’s research shows there are clear opportunities to enhance revenue in retail banking. Going forward retail banks need to: o Provide dedicated channels (website, call centre, mobile sales forces and specialist areas in branches) for affluent customers. o Reduce waiting times in branches through the use of welcome desks (concierge concept) and the option of making appointments in advance. o Efficient call centre menus and staffing that enable customers to quickly reach people who can resolve their queries. o Enable customers to tailor websites, supported by strong security measures (e.g. random number generators). o Offer mobile sales advisers who can complete transactions at the meeting, for selected customer groups. Source: Reference Booz/Allen/Hamilton - Striving for Growth, Best Practices in Retail Banking Sales and Service Channels 14
  15. 15. 1. BackgroundTHE CURRENT BANKING LANDSCAPE • It has been almost 3 years since the Global Financial Crisis • The current banking environment is a lot different to a decade ago • Branches have been rationalized • There is consolidation • Current focus is on Capital Adequacy & stringent Central Bank requirements • Growth is immanent (Organic vs. Inorganic growth) • Greater demand from customers • Development of various channels • BUT it will be about RISK, COSTS, EFFECIENCY, LEVERAGE, JV’s, M&A’s
  16. 16. 1. BackgroundCHANNEL STRATEGY • For businesses to survive Growth is imperative • A Channel Strategy is amongst the most enduring decisions a company will make • Why companies adopt or embrace a channel strategy is often related to their growth prospects, need for new customers and an increasing competitive landscape • The world in which we practice, trade or market our products have considerably changed • The economic woes in the last few months’ have been catastrophic to say the least • The global financial meltdown has restricted and impacted growth in many countries and companies alike, including Africa • However, we are beginning to witness a turn for the better in the economic cycle • Whilst this is positive news, BANKS must select a channel carefully when considering to distribute products or services • A correct channel strategy comes through a correct Segmentation Strategy • The appropriate channel should be assigned to each customer segment. The challenge for companies that opt for a ‘multi-channel’ approach is knowing how to orient each customer towards the channel that best fits its profile. It is equally important to analyse each channels costs and profitability, as it is to analyse the cost and profitability of each customer in each channel. • The growth of new channels such as the internet or mobile phones has redefined or changed the game in many sectors.
  17. 17. 1. BackgroundKEY BENEFITS IN DEFINING A CHANNEL STRATEGY • Increase in sales • A targeted market coverage • Minimize sales expenses as the strategy and channels are defined • Capture EXISTING markets and acquire NEW markets • Keeping abreast of the competition • Increase to the existing client data base
  18. 18. 1. BackgroundKEY CAPABILITIES • Create new alternative channel programs • Improve competence and commitment of direct and in-direct channels • Sales force sizing based on each channel • Driver for committed and competent partners • Hybrid channels • Direct vs. In-direct distribution channels • Indentifying and recruiting the best channel partners • Managing channel conflict • Compensation (incentives, commissions) and channel finance • Measuring the channels success
  19. 19. 1. BackgroundDEFINE DIRECT CHANNEL: Those channels where there is direct control IN-DIRECT CHANNEL: Those channels where there is NO direct control over the channels
  20. 20. 1. BackgroundDIRECT vs. IN-DIRECT CHANNELS Direct Type Description Strengths Weaknesses Channel Channel Electronic Internet Company internet site. Most Most consumers have access If the internet is NOT user channels can be linked to the to PC/internet zone. Cheaper friendly, navigation can internet, depending on the channel as most traffic is via become tedious to PUSH/PULL strategy. Internet the consumer/client. Clients frustrating. Hence ease of must have access point for have access to wider access is crucial prospective clients. This must be information linked to a central email address, finally to a central data base. Direct email to Sending direct mailers to a Most businesses have Dependant on the reliability prospective/identified customer access to email. It is more of email address provided. base. This involves a BTL cost effective. There is NO Consumers can become campaign message. Data base delay in the release and overloaded with so called that has accurate information is receiving of information. junk mail. KEY. Campaign messages can be tailor made and using multi- media (e.g. Saleslink) Direct email Receiving an email from a It is cost effective via a client. Not responding on time from prospective customer. Linkage to a Furthermore, increases the (with 24/48 hours) central email address and data success of closure base Telephony Telemarketers Outbound and Inbound. Using Competitive advantage Can become very costly if defined CRM/IT platform for all through a centralized implemented incorrectly. sales and information sharing. In approach, company controls Clients are inundated with addition, low key desktop call value chain. Hence, reduce calls thus increasing caller centre can be set up. other operational frustration. Poorly trained costs/infrastructure Telemarketers can damage reputation. Furthermore the conversion ratio is low Telephone Automated recording of a message Cost effective Can become frustrating to a Automated customer, if the message is NOT responded to. SMS Must be linked to a dedicated call Cost effective and can be Can become costly to centre, so that the response is used effectively in customer manage if implemented immediate. This will improve the follow-ups, e.g. birthdays, incorrectly. Message customer service image thank you etc contents has to be small IVR Interactive Voice Recorders. Reduced overhead costs Can become very costly for Automated interactive system with associated with staff. Helps a company. Can prove to a caller. Both inbound and improve sales and frustrating for a consumer outbound information gathering Post Direct Mailers Campaigns in most retail segments If the campaign is well Can become costly and driven through direct mailers. packaged, the ineffective due to post These are tailored messages for conversion/response rate is delays the intended recipient higher Magazine Campaigns and information on a Stuffers are placed in Can become costly if the Stuffers company/product is placed in strategic magazines with a response is very low to NIL certain magazine/s direct focus on a target market
  21. 21. 1. BackgroundDIRECT vs. IN-DIRECT CHANNELS Face 2 Walk-in and Customers that simply walk-in or The company has an active This is dependent on the Face Referrals referred by a client. This is person to engage with and marketing strategy and the dependent on the PUSH/PULL sell a product brand equity. IOW the marketing strategy product is TOP on mind Direct Sales Employing agents to fulfill sales Direct activities are most Niche industries DSA’s Agents effective in a high volume become more difficult. Can employed by industry type be very costly. If NOT company effectively trained can damage a brand. RISKs such as fraud Media BTL These are much targeted They have proven to be more They are costly if planned Campaigns campaigns on a specific data successful due to the incorrectly base/segment. These include Print, focused strategy. Planning is TV, and Radio. The campaign done in advance so as to message must be segmented and ensure costs are curtailed or implement over a defined 12 month maintained. This gives campaign period. Including companies the competitive breakfast and conferences. advantage and increase in organic growth Other Fax Fax to email is the most For companies that have NO Quality of information appropriate process email or are responding to a campaign Interactive Kiosks that are designed for a Reduce people, Can become very costly Media Kiosks company and have an interactive infrastructure costs. link to a company/website/email Embracing innovative technology gives you the competitive advantage. Place at strategic points, e.g. SME Banks Interactive TV Using TV as an interactive medium. Reduce people, Can become very costly Used in game shows etc infrastructure costs. Embracing innovative technology gives you the competitive advantage Social Media Twitter, Facebook. These have Cost effective. Used by a ? become leading interaction sites for wider audience, hence business people. captive audience. Can create blogs and interactive linkages for your company. Hence, groups of people will apply
  22. 22. 1. BackgroundDIRECT vs. IN-DIRECT CHANNELS IN-Direct Type Channel Description Strengths Weaknesses Channel Electronic 3rd Internet Sites Information is flagged on 3rd party Increase marketing Linkage to company site rd sites. Usually 3 party sites have exposure must be agreed upon. close similarity to a company or Reliability of 3rd party site engage in business with a company Telephony Outsourced The entire outbound and inbound Reduced infrastructure and Can become very costly. Telemarketing call centre is outsourced resource investment. Most May NOT receive effective if a RISK vs. dedicated support as the REWARD model is used outsourced partner may have other clients Post Knock n Drop Outsource the drop off of flyers or Capture a wider target Company personal may leaflets or newsletters market. Limit the use of NOT drop off all the flyers internal resources or leaflets. Conversion is very low Regional Surveys Have door to door surveys. In the Control and monitor Interviewer biasness form of a questionnaire responses Face to 3rd Party Direct Outsourcing the sales and Works well if a risk vs. Reputational risk Face Sales Agents marketing function. This is one of reward model is used. the biggest emerging trends Reduced labour associate world-wide. Commission driven costs. Increased speed to roll-out Partners/Associate Establishing a network of deal Increase geographical Reputational risk Companies makers regional or country-wide. reach and access to NEW This can be individuals and customers companies. Commission or % of driven Media Trade Shows Coordinated by an external field Can undertake more trade Quality of leads or through 3rd Parties marketing company. Gathering of shows in a given month, information gathered. information or data. This will be quarter, year. Costs can be high used for prospecting. Important for ATL Brand Equity ATL Campaigns Includes Print, TV, and Radio. A Results can be very positive Costly and time very important constituent for long term. However, this is consuming Brand building or Brand Equity linked to defined creation campaigns. Great for the PUSH strategy Other Joint Ventures Forming an alliance with a Increase organic growth Can fail if the objectives company that has similar very quickly. Increase and vision is NOT shared philosophy or capability to fulfill a geographical footprint. Very sales channel function effective for Retailers.
  23. 23. 1. BackgroundCHANNEL COST EFFECIENCY vs. VALUE ANALYSIS Face to Face The success for most channels centres on a company’s ability Website for interaction to achieve balance between the variable or fixed costs drivers, High information and the value the end user gains in using the respective channel. Hence, the above model is a good schematic view of IT the Cost Efficiency vs. Value to an end user. It can be applied O DO when making respective channel decisions. In addition, it highlights three critical decision paths: F OF E Avoid IT: this is attributed to low cost efficiency and low end user AD Med value, e.g. interactive TV TR ium TRADE OFF: has medium cost efficiency and medium value to a client, e.g. direct sales agents. Business must take a strategic decision IT State of art Call DO IT: has high value and high cost efficiency drivers, e.g. D OI Low Centre company website AV Low Medium High Value to the User
  24. 24. 1. BackgroundCOST BREAKDOWN PER CHANNEL Direct Type Description of Cost Drivers Cost per Driver Total Cost Channel Channel Electronic Internet • Service provider monthly cost • Line rental cost Direct email to Direct email from Telephony Telemarketers Telephone Automated SMS IVR Post Direct Mailers Magazine Stuffers Face 2 Walk-in and Face Referrals Direct Sales Agents employed by company
  25. 25. 1. BackgroundCHANNEL CAPACITY Direct Type Mgr/ No. PC Laptop Printer Scanner Fax Tel Channel Channel Sup Staff Electronic Internet Direct email to Direct email from Telephony Telemarketers Telephone Automated SMS IVR Post Direct Mailers Magazine Stuffers Face 2 Walk-in and Face Referrals Direct Sales Agents employed by company
  26. 26. 1. BackgroundCHANNEL PRODUCTIVITY IN-Direct Type Channel Productivity Measurements Conversion Ratio % Channel Electronic 3rd Internet Sites No of hits/responses Telephony Outsourced Measured against Prospects Telemarketing vs. called vs. converted appointment. Call centre will keep a tracking sheet. Post Knock n Drop No of responses via a selected channel. Prompt customer to use email/call centre Regional Surveys Measure number of applications filled in an area. Info is captured onto a data base. Face to Face 3rd Party Direct Sales Measured against target vs. Agents achieved. In addition measure achieved vs. comms paid out. Partners/Associate Measured against set targets Companies per month or quarter. Pick this up on the comms paid Media Trade Shows through No of people that visited 3rd Parties stand, from details filled on customer visit form. This info is captured onto data base. Use Call centre to follow-up ATL Campaigns Depending on the medium measure against info sent vs. customer’s response. Prompt customer to use email/call centre Other Joint Ventures Depending on the agreement i.e. partnership
  27. 27. 1. BackgroundCOMPARITIVE INCOME D & ID Electronic Telephony Post Face 2 Media Other Face Sales: Operating Expenses: Nett Effect
  31. 31. 1. BackgroundTHE 6 DYNAMICS CUSTOMER FOCUS In the EVOLUTION of retail banking channels, the 6 dynamics are critical to developing effective CUSTOMER FOCUSED strategies: • Branch generated revenue growth is becoming more challenging • Transaction processing and customer services are becoming increasingly independent of the branch channel • Customer demographics are shifting • New technologies are gaining widespread adoption, allowing customer relationship management to become channel independent • Changes in the regulatory environment are altering the playing fields • Banks must prepared for overlapping competition (Non-Banking Entities)
  32. 32. SESSION 2: Mobile Strategy
  34. 34. 1. Background MOBILE SALES CHANNELS
  35. 35. MARKET OVERVIEW: DEMOGRAPHICS CASE STUDY Diverse distribution and concentration of Target Market population R3k-R24,999 (CMM) R25k-R39,999 (RA) Provinces National Total (000s) R0-R2,999 (ELB) (000s) Occupation National Total (000s) (000s) (000s) Eastern Cape 4,616 14.8% 3,913 17.3% 641 9.6% 6 3.6% Occupation, Administrative & 673 2.2% Managerial Free State 2,000 6.4% 1,571 7.0% 298 4.4% 6 3.4% Occupation, Agriculture 1,101 3.5% Gauteng 6,402 20.6% 3,677 16.3% 2,029 30.2% 102 58.8% Occupation,Artisans & Related 1,047 3.4% Kwazulu Natal 6,363 20.5% 4,725 20.9% 1,348 20.1% 26 15.0% Occupation,Clerical & Sales 2,743 8.8% Limpopo 3,347 10.8% 2,659 11.8% 388 5.8% 8 4.5% Occupation, Not Active 18,531 59.6% Mpumalanga 2,315 7.4% 1,730 7.7% 471 7.0% 10 5.8% Occupation,Production & Mining 2,061 6.6% North-West 2,222 7.1% 1,707 7.6% 419 6.2% 2 1.1% Occupation,Professional & 1,551 5.0% Technical Northern Cape 770 2.5% 622 2.8% 120 1.8% 3 1.5% Occupation, Service 2,579 8.3% Western Cape 3,071 9.9% 1,970 8.7% 996 14.8% 11 6.2% Occupation,Transport & 709 2.3% Communication Totals 31,106 100% 22,574 100% 6,710 100% 174 100% Occupation, - Other 113 0.4% Totals 31,108 100% Provinces with the highest distribution ALL segments: • Gauteng • KwaZulu Natal 59,6% Not Economically Active • Western Cape Source AMPS2007B 35
  36. 36. MARKET OVERVIEW: ECONOMICS Growth slow down and upward Inflationary pressures Real GDP growth Overview of 2007 6  In 2007 the economy continued to perform strongly with real GDP growth coming at 5,1% after the 2006 growth rate was revised upward 5 to 5,4%. 4  The services sector, in particular the financial, real-estate and business services sector made the strongest contribution to growth towards the %3 end of the year as banks’ balance sheets and revenues continued to grow at a rapid pace. 2  After remaining stable in the first half of the year, interest rates were 1 hiked further in the second half of the year on the back of rising inflation. 0 2000 2001 2002 2003 2004 2005 2006 2007 2008  Interest rates were raised by a total of 200 basis points between June and December, and together with the implementation of the National CPIX Inflation and Interest Rates Credit Act (NCA), caused demand for credit to gradually taper off 18 towards year-end. 16 Prospects for 2008 14  Economic growth is expected to slow down further in 2008 on the back 12 of rising interest rates, infrastructure (electricity) constraints, and a struggling household sector.% 10 8  A slowing US economy and the impact this will have on world growth, will also cause lower real GDP growth in South Africa, projected at 6 3,4% in 2008. 4 2  Inflation is forecast to be under strong upward pressure for most of the first half of the year as a result of movements in oil and food prices, 2000 2001 2002 2003 2004 2005 2006 2007 2008 and the rand exchange rate. CPIX inflation rate Prime interest rate  Interest rates are projected to rise another 50 bps in June, remaining stable in the rest of 2008 in an attempt to keep 36 inflation and inflation expectations under control.
  38. 38. Purpose: To grow the access of Purpose sales & service within NICHE markets, through dedicated external sales teams at the MOBILE SALES FORCE BUSINESS MODEL worksite, at place of convenience or on the phone……… In house or out sourced Direct Sales WPB Business External Sales & and Service Development Operations Channel for the niche Support markets, The purpose of WPB Business Development is to aggressively grow the number of schemes, active portfolio growth and B2B Key Account Relationship Teams B2B other business units e.g. ELB via ML To provide access to sales & service Finance Joint Ventures / New Opportunities to increase the number of schemes relationship management LG: Retail Affluent & Investment Appointment/Diary Management through Points of Presence at Sales & Operational Support Customer Value Proposition/ LG: Islamic Consultants LG: Core Middle Market Marketing Outbound Sales Teams Inbound Sales Teams The purpose of Ext Sales & designated worksites Management Team Operations is provide an external Human Resource sales force for niche markets at Consultants the worksite, at home place of convenience or distributionDelivery Solutions channels (ESP) & Innovation The purpose of Direct Sales and Service is to optimise the use of a dedicated call centre for acquisition, cross-sell and support to the external sales team. A CRM approach will be adopted, with an out-sourced or in-house approach Development of compelling value propositions for the WPB externalCVP/Commercial LEAD GENERATOR sales teams focusing on worksites, niche markets and aggressive SEGMENTED APPROACHManagement acquisition END TO END CAPABILITY with DEDICATED focus NICHE markets 38
  39. 39. MOBILE FORCE SEGMENTATION MODELSegment specific focus MS force spread over 10 Provinces Contract Market Total FTE LG Designation Product Focus (Outs – 3rd Segment Comp. (ABSA) Party) Retail •Investment ProductsMS: Acquisition Banker Affluent •Retail Affluent Transactional Products 100 100 0 •Unsecured Lending Products Islamic •Shariah compliant Transactional andMS: Islamic Banker investment Products 85 85 0 •Shariah compliant Vehicle Finance Core Middle •Transactional Products Market •UnsecuredMS: Core Middle •Lending Products 296 139 157Market Focus •Investment Products •Value Add, e.g. Telephonic BankingLG: Entry Level Entry Level •Transactional Products ESP: 450Banking Focus – Banking •Unsecured Lending Products(1) External Sales •Investment Products MobilePoints (linked to •Basic Insurance Products Units: 54 0 504Branches) •Value Add, e.g. Telephonic Banking(2) Mobile Sales Unit(Unbanked Focus)TOTAL MS 985 324 661 GRCB Lead Generator Conference, London, 18 & 39 19 May 2008
  40. 40. CUSTOMER SEGMENTATION MODEL Entry Level Banking up to Retail Affluent Segment Wealth Absa retail acc R15m NIA customer base2 Private Bank R650 000 pa Retail Affluent RA R300 000 pa 290 969 Prof’s 63 400 New to bank customers Staff 49 629 R120 000 pa CMM 3.6m f af Se St M th n LS io u Core Middle Yo r s n/ Market Seniors io 1.32 m at Students R36 000 pa Students ti c 105 000 is ph Youth so 490 000 al Entry-level banking i nc ELB na 3.79m Fi New to bank customers GRCB Lead Generator Black diamonds Unbanked Conference, London, 18Lending Micro & 40Note: 1 Source: Primary Bank Relationships – Amps ‘07 19 May 2008 2 Source: Absa Internal reflecting all relationships: Dec 2007
  41. 41. OUTSOURCED RECRUITMENT MODEL Conventional sourcing methods Unconventional sourcing methods • Within Absa Bank • External Sources • Leveraging brands ADCORP CV Order confirmation Sourcing Walk-In / First-line Labour Telephone screening Broker Resource pool management Adcorp alliances Voice Assessments Competency Interview recognition Credit Checks (SHL, Hrsmart) based interview assessment Request CM / Cultural match Request red list Client interview Induction ED / Ref Checks interview Workplace FAIS Placement preparedness accreditation Quest training incubator 41
  42. 42. TRAINING Mobile Sales Force Academy : Lean Curriculum- 5 day Programme Day 1 Days 2 and 3 Absa Socialisation (high level) Business Simulation Absa Compliance and testing encompassing Sales, Service, Products and Process Days 4 and 5 Regulatory Training (NQF 4 and 30 Credits) According to Financial Services Board the regulatory pre-requisite for this role is the NQF 4 and 30 credits. Money laundering and Sanctions are compulsory prior to contact with the client. 42
  43. 43. MOBILE SALES CAPABILITIES & DEPLOYMENTSegmented Distribution Channel focus providing multiple options of delivery Entry Level Entry Level Workplace Banking Banks on Wheels Banking Banking Kiosks (BOW’s) External Sales Points Mobile Sales Units Focus: Worksites Focus: ELB and CMM (ESP’s) (MSU’s) Core Middle Market at Events, Worksites, Focus: Branch Hot Spots Focus: Townships Branch Support Comprises: Comprises: Comprises: Comprises: •Gazebo •Mercedes Sprinter •Large Kiosk •VW Crafter •Digital pens (2) •Gazebo •Generator •Generator •POS device •Generator •Remote opening kits (2) •Combination TV and Video (CET) •Tables (2) •Combination TV and Video (CET) •Digital pens (2) •PA System •Chairs (7) •Remote opening kits (2) •POS device •FBSS Workstations (2) •Marketing materials •Digital pens (2) •3G printer/Fax/Scanner •Fully functional ATM •Promotional materials •POS device •Marketing materials •Marketing materials •Card and Pin Mailers •Tables (2) and Chairs (7) •Promotional materials •Promotional materials •3 DSA’s per team •Marketing materials •4 FTE’s per BOW •Team Based Targets and •Promotional materials •Chairs and Umbrella’s Incentives •Training ATM •6 DSA’s per team Functionality: Functionality: Functionality: Functionality: •Account opening •Account opening •Account opening •Account opening •Basic Enquiries •Basic Enquiries •Basic Enquiries •Basic Enquiries •Mini Statements (future) •Mini Statements (future) •Mini Statements 43 •Mini Statements •Prepaid purchases (future) •Prepaid purchases (future) •Prepaid purchases •Prepaid purchases
  48. 48. SALES FULFILLMENT PROCESS High level sales fulfillment process LG makes LG meets or LG interviews customer Customer accepts the proposal/s and contact with or interacts with for sale: Connect, completes the application forms, Record START sets up an customer and Needs analysis, of Advice and obtains all supporting appointment prompts the present solutions documentation. Customer signs all the with customer customer to handle objections and required documents (Close the deal). disclose financial cross sell *If available - issue card and pin mailer request/need SS captures the SS screens SS checks quality Sales Support clerk LG forwards all of the Record of Advice customers against and compliance (SS) receives the documents through to the online and CASA and opens adherence of all documentation and Sales Support clerk at the executes all other account on FBSS documentation records deal in Sales Support Hub/branch administrative register/DSAS duties SS calls the LG / customer Customer LG monitors LG sends original and informs them that the encouraged to progress of account documentation to account has been opened. Activated activate account activation and Hub/branch Account no provided. account Update records in updates verified & register / DSAS commission claim Commission form once account paid to LG is activated 48
  49. 49. COMPENSATION STRUCTURE Fixed Salary R 3000 / £194 LG (ELB) Commission per Prod Team based targets Other Commission None Products sold Transactional Unsecured Lending Investments Basic Insurance Commission payable per LG 100% to target (195 NET Team products per team), R3000 per LG Quarterly Bonus None Quarterly Incentive (stretched 110% to target ( 216 NET products per team), R3000 per LG target) 125% to target ( 243 NET products per team), R9000 per LG OTE Monthly Ave Salary R7000/ £467 Fixed vs. Variable 43% remuneration split 49 OTE: Opportunity to Earn
  50. 50. COMPENSATION STRUCTURE Fixed Salary R3000/ £194 LG (WPB, Core Middle Market) Ave Commission per prod R122 / £ 8 Other Commission R1000 / £ 65 for Value % Achievement 100% to 124% Products sold Transactional Savings & Investments Unsecured-lending Value Adds Commission payable 100% to target (60 NET products pm), R8000 for Volume and R1000 for value Quarterly Bonus R8000/ £517 VOL (125% to target) R4500/ £291 VAL (125 to target) R11000/ £712 VOL (150% to target) R9000/ £582 VAL (150% to target) Quarterly Incentive (stretched None target) OTE Monthly Ave Salary R 10 320/ £ 688 Fixed vs. Variable 29% remuneration split 50
  51. 51. COMPENSATION PHILSOPHY COMPENSATION PROGRESSION CHART 30000 COMMS RAND VALUE 25000 20000 15000 RAND 10000 5000 0 LG (ELB) LG (WPB) LG (ACQUISITION BANKERS) LG SEGMENTS • Allows for progression from ELB segment to Retail Affluent segment • Succession planning for MS • OTE: Opportunity to Earn as MS performs
  52. 52. PRODUCTION VOLUME - QUARTER 1 PERFORMANCE Overall substantial increase in Performance – Cumulatively 112% to Target Jan Feb March YTD - Q1 Active Active Active Actual Target Sales Actual Target Sales Actual Target Sales Actual Target Staff Staff Staff WPB 3,624 1,875 113 6,431 5,008 120 5,977 9,569 130 16,032 16,452 AB 2,799 1,509 89 2,734 3,897 101 2,409 5,565 101 7,942 10,971 IB 1,037 1,219 61 902 2,461 63 2,393 2,817 70 4,332 6,497 ELB 24,130 13,365 540 38,092 26,059 749 33,903 38,052 804 96,125 77,475 124,43 111,39 Total 31,590 17,968 803 48,159 37,424 1,033 44,682 56,003 1,105 1 5 TOTAL Keys: ELB • WPB – Workplace Banking IB • AB – Acquisition Bankers • IB – Islamic Bankers AB • ELB – Entry Level Banking WPB NB: Productivity Includes 0 GRCB 20,000 Lead Generator 40,000 60,000 80,000 100,000 120,000 140,000 Value Added products Conference, London, 18 & 52 Actual 19 May 2008 Target
  53. 53. PRODUCTIVITY RATIOS - QUARTER 1 PERFORMANCEAverage Product Volume Trends Positive – sound monthly product volumes per MS YTD Jan-08 Feb-08 Mar-08 AVE Average Volumes sold per day per MS (WPB) 1.5 2.6 2.4 2.1 Average Volumes sold per day per MS (Acquisition Banker) 1.4 1.3 1.3 1.3 Average Volumes sold per day per MS (Islamic Banking) 0.8 0.7 1.8 1.1 Average Volumes sold per day per MS (ELB) 2.0 2.4 2.2 2.2 Total Ave Product numbers sold p.m. per MS PERSON PRODUCTIVITY RATIOS 3 AVERAGE PRODUCTION Acquisition Bankers 26 2.5 2 LG (WPB) Islamic Bankers 22 LG (AB) 1.5 LG (IB) 1 LG (ELB) WPB Consultants 42 0.5 0 GRCB Lead Generator JAN FEB MAR ELB Lead Generators 44 Conference, London, 18 & 53 19 May 2008 MONTHS
  54. 54. TECHNOLOGY & ENABLEMENTOptimal technological enablement solution per segment Technology Solution Targeted Areas Status Medium Term View Digital • Entry Level Banking • LAUNCHED • Implement nationally Pens • ESPs • WPB Kiosks Laptop • Core Middle Market • LAUNCHED • Implement nationally Kits • Retail Affluent • Islamic Banking • Mobile Sales Units • Bank on Wheels Card and • All NBS sales • LAUNCHED • Full implementation Pin environments Mailer Other • Entry Level Banking • IT LITE SOLN • Introduce alternative devices Devices LAUNCHED Fulfilment • All NBS sales • INTEGRATION • Implement ED Portal environments
  55. 55. ENABLEMENT PLATFORM Technological Integration ensure a seamless end to end Sales fulfilment processNote: Integrated Service – accessed by AGO, NBS Support hubs, other SBU’s andES & WPB Sales Consultants
  56. 56. KEY LEARNINGSSolid progress despite challenges experienced Positive Experiences Learning Curves – Volume production – Poor performance in Value targets – Variable compensation – Developing an accurate MI system to – Segmented sales force track commissions and daily production – “First Job Application” employees and – Attaining volume in certain targeted productivity product lines – Delivery channel positioning, e.g., – Bedding down technology enablement External Sales Points – Investment Consultants with limited – Bank on Wheels highly successful in transactional products to sell in targeted Student Market and event based market interventions – Lag in addressing poor performance due – Positive productivity and performance to bedding down of overall DSA model trends approach – Contribution towards “New to Bank” core customer growth
  57. 57. LG BUSINESS SIMULATION PROGRAMME Description: LG manage the performance of a Sales team through 3 cycles by following a 6 step process: • Step 1: Teams receive goals per product and campaign • Step 2: Teams come up with actions and ideas on how to create opportunity i.e. prospecting, networking as well as looking at events in certain areas which might offer opportunities • Step 3: Teams react to events and make service choices which will influence the amount of potential sales going into their sales funnel • Step 4: Teams analyse customer profiles and put together a Value Proposition which is presented and rated. The ‘client sales interaction’ determines the number of products in the sales funnel (cross-selling opportunities) • Step 5: All team members fill out documentation and indicate compliance requirements per product for those products they managed to sell in step 4. Faulty applications leads to lost sales • Step 6: Teams receive final actual revenue and compare it to targets. Action plans are put in place for the next round Reflect Workshop Plan for Do Feedback/coaching action Pre-work Action (Product Planning Knowledge & Tool) Simulation Apply Application Execution 3 Simulated Analyze/present cycles 57
  58. 58. SALES PERFORMANCE MEASUREMENT PROCESS Sales support Clerk receives application, Sales consultant Sales consultant submits conducts quality check complete application application to respective and then proceeds to with customer Sales Support Hub for captures application on processing. FBSS. Sales support clerk then captures details and status of application on Manuel Submission DSAS. • Digital Pens Technology: • Lap top Kit •Productivity by sales consultant The following status of the •Productivity by Sales DSAS system generates application can be captured Support productivity reports based on DSAS. •Productivity by Region on what has been captured • Approved •National Productivity. at the Sales Support Hubs. • Pending • Number of Sales per Sub- • Declined Product 58
  59. 59. SALES COMMISSION PROCESS Detail report of all applications Sales consultant to complete Regional manager to send processed and approved is application with customer and validated report to national extracted from the DSAS system send application through to sale sales manager by the 3rd by the regional manager for the support hub for processing on working day of month. respective region and validated FBSS and capturing on DSAS. for accuracy by the second working day of the month. Business Analyst from Business analytics department to use spreadsheet received from National sales manager to National sales manager to collate all verify against the Absa data warehouse for activated validated regional reports into one status of transactional, unsecured lending, insurance, spreadsheet, verify for correctness and savings and investment products. Only valued added submit to Business Analytics department products will not be verified for activated status. by the 4th working day of the month. Once the business analyst has Commission will then be calculated for completed the commission calculation, all verified activated sales (in the case business analyst to send commission of value added products – only claims to General Manager (External applications captured as approved on Sales and Operations) for validation DSAS - will commissions be calculated and sign-off by the 7thth working of the for). month. General Manager (External Sales and Operations) to sign-off commission claim and send through to Quest for payment of commissions to direct sales agents by the 8th working day of the month. 59
  60. 60. 1. Background MOBILE E-COMMERCE
  61. 61. 1. BackgroundOVERVIEW M-COMMERCE • Internet banking has received the most coverage over the last decade • Movement towards greater mobility as mobile phones become more sophisticated • These phones can know handles more advanced applications & services • Banking via mobile phones appeals to consumers on multiple fronts • Mobile phones also serve as an efficient vehicle for making contactless payments, P2P transfers, providing greater security protocols and storing in-depth preference information • Various software platforms for mobile phones and other devices will allow the consumers to use the web • Over the next decade the movement towards Mobile Banking will rapidly increase • Other technology developments will affect retail banking and these include: • Growing broadband at lower costs • Webcams via Web 2.0 will reach consumers at home • VoIP • Instant message systems • Social Network (face-book, twitter, etc) • Thin client capabilities makes remote access easier • Level of security protocols and applications is constantly improving • Technology is allowing banks to be more cost effective and efficient
  62. 62. 1. BackgroundMOBILE TRENDS 2011 • Year of the smart phone even for the ‘dumb’ user • Apps vs. mobile content internet will continue • Mobile marketing spend will grow significantly (USA to exceed the 1 billion mark) • Mobile will increasingly prompt customers to interact with their physical environment • Companies will invest first in convenient services for customers, acquisition will come second • Casual gaming will continue to lead the mobile change for content • Term mobile will mean a lot more than mobile phones (I-Pad)
  63. 63. 1. BackgroundBEST PRACTICE FOR SUCCESSFUL M-BANKING STRATEGY • Implement SMS based M-Banking capabilities that focus on the most relevant and actionable alerts for customer today • Plan for the future • Anticipate the increased need to intelligently reach out to customers across multiple communication channels (SMS, email, voice, and instant messaging) • Select a service provider that enables and implements a cost- effective delivery of SMS capability & function
  64. 64. 1. BackgroundMOBILE GROWTH DRIVERS
  65. 65. 1. BackgroundSOCIAL NETWORKS
  66. 66. 1. BackgroundMAIN FEATURES OF MOBILE COMMERCE • Ubiquity – anywhere • Immediacy – anytime • Localisation – GPS specific to a location • Instant Connectivity – General Pocket Radio Service (GPRS), means mobile service are online and always on • Pro-Active Functionality – tailor making to suit the needs of a user, IOW, a user can choose what he wants to view or receive on his mobile • Simple Authentification Procedure – electronic chip found in mobile devices call Subscriber Identity Module (SIM) using a PIN
  67. 67. 1. BackgroundSERVICES IN MOBILE BANKING Account Operations Account Administrations Money Transfers Changing accounts Bill payments Blocking lost cards Money Transfers Cheque book requests Subscribing insurance policies Administration Account Information Product Information Balance enquiries Product Information Statement requests Product Pricing Threshold alerts Interest rates Branch/ATM locations FOREX rates Helpline Credit card info
  68. 68. 1. BackgroundMOBILE BANKING AND CORE TARGET GROUPS a) The Youngsters: • The segment of the 14-18 years old • Technology savvy and willing to experiment with innovative products/services • On the move, demand ubiquitous, anytime service • Represent future prospects • Hence marketing must be used to cultivate this group a) The Young Adults • Technology & innovation friendly • Financially not very strong • They also will need to be cultivated through marketing • Students to beginning of a career a) The Business People • Age group 26-50 years • Important segment to mobile banking • Well educated & economically well-off • On the move, hence carry mobile devices • They demand financial services and products
  70. 70. 1. BackgroundTRENDS IN USERS (2007, EUROPEON UNION BANKS)
  71. 71. 1. BackgroundSMS BANKING • Using mobile phone via TEXT to conduct banking functions: • Balances • Mini-statements • Transfers (M-Pesa) • Different to telephone banking • Helps users keep track of banking activities anytime, anywhere, any place • Some do not charge for SMS banking (South Africa – cross-sell/retention) • Most to all phones are capable in using SMS banking • SMS alerts, keeping you informed on daily transactions • Costly, complex when looking at future growth, developments • A comprehensive mobile messaging solution must be able to abstract, send, and receive messages from multiple channels, including mobile devices, landlines, & IVR systems • The capability implies the need for a MULTI-MODAL messaging architecture • Multimodal architectures help banks cost effectively deploy SMS messaging services without upgrading existing IT infrastructure or adding support personal • This allows users/customer to perform simple transactions (balances, statements, transfers…etc) • Current focus is on SMS functionality, over WAP & app type solutions
  72. 72. 1. BackgroundCONSUMER PREFERENCES FOR SMS BANKING (2007, US)
  73. 73. 1. BackgroundMULTIMODAL MESSAGING ARCHITECTURE • Enables a single messaging strategy • The platform uses application programming interface to abstract, track, transmit and receive messages from multiple channels • Customer profiles determines where/which messages go • Routes messages via multiple networks • Switches between communication channels until customer receives the message
  74. 74. SESSION 3: Branch Strategy
  75. 75. WHAT DO CUSTOMERS WANT?????? Customer  Most customers prefer to purchase in the branch Centric View  There are groups that are moving away from branches, and towards alternative channels, mobile sales force, cell-phone banking, internet  Excellent service Convenience  Convenience and accessibility & Understanding the needs  Feedback  Customers want products that are understandable and easy to transact with
  76. 76. OBJECTIVES  Launch a differentiated retail branch  A multi-channel approach to support the accessibility and convenience for customers  To ensure that channels are profitable and sustainable  To ensure that our channels offer superior customer service  Keep our approach simple  Doing things right the first time