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INFORMS Marketing Science Conference  2008 BUSINESS BANKING TRANSACTIONAL, LENDING AND SAVINGS PRODUCT ACQUISITION SEQUENCES AND RATES OF CHANGE A Practitioner Study by Guy F Pearce Customer Strategy Division Personal and Business Banking Standard Bank [email_address]
Can we do better than to market banking products to businesses as if they are homogeneous entities? ,[object Object],[object Object]
Theoretical Background – The Business Context ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Theoretical Background – Relationship Marketing ,[object Object],[object Object],[object Object],[object Object],Can relationship marketing be effective without having the right information about every customer at a 1:1 level?
Theoretical Background – Previous Pattern Studies ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Most studies seem to have been conducted in a Personal Banking context. Equivalent studies in Business Banking are scarce
The contribution of this study ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
The data ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Not (yet) included in the study are Merchant Devices, Electronic Banking, Forex, Commercial Property and Insurance products
Arranging the data Relationship cohorts allow the analysis of products acquired by customers at the same points in time of their relationships with the bank.  There is left- and right censoring, with left-censoring representing the bank product acquisition history that is not known to the bank, and right-censoring representing an unknown future Age of Relationship Year of Acquisition
Analysing the data ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],It seems that 24 months is, for some cases, an upper limit to which simple trajectory analysis can be used in this kind of study
Analysing the data Example insights for the “Other Business Activities” SIC (1 of 39 SICs) In this SIC:    The later you sell a transactional product to Optima, the less chance of a sale.    You can address savings with Focus at each review, but with Expert and Optima the opportunity rapidly falls away.    The opportunity for lending increases over time in all segments.    Transactional products are at least 4x more likely to be sold for Expert and Focus than anything else.    Lending sustains Optima activity over time.
Analysing the data Insights for the “Health and Social Work” SIC In this SIC:    Transactional requirements are sustained over time, with Optima experiencing 3x more activity than the other segments.    Savings activity is the highest for Optima, but opportunities fall away rapidly.    Lending opportunities start at a higher level for Optima, but are soon superceded by Expert and Focus.    All product activity is sustained over time for Expert, especially lending.    Focus and Optima sustain or grow acquisition activity over time for all but savings products.
Visualising the differences Simple composite view across five of the largest industries (by volume) and three segments, showing niche marketing opportunity potential* ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Age of relationship (months) % total acquisition volume But are they statistically significant differences? *Of course, not exclusively
The findings Research Question 1: Do businesses behave differently to each other with respect to their requirement for banking services? ,[object Object],[object Object],Many combinations of industry, segment and product behave significantly differently to each other over the first 24 months
The findings Research Question 2: Can we assume that businesses express the same requirement for banking services over time?  ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Some combinations of segment, industry and product express different needs for banking services over time
Application ,[object Object]
Limitations ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Need to be aware of the value* of the customers in potentially niche activities to be sure resources are not wasted
Conclusion ,[object Object],[object Object],[object Object],[object Object],[object Object],Sequences are indicated at the aggregate product  group  level. With the multiple acquisition limitation, it’s not yet clear at a product level

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Marketing Science Conference on the SME use of banking products, Vancouver 2008

  • 1. INFORMS Marketing Science Conference 2008 BUSINESS BANKING TRANSACTIONAL, LENDING AND SAVINGS PRODUCT ACQUISITION SEQUENCES AND RATES OF CHANGE A Practitioner Study by Guy F Pearce Customer Strategy Division Personal and Business Banking Standard Bank [email_address]
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  • 8. Arranging the data Relationship cohorts allow the analysis of products acquired by customers at the same points in time of their relationships with the bank. There is left- and right censoring, with left-censoring representing the bank product acquisition history that is not known to the bank, and right-censoring representing an unknown future Age of Relationship Year of Acquisition
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  • 10. Analysing the data Example insights for the “Other Business Activities” SIC (1 of 39 SICs) In this SIC:  The later you sell a transactional product to Optima, the less chance of a sale.  You can address savings with Focus at each review, but with Expert and Optima the opportunity rapidly falls away.  The opportunity for lending increases over time in all segments.  Transactional products are at least 4x more likely to be sold for Expert and Focus than anything else.  Lending sustains Optima activity over time.
  • 11. Analysing the data Insights for the “Health and Social Work” SIC In this SIC:  Transactional requirements are sustained over time, with Optima experiencing 3x more activity than the other segments.  Savings activity is the highest for Optima, but opportunities fall away rapidly.  Lending opportunities start at a higher level for Optima, but are soon superceded by Expert and Focus.  All product activity is sustained over time for Expert, especially lending.  Focus and Optima sustain or grow acquisition activity over time for all but savings products.
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