Marketing, customer segmentation, and continuous monitoring of customer needs are key areas where leading retailers are able to distinguish themselves. The best retailers in the world are sharply focused on understanding what happens in the head of their customer relationships. Relevant customer insights make it possible to provide exactly what their customers want and how they want it.
Despite the differences in products and customer interaction frequency, banks can certainly draw inspiration from what is happening in retail. According to the survey of 78 senior executives, many leading banks are adopting retail techniques to grow revenues and increase cross-selling.
Research conducted by Efma (commissioned by Accenture and UniCredit) reveals that banks have made substantial progress by implementing proven retail strategies. Four out of five respondents thinks that retail techniques for customer analytics and behavioral segmentation are essential for future competitiveness. 41% responded that at least one retail program has already been implemented or plans to do this within one year. Moreover, a significant number of respondents said that their bank has already begun initiatives similar to those of:
- Best Buy (56%)
- Giorgio Armani (47%)
- Prenatal (38%)
Best Buy has a customer segmentation initiative that helps to determine existing and potential customer profitability. All customers are divided into segments for targeted marketing and promotions. Giorgio Armani is working with in-store and online branding programs for Y-generation clients, popular celebrities, social networking and entertainment. The in Italy based Prenatal (retailer of baby products and maternity wear) offers free in-store and online customer education services.
Respondents judged 16 successful customer initiatives from outside the banking sector on applicability and potential to increase revenues and cross-selling. Initiatives rated highest were:
- Amazon’s point-of-sale product recommendations, consisting of “often simultaneously purchased” products based on buying patterns and correlations within the shop.
- Best Buy’s strategy for customer segmentation.
- Analytics based on Apple’s iTunes “Genius” tool, which recommended new content based on individual purchase history and entertainment library.
Respondents also give high ratings to Prenatal’s free educational services and BMW’s Configurator tool for creating your own BMW.
We expect a shake-out in the banking sector, driven by a sophisticated use of marketing and analytics. New service models, with greater focus on digital channels, are already being implemented to reach out to today’s less loyal customers. Although not all techniques will be equally meaningful to the European banks, many can be valuable in the battle for customer loyalty. With a selective approach and the right investments, banks will be better equipped to differentiate their offerings to achieve higher growth and profitability.
Banks that learn selectively and quickly from the successes of top retailers have a good chance to outperform the competition. Compared to retail, banks have a lot of customer information, but are currently not using this to its fullest potential. Those able to transform this data into usable information and linking this to the right retail strategies will have an absolute advantage. Using this wealth of customer information would enable banks to service customers more effectively. Although there are many barriers regarding confidential information, overcoming these barriers will prove essential for survival.
Which successful retail strategy do you think will grow revenues and increase cross-selling in today’s Banking?