July 2007
The Recipe for Growing Share Of
Wallet Includes More Than
Technology
Financial Firms’ Culture Is A Key Ingredient
A commissioned study conducted by Forrester Consulting on
behalf of Adobe Systems
Growing Share of Wallet
Introduction
Financial services firms are competing for their customers’ share of wallet — trying to be the
primary and ultimately sole provider to them. Competition is tough, because customers tend to shop
around for the best deal (see Figure 1). In addition, consumers have conflicting instincts: a desire
for the simplicity of having one or two providers battles against a hesitation not to have “all their
eggs in one basket”. As a result, financial firms need to make some compelling arguments to get
more of their customers’ business.
Figure 1: Consumers shop around for financial products
Figure 1-1: 45% of US consumers researched financial products in 2006
From the April 3, 2007 “Turning Pricing Optimization Into Relationship-Based Pricing “
Figure 1-2: High rates of European consumers shop around for their financial services
From the April 3, 2007 “Turning Pricing Optimization Into Relationship-Based Pricing “
Technology Is Still The Primary Barrier
Despite the fact that supporting technology is commonplace in the market today, financial firms
still indicate that the lack of a 360° view of the customer is a primary barrier to growing share of
wallet, according to the results of a global survey of banks and investment firms commissioned
by Adobe Systems and conducted by Forrester Consulting. Respondents were asked to
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Growing Share of Wallet
indicate — on a scale of one to five — to what extent seven issues related to share of wallet
were problems for them.1 While there were no significant standouts where respondents agreed,
when they were asked to identify which of the issues posed the greatest challenge, the
statement “We don’t have a complete consolidated view of the customer relationship, so it is
difficult to determine what products are good offers for them” was chosen most often (see
Figure 2). Why is this, given that financial institutions have been focusing on this issue for over
ten years? Here are some key reasons that banks and investment firms still haven’t fully
succeeded in developing this capability:
ƒ
Mergers and acquisitions have slowed the consolidation of customers into single profiles,
given the multitude of customer information files (CIFs) that have to be united.
ƒ
Subsidiaries like mortgage and credit card groups still maintain their own, separate CIFs,
and marketing data bases often only capture the fact that accounts there exist and do not
include account details like balance, rate, and terms.
ƒ
Details on investments such as annuities are often held only at the originating insurance
company, even though the product might have been sold through an investment firm or
bank. Again, only the fact that a customer has an annuity is often available in the CIF.
Financial firms continue to work towards a full view, but this project is often prioritized well below
other current challenges such as meeting compliance and regulatory requirements.
Figure 2: Lack of 360° Customer View And Lack of Focus On Retention Were Top Issues
What are your two highest priority issues related to expanding wallet share among customers?
Issue of primary concern
11%
17%
Lack of consolidated customer view
Too much focus on growing wallet share, not enough on
retention
13%
Cross selling is difficult as customers don't want to put all
their eggs in one basket
12%
No value based pricing
11%
Referring existing customers to the correct product
specialist is difficult
11%
Most client interaction is during servicing issues - not a
good time for cross-selling
Marketing offer management system doesn't target the
right products to the right customer
Issue of secondary concern
8%
4%
8%
4%
8%
5%
11%
8%
Base: Respondents reporting facing issues around growing share of wallet. n=58
Source: Phone survey of 76 decision-makers with responsibility for customer-centric applications across multiple channels in large banks and
investment firms. Survey commissioned by Adobe and conducted by Forrester Consulting, February and March 2007
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Growing Share of Wallet
Aligning Share Of Wallet Growth With Retention Is Critical
The other key issue that was highlighted in the survey results was a lack of focus on retention at
their institutions. Over 20% of the respondents scored the statement, “We focus too much on
growing share of wallet, and not enough on retaining our existing customers,” as their first or
second challenge. Even with a renewed focus on retention active in the market today, financial firms
aren’t necessarily aligning strategies for retention with those for growing wallet share. As expected,
the barriers to this alignment are associated with people, process, and technology, but the survey
results indicated that people, culture, and company combine to serve as the primary impediment
(see Figure 3). Here are the core factors behind this organizational challenge:
ƒ
Many financial firms are still product-centric, rather than customer centric, so product
managers are rewarded for selling more product units rather than on retaining the existing
relationships. These firms may be satisfied with the fact that as long as the number of
accounts on file continues to grow, they are selling faster than they are losing customers.
ƒ
Line of business silos often are still prevalent in banking and investment firms, so even if
the LOB marketing group is focusing on retention as well as sales, the efforts may not be
coordinated across the different business lines.
ƒ
Retention is hard to track, and equally difficult to reward. Consider the front line sales and
service representative: She is generally goaled on new product sales and some service
level (be it using customers’ names, or being fast and accurate with their transactions.) But
it’s a rare program where these representatives are goaled on — and rewarded for —
saving account relationships. Frankly, with a line of potential sales waiting, it’s often fastest
and easiest just to handle the request when someone wants to close his account.
Figure 3: 360° View Is a Technology Challenge, but Retention Focus is Culture Related
Thinking about your highest priority challenges, what proportion of the challenges would you
attribute to Process, Technology, or People/Company Culture?
Too much focus on growing wallet
share, not enough on retaining
customers
Difficulty cross-selling appropriate
products and services due to lack
of consolidated customer view
People,
Culture,
Company
22%
Process
25%
People,
Culture,
Company
34%
Process
28%
Technology
23%
Technology
53%
Base: Respondents reporting “Difficulty cross-selling
appropriate products and services due to lack of consolidated
customer view” as their first or second greatest challenge.
n=19
Base: Respondents reporting “Too much focus on growing wallet
share, not enough on retaining customers” as their first or second
greatest challenge. n=16
Source: Phone survey of 76 decision-makers with responsibility for customer centric applications across multiple channels in large banks and
investment firms. Survey commissioned by Adobe and conducted by Forrester Consulting, February and March 2007
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Growing Share of Wallet
People, Process, And Technology Come Together For Growth
Growing share of wallet successfully can be supported through a comprehensive strategy that
addresses all key areas of the issue — people, process, and technology. The survey results
showed that 63% of respondents who indicated a priority challenge with the lack of a consolidated
360° client view — which respondents said is primarily a technology oriented problem — are
currently addressing the issue, and another 21% are planning to address it. But surprisingly, nearly
one third of the respondents who identified the lack of focus on retention as a problem have no
plans to address this challenge (see Figure 4). With competition growing fiercer, financial firms that
continue with a strategy reliant upon on new sales to outpace the loss of existing accounts will
eventually lose the battle of accounts on file. This is especially true in light of the fact that as
competition grows, companies are increasingly forced to focus on luring back customers they have
already lost. That’s a much harder chore than acquiring a new customer.
Figure 4: A Surprising Number Have No Plans To Address The Retention Challenge
Is this an issue that you are addressing?
Difficulty cross-selling appropriate
products and services due to
lack of consolidated customer view
Too much focus on growing wallet share,
not enough on retaining customers
Plans to address in future
6%
Don't Know
13%
Plans to
address in
future
21%
Currently
addressing
63%
No plans to
address
31%
No plans to
address
16%
Respondents have been addressing multiple core
systems issues for an average of 15 months.
Currently
addressing
50%
Respondents have been addressing continuity across
channels issues for an average of 10 months.
Base: Respondents reporting “Having too many core
systems makes modifying them too slow a process” as
their first or second greatest challenge.
n=28
Base: Respondents reporting “Too much focus on
growing wallet share, not enough on retaining
customers” as their first or second greatest challenge.
n=16
Source: Phone survey of 76 decision-makers with responsibility for customer centric applications across multiple channels in large banks
and investment firms. Survey commissioned by Adobe and conducted by Forrester Consulting, February and March 2007
Without an enterprise strategy for share of wallet, firms won’t be able to move past the competing
efforts they have today: technology, without appropriate cultural incentive to use it optimally, is
inconsequential; processes, without the right technology behind them, can’t be as effective; and
people can work and try very hard, but without the suitable technology and processes, can’t achieve
what they could.
Here are some key things to think about when building your integrated share of wallet strategy:
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Growing Share of Wallet
People/Culture/Organization
Process
Technology
• Re-evaluate your
• Re-evaluate your customer • Break down the barriers
organizational structure:
facing processes: Are they
to the consolidated
Are you product centric or
designed with the customer customer view and apply
people centric?
in mind?
the right technologies to
deliver it.
• Define a champion for the • Simplify processes for
integrated strategy to
serve as the executive
evangelist.
problem resolution and
other customer pain points
to reduce the desire for
them to attrite.
• Re-define your incentive
programs for all staff
• Build specific processes
members involved in
around retention —
selling products (from the
including how to identify
product manager to the
those likely to leave, and
front line sales person).
methods to counteract that
Ensure there are rewards
impulse. Don’t forget to
to support your strategy.
build a process for
measuring results.
• Use analytics to support
growth and retention
strategies — including
real time offer
management.
• Consider broad-range
capabilities like price
optimization and
relationship-based pricing
tools to support your
integrated strategy.
Conclusion
Growing customer wallet share is one of the most difficult fights financial firms have today, and
approaching it with tunnel vision or piecemeal won’t help these companies gain the success they
are after. The survey results support what many think of as common sense: Success with sales
growth is only effective if you retain your customers. Without the right technology, processes, and
cultural focus, even solidly aligned strategies will have limited success.
Make it a priority for front line staff to identify retention triggers and try to resolve the customers’
objections. But give them clear, effective processes and the supporting technology to get the job
done.
1
The survey, commissioned by Adobe Systems and conducted by Forrester Consulting, was
conducted in North America, the UK, and Western Europe during the period of late January through
mid-March, 2007 by phone, with 76 respondents at the executive level in the businesses and IT.
Eight-four percent of the respondents were from banks, and 16% from investment firms.
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