Barclays 2011 Global Financial Services Conference in New York to present investors with a review of results so far in 2011 and provide an outlook for 2012. Unlike the past two years, where this conference was dominated by bank presentations focused on TARP, credit risk, capital reserves and liquidity, this year's presentations highlighted the opportunity for organic growth and improving client's share of wallet.
For instance, Jim Rohr, Chairman and CEO of PNC Financial Services Group said that PNC will be focused on adding new customer relationships and cross-selling going forward. "If we cross-sell new clients, we'll see an almost $220 million increase," Rohr said during his presentation.
Similarly, Tim Sloan from Wells Fargo discussed significant opportunities that exist as a result of the integration of Wachovia. According to the presentation done by Sloan, there is a variance of an average of one product per household between legacy Wells Fargo (6.25) and the results from the Eastern footprint (5.29). He further illustrated that there is a variance of two products when legacy Wachovia is compared to the top Wells Fargo region (7.36).
When reviewing the presentations done by all of the top 20 banks, virtually every organization referenced their strong branch footprint and their focus on cross-selling and improving share of wallet going forward. Interestingly, only SunTrust referenced a focus on the retention of current customers (a drop of 8% in checking account closures between 6/30/11 and 6/30/10).
I am definitely a major proponent of cross-selling (see previous post: Seven Common Sense Ways to Increase Cross-Sales), but how do ALL of the leading banks think they are going to battle each other for a greater piece of the pie if the pie itself isn't getting any larger? Sure, it makes more sense to cross-sell existing customers as opposed to acquiring brand new ones, but isn't showing love and retaining current customers a viable path to growth as well?
Over the past year, I have visited most of the major banks in the country and still find that the first year new customer attrition ranges from roughly 25 percent to greater than 40 percent, usually based on the aggressiveness of a bank's acquisition efforts (the more aggressive banks usually have a higher level of attrition). Unfortunately, this is a number that most banks, as well as many marketing and product areas continue to ignore.
Before banks beat each other up trying to reach Wells Fargo's household cross-sell objective of 8 services, or move all of the budget that was spent in 2011 on acquisition into cross-sell initiatives, maybe more thought and money should be diverted to help make current customers feel better about their decision to open an account at your bank. Onboarding programs, customer satisfaction initiatives, customer engagement strategies, rewards programs and recapture triggers can all assist retention efforts.
At a time when most of the leading banks in the country are increasing fees and reducing some of the benefits that customers had come to expect and enjoy (rightly or wrongly), maybe we should focus more on sharing the love for their patronage as opposed to waging war on each other vying for a greater share of wallet.
Maybe next year's presentations at the Barclays Financial Services Conference will have more presentations around how many customers were saved in addition to how many were cross-sold.
I'd love to hear what you think.
Links to Barclays 2011 Global Financial Services Conference Investor Presentations:
Bank of America
Capital One Bank