Noyes and Funsten offered their observations during a February 8, 2007 Webcast entitled, “Strategies to Optimize Deposit and Loan Acquisition, Retention & Profitability,” hosted by OnsiteConference, Inc. a privately held research marketing firm located in Tampa, Florida.

Communication is particularly critical when it comes to the mass affluent, affluent, and business banking segments, according to Noyes.  “You have that very short window of opportunity, your honeymoon.  If banks miss the honeymoon it may be years—yes, years—before you have the next opportunity for cross sell,” Noyes stated.

Most of the onboarding programs implemented have occurred through the branch network.  And many of these efforts haven’t worked due to limited time, conflicting priorities, and lack of tracking, observed Noyes.  He added, “The final cause for failure is not having the information needed to understand what would be the next best likely product or service to offer this person.” 

This type of communication comes only with a timely and disciplined database  communications campaign that is business ruled and model driven and improved over time. 

“Banks can gain a better return on traditional cross selling and retention investments by shifting a portion of their typical single-drop cross sell mailings to new account onboarding programs.  With this reallocation, banks must establish clear sustainable processes for orienting new customers to the institution’s services,” stated Noyes.

According to Noyes, successful onboarding correlates with satisfaction, profitability, loyalty:

• Onboarding reduces new-account attrition by 12%-21% (vs. average 30% deposit account attrition in year one)

• Drives 8%-10% portfolio gain in new products per customer (73% of cross-sell occurs within 60 days of a new relationship)

• Cross-sells an additional 1.3 to 1.7 new products per customer (those with two or more products have 37% less attrition than single-service customers)

The opportunity and the challenge to make this type of progress all occurs within the first 120 days. 

Program components in a typical onboarding solution include up to three mail communications in the first 120 days and up to six actual contacts in the first 6 months.  Noyes recommends calls from the branch or call centers to follow up one of the mailings.

The first contact may be a very simple welcome/thank you letter sent within the first week and independent from any database updates.  The next contacts, says Noyes, can be database and model generated communications to offer specific products and services that the customer is likely to buy. 

Noyes also recommends that include with any product offers a recommendation to use convenience or “entanglement” services such as online bill pay, debit cards, or direct deposit.  These services, according to Noyes, help to make certain it is even more difficult for that customer to leave the bank.

But after the honeymoon period, cross-selling should not stop. Upselling, according to Noyes, is an on-going process.  “You need to continually deepen the relationship, relying upon next-likely-to-buy analysis and subsequent cross-selling programs,” he added.

From onboarding and cross-selling communication programs, Noyes and Funsten offered the following highlights:

•         Clients receiving offers are stimulated to open more accounts

•         Great response from new customers, with even better response from existing

•         Almost 200% lift in response, test over control

•         Overall Response Rates from 2% to 10%, some in the mid-teens

•         Overall attrition can be cut by 12%

•         Incremental cross-selling improved by 18%

•         Cost/Account is less than $10

•         Cost/Account is less than $1 per $1,000 in balances

To gain this level of success, several key elements need to be in place, according to Noyes.  “First, active executive buy in across the management structure of the organization is absolutely critical.  If a branch isn’t doing their part, a sticky note from the CEO can be very effective,” offered Noyes.

“Second, you need a good business case to begin. It should be simple, concise and have some real tangible gains.  We all know that it’s not easy to go and present a case and when we do you only have so many times at bat and you want to make sure you’re hitting homeruns,” he added.   

“Third, the business process must be addressed in accordance with an onboarding and cross-sell program.  “It’s not just sending mail out the door.  It’s not just targeting, business rules and model driven.  You need to have processes that are in sync with the program,” stated Noyes. 

“Finally,” commented Noyes, “business intelligence is paramount for improving your program over time.”