Pub. 4 2015 Issue 3

11 F A L L | 2015 products held in the household can be quickly viewed prior to calling the customer. Householding also saves time at the front line by reducing double-calling efforts. There is no rea- son to approach Desirae and Emerson separately to sell a mort- gage or home equity line. Systems like SNL Banker perform householding weekly and update account information nightly to ensure that bank officers have up-to-date views of their customers. This saves time, and more importantly, provides officers the data they need to be more effective in their role. With householding, executive management can assess and set goals for both adding new households and reduc- ing lost ones. They can compare the number of new and lost households by branch or officer and design campaigns, refo- cus on customer service or coach employees to increase the number of net new households (i.e., new minus lost). Execut- ing an onboarding process for new checking customers is a best practice that reduces attrition. Call the customer in a week to make sure all materials have been delivered (e.g., checks, debit cards) and call again in a month to sell more products and inquire about service delivery. Establish goals to sell some key sticky services such as bill pay at the time checking accounts are opened. It is easier to track what occurred when customers and households are accurately identified. SNL Banker also links individual households together into super households based on joint account ownership (e.g., someone in Household A owns a joint CD with someone in Household B). Just as a customer key can only be assigned to one household, a household key can only be assigned to one super household. Super households can inform both your retention and sales strategies. On the retention side, it’s important to review the super household composition before doing some- thing that negatively impacts a particular member of that super household. For example, if a young person asks for an NSF waiver, one thing to consider is if he or she is tied to other individuals or households that are high value relationships. On the sales side, someone like mortgage bankers can view their customers to see who else they know. If the bank- ers have a good relationship with these customers, they may be able to refer them other members of the super house- hold. PRODUCT GROUPING The product grouping process aggregates bank prod- ucts in increasingly broad levels. Banks sell hundreds, even thou- sands of products (e.g., 30-day Jumbo Step Rate CD). Sifting through all the products is tedious and time consum- ing. Different levels of aggregation help bankers discover sales opportunities and coaching opportunities that could be easily overlooked. For example, a bank’s Senior checking account could be categorized as a non-interest checking account, more broadly as a checking account, and even more broadly as a deposit account. Think of these as levels with deposits at level 1, checking at level 2 and so on. Each level of aggregation offers a different perspective and may also involve a different sales force. Certainly, product man- agers will also want access to the most granular products, and that is provided within systems like SNL Banker. A key performance indicator is the cross-sell ratio (i.e., the number of products or services per customer or house- hold). The cross-sell ratio typically counts the number of product types a client owns rather than the number of accounts. Every bank seems to calculate this differently so it is very hard to compare them bank to bank. For example, some banks count virtually every account so that if a house- hold has three CDs and a checking account, their cross-sell number is four. Other banks may look at that same house- hold and say their cross- sell number is two (they own CDs and Checking). Another bank may look at that same house- hold and come up with a cross-sell of three if the household has two 90-day CDs and one 180-day CD. If SNL Banker clients organize their product level definitions fairly consistently, it is much easier to show and understand peer comparisons and develop meaningful goals. SNL has developed a recommended aggregation schema. These recommendations are based on a number of factors such as: • whether the products are substitutes for one another, • whether there tend to be different sales forces supporting the products, • whether demand estimates are available from outside parties at a particular level of aggregation (e.g., demand estimates for equity credit are readily available but de- mand estimates for 100% equity lines are not so one level of aggregation is all equity credit), • how regulators view product aggregates (e.g., per FDIC reports), and • whether some key business areas would be over- or under- counted based on the business rules (e.g., insurance, with many product categories like life or property insurance and variations within those categories, should not be at the same level as non-interest checking with only a few product offerings) The broadest, first level of product aggregation is below: First Level of Product Grouping Retail Products Commercial Products Deposits Deposits Credit Credit Investments Business Services Insurance Insurance Ancillary Ancillary Ancillary products include items such as debit cards or bill pay—important to the bank but the customer does not think of them as “products”. Business Services include areas such as Treasury Services, Merchant Services or Capital Markets. Continued on page 14... F E A T U R E