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Customer
Education:
Does it produce just good feelings or measurable ROI?
Conclusion:
Companies attending the Beyond Survival program used the tools provided to
manage their businesses more effectively and improved profits and cash
flow. Improved cash flow allowed them to increase cash balances and
purchase more services. Furthermore, increased profits have been
reinvested to grow the businesses – leading to increased credit limits
and expanded loans.
By
all measures – loan limits, loans, deposits, and products – seminar
attendees are more profitable accounts. Clearly, the seminar program
provides a mechanism to significantly increase profitability from the
existing client base. These results can be leveraged into a unique and
powerful business development campaign as Westpac has done in Australia,
by introducing Beyond Survival in their national advertising cable TV
version of Beyond Survival.
In
the banking industry, the topic of small business is hot. Not surprising.
Continuing and increasing competition has squeezed both the volume and
margins out of many of the traditional profit centers. In a sense, small
business is one of the last “segments of opportunity.” Banks are
rushing to the fore in a manner similar to the frontier “land rush”.
However,
beyond being the only game left, there are a number of compelling reasons
that make the small business market particularly attractive. Among them:
-
There
are many – more than 22 million, in fact
-
The
segment is growing (corporate downsizing, lifestyle evolution, etc.)
-
Smaller
loans counter the risk of concentration (big loans gone bad)
-
Small
business owners tend to be high net-worth individuals (additional
products and services)
Of
course, every market has its own challenges, and small business is no
different. From the beginning, there have been two primary challenges:
Cost
and Risk
Conquer
these and you have a “leg up” on the competition.
The
cost issue has been addressed in several ways, most notably loan scoring
to reduce the cost of the credit granting process. In addition, client
segmentation is used to determine which accounts will be assigned a client
manager, and which will be managed on a transaction basis. However, these
are strategies that any bank can employ.
Risk
is introduced because of the known failure rate of small business. This
occurs not only because of the tendency toward undercapitalization, but
also the lack of financial acumen of the typical small business owner.
To
address these changes, Westpac chose to partner with Business Resource
Services (BRS) - to design and deliver to both bank staff and customers
– a unique two-day seminar that BRS has been delivering to business
owners and managers in the U.S. market for over 20 years.
The
bank received the same outstanding attendee evaluations that BRS has
received for years; however, Westpac endeavored to go beyond anecdotal
praise, and measure the impact of the program on the customer base.
The
18-month study identified key customer profitability drivers ― and
then measured the difference between 2000 + seminar attendees and the
small business portfolio at large. The results are summarized in the
attached graph, and they are extremely compelling.
In
measuring the critical profit drivers – loan commitments, loan
disbursements, deposits, and product usage – the seminar attendees
dominate non-attendees. Clearly, the seminar program provides a mechanism
to significantly increase profitability from the existing client base.
These results can be leveraged into a unique and powerful business
development campaign.
Contact
us today for a no-obligation preview of our programs for bank staff and customers.
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