The Digital Sales Inflection Point: Online Sales Surpass Branch In The US
With all the focus and hype around mobile and payments, one major trend surfaced that has as much impact on financial service companies as anything mobile. In 2011 for the first time, consumers who opened financial products opened more of those products through digital channels (online and mobile) then they opened in a branch.
Every year, Forrester surveys North American consumers and asks them about the products they purchased/opened in the previous 12 months and the channels they used to research and apply for the those products. In 2011 across products including checking, credit cards, mortgages, insurance and investments, 37% of US online adults that opened a product opened that product online with another 2% that opened via mobile. This compares with 36% who applied in a branch. These percentages are up significantly from 2010 where 32% applied online and 40% in a branch. The percentages for Canada are less for digital, but we expect those numbers to continue in the digital direction with the focus Canadian banks are putting on digital sales.
So why the big move? In general more products were opened in 2011. In the US in 2011, 38% of online adults opened a product versus 32% in 2010. Other reasons for the move in digital sales include:
- More digital bankers. Survey data has consistently shown that online bankers, mobile bakers and bill payers are more likely to apply through digital channels then those who are not digitally savvy. Those groups continue to grow. In fact, Bank of America announced today that they reached 10 million mobile bankers.
- Greater familiarity. Applying for financial products online is no longer a new activity. Most consumers have opened at least one financial product online at this point.
- Better sales websites. While there is certainly a long way to go, financial services firms are getting better at selling online. Forrester has tracked the quality of sales sites in North America for the last seven years and in the last few companies like Royal Bank of Canada, Citibank, Discover, and Capital One (to name a few) have made major strides.
This major trend shift further highlights the need to focus on online sales or risk revenues in the future. Many retail banks are headed in that direction. In a survey Forrester recently conducted with the Consumer Bankers Association around digital priorities, digital executives reported that online sales is the biggest investment priority for the digital team as well as the biggest area of hiring. As these teams evolve, there are a few things they need to keep in mind:
- Focus on re-merchandising as much (maybe even more) than re-designing. Far too many redesigns focus exclusively on "look and feel" and forget that it is equally as important to ensure that the website excels at selling. This includes compelling content, tools and a quality lead/application process.
- Think add-on sales. Statistics show that consumers that open a checking account do the majority of the cross selling (that they will ever do) in the first 12 months of that relationship. This is not surprising since life events drive many financial product sales. Quality merchandising includes up-selling and cross-selling during the sales and onboarding process. Few are good at this and financial service companies should look to industries like travel that have excelled in this area.
- Focus on data-driven "context" selling. Far too much marketing is focused on the well worn trails of banners and search marketing. While important, financial service firms (especially investments, card and banking) have regularly visiting customers for whom they have demographic and (in many cases) transactional information available. This customer data needs to be combined with uber smart contextual selling to drive sales. Case in point: one of the top life events that drives sales of financial products is when a consumer moves, and yet few financial firms consistently cross sell when the customer changes their address — online or offline.
I'd like to hear your thoughts.