A survey of SaaS business executives recently published by Pacific Crest (results available free here) reveals some interesting information about the profiles of higher-growth companies.
In their graph below, we can see that while the greatest number of SaaS companies use a field-based sales strategy, those that use inside sales that are actually growing the fastest—on average, almost 75% faster than the field sales companies. (Growth is defined as year-over-year change in revenue.)
The complement to this graph is the one below, which shows that the Fast Growers (>45% growth) have lower customer acquisition costs. This differentiation is undoubtedly driven in part by the use of an inside sales force.
The final piece of the puzzle is revealed in the following graph. This slice of the survey data shows that Slower Growers are much more focused on Enterprise customers. Fast Growers, on the hand, balance their Enterprise sales with a healthy dose of SMB sales.
Of course, this data shouldn’t be read as an indictment of SaaS businesses that use field sales to sell mostly to the Enterprise; there are highly successful examples of such businesses. Instead, the data serves to highlight the achievement of those Fast Growers, and I hypothesize that effective marketing has played a key role in their success. It isn’t easy selling through an inside sales force to SMB; relationships are difficult to build over the phone and SMB management is often difficult to reach. Success, then, becomes a numbers game: Maximize leads (with a focus on inbound), and optimize conversions by creating tools to move prospects through the funnel. Without a highly capable marketing function, the numbers don’t add up and growth is elusive.
Bank of America recently announced that it now has more than 10 million active mobile banking users. Other leading banks, such as Chase and Wells Fargo, are also reporting very strong growth in mobile banking usage. We expect the strong growth in mobile banking usage to continue, given the increased penetration of smartphones and tablets, the growing sophistication and power of these devices, as well as people’s increased comfort with using mobile channels for everyday financial management needs.
Much of the focus in mobile banking to date has been on the consumer market, but some of the leading U.S. banks are now directing their attention to the commercial banking market. In recent weeks:
Financial technology vendor Jack Henrylaunched a commercial banking app for the Apple iPad.
Citibank incorporated elements of its TradeAdvisor online banking tool (which enables companies to conduct cross-border trade transactions) into its CitiDirect BE Mobile banking suite.
Wells Fargo integrated its TradeXchange service into the bank’s CEO Mobile app.
The examples above show that, not surprisingly, the largest banks have led the charge into new mobile commercial banking apps. Small regional and community banks now need to follow suit, in order to meet commercial clients’ needs and remain competitive.
The objectives behind the development and marketing of mobile banking functionality in the commercial space are very similar to that in the consumer banking environment:
Lowering customer service costs
Enhancing the customer experience
Differentiating services from competitors, or reducing a competitive disadvantage
Reducing churn through the provision of “sticky” services
Providing additional customer touchpoints for cross-sell and upsell
Differentiation through commercial mobile banking (and in other service areas) can be fleeting, as other banks will aim to imitate certain value-added service and close the competitive gap. To maintain a competitive advance in the provision of mobile banking services, banks need to:
Continually research customer desire for and usage of new mobile apps
Effectively market these apps to new and existing customers
Communicate the value of these apps to bank personnel who deal directly with commercial clients
Integrate the emerging mobile banking channel with other customer sales and service channels to provide a seamless and consistent user experience.
For decades, bank branches have been focused on everyday banking transactions. However, with electronic self-service channels now handling a dominant share of these transactions, branches have come under intense scrutiny, with many industry commentators predicting the decline and even extinction of the branch channel. This view has been strengthened by the fact that banks are focusing significant attention on cutting costs in an era where revenue growth remains elusive. And branches represent a significant cost for banks.
Banks are belately beginning to react to this new environment by developing new branch strategies that recognize its changing role. Banks are now putting less emphasis on the branch as a channel for day-to-day financial transactions. Instead, branch investments are being directed to capture the potential of the branch as a key channel for sales, customer relationship development (through the provision of complex and/or sensitive financial advice), and branding (even customers who bank online tend to want the physical reassurance of the branch). In addition, banks are increasingly aware of the research value of branches, both in terms of directly surveying branch visitors as well as testing new product or service innovations in selected branches before full roll-outs.
Some examples of new bank branch strategies:
In a presentation this week at the Morgan Stanley Financials Conference, PNC outlined a vision of its branch network that involves a more dynamic definition of branches, which includes multiple physical formats, as well as greater integration with both remote sales people and electronic channels.
Huntington recently reported branch plans driven by both the desire for cost savings (closing traditional branches and opening in-store branches) as well as to leverage the latest technology (such as branch image capture and processing) to drive efficiency.
U.S. Bank has three branch models, which enables the bank to tailor branch investments to market composition and opportunity.
Wells Fargo continues to have a strong commitment to the branch channel, as it claims that the vast majority of financial products are bought in a branch. It follows a specific model for branch productivity that is based on both in network density and retail execution, and which is seen in the following chart from its recent Investor Day:
At its 2012 Investor Day, Chase discussed a number of branch innovations designed to reduce costs and improve the customer experience. These include self-service tellers, paperless tellers, instant-issue cards and access to remote sales specialists through video. It is testing other innovations like next-generation ATMs, paperless sales, and mobile demonstration zones. Chase is also continuing to deploy additional sales personnel in branches; at the end of 1Q12, Chase had more than 6,000 sales specialists (y/y increase of 21%).
As electronic channels continue to change how consumers and businesses interact with their banks, many banks are reassessing the level and type of investments in their branch networks. Though most are still committed to the branch model—noting its importance in sales and understanding that many customers still want to have the reassurance of a physical presence—the role of the branch is evolving and this has important implications for issues like branch sizing, design, staffing, technology deployment, and merchandising, as well as integration with other channels.