Bank Product Bundling: Super-sized Challenge?
‘No, I don’t want fries with that!
Chances are your customers have often felt that their preferences are not being addressed when presented with a well-intended but isolated, generic offer that misses the mark. To improve customer satisfaction, more and more financial institutions are taking more of a customer centric approach by presenting customized multi-product offerings in an attempt to meet their customer’s unique needs. These offerings are often referred to as product bundles, packages, relationship-pricing and many others.
“The consolidation in the financial services industry along with other market changes may be driving a quest for new pricing paradigms that shift the focus from individual product pricing toward more relationship oriented approaches.” – Deloitte Consulting, Relationship Pricing, May 2010
Banks are just starting to experiment with this bundling approach while others are expanding their packaging strategies by adding a “Gold” tier between their “Silver” and “Platinum” bundles or launching a small business banking bundle based on their success with personal bundles. One thing seems certain: dynamic product bundling in retail banking is gaining in both momentum and sophistication.
Early in this journey many banks find their product marketing “bundles of joy” turn into “super-sized” operational challenges:
- Where do you define and house a product bundle?
- Individual products are currently defined in siloed systems.
- How do you collaborate across multiple lines of business as well as with marketing, legal and other stakeholders?
- How do you quickly roll out product bundles to sales delivery channel systems and integrate them with legacy systems?
- How do you analyze product performance and feed those insights into the next product innovation cycle?
Camilion’s ProductAuthority®, an innovative product development and management solution for financial services, solves these key challenges by providing a repeatable closed-loop enterprise product agility platform that enables banks to drive relevant product bundles to the right customers ahead of the competition at speed and volume.
To learn more download your copy of Product Bundling for Banking.
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Posted On: Aug 29th, 2011 at 2:19 pm
In my point of view relationship pricing is the key, not product bundling. Product bundling & associated pricing is product centric while we are all talking moving to customer centric. Pricing & selling product bundles have inherent complications. Customer may not be ready to buy the bundle at one time. How to make sure the bundle remains in tact later? How do we penalize the customer for breaking the bundle later without antogonizing the customer? These are only some of the complications of product bundles & bundled pricing.
The depth & size of the relationship is best for dynamic relationship pricing. I call this as relationship benefits instead of relationship pricing. The greater the depth of the relationship the better the benefits. Not sure when the industry will embrace the idea of relationship benefits based on the depth. Simple way of doing this is allocate points each month based on the total relationship we have realized with the customer; empower the customer to use the points for cash back, refund fees, purchase services etc. Come to think about it, this could all lead to a single benefit points account by combining debit card points, credit card points, relationship benefit points etc.
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Posted On: Aug 29th, 2011 at 4:28 pm
Thank you Basava! Some excellent thoughts. A lot of the Banks we talk to are interested in Product Bundling, but others take a more Relationship Pricing approach like the one you describe, and some have a hybrid strategy that combines Product Bundling and Relationshhip Pricing. And your focus on benefits is spot on. Products are simply the vessels to deliver the benefits. Thanks for your excellent comment. Keep them coming.
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