Question

Topic: Student Questions

How Can A Bank Persuade Smes To Buy Products Online?

Posted by Anonymous on 6/28/2007 at 11:06 PM ET 125 Points
I'm a university student working in "Small Medium-sized Enterprise banking" unit of a large bank as summer intern. I'm having difficulties in the recommendation part of my research project.

The aim of the recommendation is to persuade "SMEs" to apply & buy investment/insurance/loan/business credit card (online e-products) via the Internet. Apart from money incentives, I can only think of developing an online text chat system to help smoothing the online application process of the bank e-products.

The info-searcher may not be the decision maker of an SME, making the problem more complicated. Could anyone suggest some methods to promote SMEs to buy online, like how to communicate with decision makers of SMEs effectively? How to promote the “online application and buying channel” to SME through internet? How to generate incentives for them to buy products via the internet or phone?

Many thanks.
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RESPONSES

  • Posted on 7/1/2007 at 3:39 AM Accepted
    Hi,

    Have you done any research on the potential buyer's decision making process? Which factors do they look out for during purchase of such items. I would consider these to be big ticket items. Anyway, you could do come outcome-based research to find out which aspects the customers prefer and then see if internet is going to do a better job?

    During my study of internet selling (mainly focusing on The Long tail), I did come across a case study of selling big ticket items online- automobile.

    What they did was promote the website and focus on responding within 48 hours of any queries. And then follow up with telephone calls to clinch the deal.

    Some points noted:

    1) The faster you respond, the higher % of probable sales.
    2) Be direct with your offers, the reason people try to buy online is because they DON'T want to hassle with salesman or get involved in alot of negotiation.
    3) Because internet selling is lower cost than traditional, the company threw in alot of freebies, like driving the vehicle to their house with a FULL tank. etc.

    What's good about internet selling was, majority of the sales CAME from new leads. Internet has a longer reach and following up is important.
  • Posted by Chris Blackman on 7/1/2007 at 11:31 PM Member
    Winnie

    Steven Covey says "First seek to understand, before trying to be understood".

    Before starting to develop solutions, why not try to better understand the problem? What's the point of providing a financial incentive, if money isn't the reason why they don't purchase or invest in these products online?

    BTW you approach is what most people do. I'm not being critical of you - but you are coming up with potential solutions for a problem that hasn't been specified properly. You're guessing what might bring them to the online channel without knowing what you do will work.

    The question you really need the SMEs to answer is: What stops SMEs buying investment, insurance, loan, or business credit card (online e-products) via the Internet?

    And the answers may surprise you.

    When you ask your target market the question(s), you might also want to find out what each of the SMEs you sample would ordinarily spend on or invest into such products annually, purchased via any methods or channels. You need to answer that question, to determine what it's worth to try to get them to buy online instead.

    Finally, ask yourself, why does the bank want to direct this buying behaviour online? Do they perceive there will be a better conversion rate? Or are they simply trying to cut the cost of the sale?

    Answers to these initial questions might even dictate a further research project to really define and understand the problem. Only then will you be properly equipped to start contemplating strategic options to address the situation effectively.

    Hope that helps.

    ChrisB
  • Posted on 7/3/2007 at 1:34 AM Accepted
    ^_< I'm just a student by the way.

    From your definition of problems,

    1) Security, Complexity (less complexity= more time saved) - All these really have to come from your side to answer to their needs. If you cannot do primary research, maybe you can benchmark yourself against competitors.

    2) Inertia, knowledge - Prehaps all these could be overcomed by education- some form of campaign to educate them on your offerings ? Testimonials from satisfied customers? One of the 7 P's - Physical evidence.

    Hope that helps in some way ;)
  • Posted by Chris Blackman on 7/3/2007 at 11:06 PM Member
    Winnie

    "I can do is a 2nd research only as the bank doesn’t allow me to do a 1st research."

    The bank should either get real, or forget the project. Taking a half-baked aproach to online is a waste of time and money.

    Taking a guessing approach to what customers want is also a waste of time and money.

    If the bank was honestly trying to create stategic advantage, it would be prepared t commit to do the project properly.

    What will happen is the current approach will likely continue and fail after burning out all the people involved. In several years time when the bank's board realises the strategy has failed, they will call in McKinsey who will charge them $10M to tell them they should have properly researched the customer base to find out what are the real obstacles to buying online.

    I have real reservations about what you think are the main hurdles that hinder SMEs buying online:

    e.g.:
    1. Internet security - Are you saying the SMEs have doubts about the bank's ability to transact online safely? Or about the integrity of their own (client) computer?

      I can't believe in this day and age of internet banking that SMEs generally have a security-based fear of online transactions.
    2. inertia (to switch from brick-and-mortar bank to buying online) - How much are they buying through the bank's bricks and mortar channels? Or are they buying these services from non-bank channels - which I believe is far more likely.
    3. time (to search info., complete application forms) - Now the form filling may be a real issue. So how would the bank address this? Could not an existing customer's details be automatically populated via their online banking records and much of the formwork be pre-completed for them?

      More to the point, how could the bank re-roganise it's online information to make it easy to find what the SME is looking for?
    4. knowledge (of some security products) - I don't understand what this one means. Do you mean financial secities? Or internet security products (see (1) above)
    5. complexity (of applying & buying online) - Isn't this the same as point (3) above?


  • Posted by Chris Blackman on 7/3/2007 at 11:11 PM Member
    Winnie

    Whoops, sorry, ignore the answer above as I posted before I'd finished.

    "I can do is a 2nd research only as the bank doesn’t allow me to do a 1st research."

    The bank should either get real, or forget the project. Taking a half-baked approach to online is a waste of time and money.

    Taking a guessing approach to what customers want is also a waste of time and money.

    If the bank was honestly trying to create strategic advantage, it would be prepared to commit the necessary funds to do the project properly.

    What will happen is the current approach will likely continue and fail after burning out all the people involved. In several years time when the bank's board realises the strategy has failed, they will call in McKinsey who will charge them $10M to tell them they should have properly researched the customer base to find out what are the real obstacles to buying online.

    I have real reservations about what you think are the main hurdles that hinder SMEs buying online:

    e.g.:

    1. Internet security - Are you saying the SMEs have doubts about the bank's ability to transact online safely? Or about the integrity of their own (client) computer?

      I can't believe in this day and age of internet banking that SMEs generally have a security-based fear of online transactions.

    2. inertia (to switch from brick-and-mortar bank to buying online) - How much are they buying through the bank's bricks and mortar channels? Or are they buying these services from non-bank channels - which I believe is far more likely.

    3. time (to search info., complete application forms) - Now the form filling may be a real issue. So how would the bank address this? Could not an existing customer's details be automatically populated via their online banking records and much of the form work be pre-completed for them?

      More to the point, how could the bank reorganize it's online information to make it easy to find what the SME is looking for?

    4. knowledge (of some security products) - I don't understand what this one means. Do you mean financial securities? Or internet security products (see (1) above)

    5. complexity (of applying & buying online) - Isn't this the same as point (3) above?


    Student Bennydunreallycare has addressed the above points well. My concern is whether these really ARE the issues - or whether the bank's penny-pinching approach is going to see you dealing with a fabricated agenda, rather than identifying the real issues underpinning the problem.

    I think you need to talk with your work experience supervisor at the bank about taking a stand against the "no primary research" rule and explain that you are otherwise tinkering with the edges of the situation - not actually getting to the bottom of the problem.

    Best of luck.

    ChrisB
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