Solution to improve sales performance of thrid party sales agency channel in HSBC bank vietnam

LIST OF FIGURES Figure 1: HSBC Vietnam Organization structure Figure 2: Percentage of contribution of RBWM Sales Channel Figure 3: Percentage of contribution of RBWM Sales Channel in t

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

-

TRẦN CAO MAI TRÂM

SOLUTION TO IMPROVE SALES PERFORMANCE

OF THRID-PARTY SALES AGENCY CHANNEL

IN HSBC BANK VIETNAM

MASTER OF BUSINESS ADMINISTRATION

Ho Chi Minh City – Year 2019

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

-

Trần Cao Mai Trâm

SOLUTION TO IMPROVE SALES PERFORMANCE

OF THRID-PARTY SALES AGENCY CHANNEL

IN HSBC BANK VIETNAM

MASTER OF BUSINESS ADMINISTRATION

SUPERVISOR: Dr Lê Thị Thanh Xuân

Ho Chi Minh City – Year 2019

TABLE OF CONTENTS

LIST OF FIGURES 4

LIST OF TABLES 4

EXCUTIVE SUMARY 5

ACKNOWLEGEMENT 7

CHAPTER 1: INTRODUCTION 8

1.1 HSBC Group overview: 8

1.2 HSBC Vietnam background & organization structures: 9

1.3 Overview of third-party company – MOCAP Vietnam Joint Stock Company: 11 CHAPTER 2: PROBLEM ANALYSIS 13

2.1 Symptoms of company: 13

2.1.1 Background of symptoms: 13

2.1.2 Symptoms analysis: 14

2.2 Problem analysis: 19

2.2.1 Potential problems 1: Ineffective Project Organization Structures & operational issues 19

2.2.2 Potential problem 2: Wrong customer segments touching 22

2.2.3 Potential Problem 3: Poor Sales-forces Capacity 23

2.3 Central problem validation and consequences: 26

2.3.1 Central problem validation: 26

2.3.2 Consequences of central problem: 29

CHAPTER 3: CAUSE VALIDATION 32

3.1 Potential causes: 32

3.1.1 High-staff turnover rate: 32

3.1.2 Lack of salesforces training for agent: 33

3.1.3 The shortage of headcount (sales forces): 33

34

3.2 Main Cause Validation: 34

3.2.1 High staff turnover rate in TPSA Channel: 34

3.2.2 Shortage in Sales agents of TPSA channel: 36

3.2.3 Lack of salesforce training for TPSA agent: 37

CHAPTER 4: ALTERNATIVE SOLUTION & ACTION PLAN 40

4.1 Alternative Solution: 40

4.1.1 Alternative Solution 1: Supporting fees on incremental headcount increase 40

4.1.2 Alternative Solution 2: Developing training program for TPSA agents: 42

4.2 Solution Selected: 43

4.3 Action Plan: 44

CONCLUSION 49

CHAPTER 5: SUPPORTED INFORMATION 50

5.1 Summary of methodology conducted: 50

5.2 Transcription: 50

REFERENCE 60

LIST OF FIGURES

Figure 1: HSBC Vietnam Organization structure

Figure 2: Percentage of contribution of RBWM Sales Channel

Figure 3: Percentage of contribution of RBWM Sales Channel in the last 3 years Figure 4: Percentage of contribution of TPSA channel in 7 ASIA markets

Figure 5: HSBC – TPSA project organization chart

Figure 6: TPSA channel – Credit Card Application Handling

Figure 7: TPSA sales agents resources in 2018

Figure 8: Initial causes and potential problem

Figure 9: Initial - Causes and effect diagram

Figure 10: Productivity break down by sales agent vintages

Figure 11: TPSA sales agents resources in 2018

Figure 12: Final – Cause and effect diagram

Figure 13: Alternative solution 1 – Human resources planning

LIST OF TABLES

Table 1: HSBC Bank – RBWM Sales Performance in 2018

Table 2: HSBC Bank – RBWM Sales Performance Contribution in the last 3 years Table 3: Approval rate of HSBC Credit Card by Channels

Table 4: Sales Performance plan of HSBC RBWM in 2019

Table 5: Human resource recruitment cost

Table 6: Alternative solution 2– Action plan

Table 7: Training Course – Training Agenda

EXCUTIVE SUMARY

As one of market leader in Credit Card selling in Vietnam financial market, HSBC Banks issues more than 75,000 cards into market as of December 2018 Giving the fact that, Vietnam financial market is potential and promise market for banking & financial industry with golden young population and middle-income With the ambitious accumulate the largest market share, HSBC operated TPSA channel as supported sales channels (besides HSBC in-house sales force) to capture new to banks customer in major city like Hochiminh city Although, recently TPSA channel gain sales performance developed year on year, it’s not achieved sales expectation (around 10% contributed to RWBM total sales volumes), which was set by HSBC’ group when operated TPSA channel in Vietnam market The purpose of this thesis is evaluating the root causes leading under contribution of sales performance expected in TPSA channel

to total sales volume of HSBC Banks in recent year Then find the best solution to implement in the next year to push-up sales performance of TPSA channel achieving the performance expectation of HSBC Group This thesis consists of 4 main chapters:

- Chapter 1: the introduction about HSBC Bank in Vietnam and overview of TPSA agency – Mocap Vietnam Joint Stock Company

- Chapter 2: the description about the general of symptoms and identify the central problem leading to this symptom Recently, the symptom was after three years operated and experienced TPSA channel in Vietnam market, HSBC project can meet the percentages of contribution (10%) to RBWM sales volumes

- Chapter 3: the validation of all causes leading to the central problem and evaluated which was the main causes leading to the central problems

- Chapter 4: propose two potential alternative solutions for choosing the best solution

to drawn out action plan for implementation

After evaluating basing on the combination of primary and secondary data, in-depth interview and theory support, the key finding of theis shown the problem of HSBC project is poor sales capacity in TPSA channel Then, a list of these main causes collected via in-depth interview and literature review drawn out The shortages of sales agents in HSBC – TPSA project is the main causes leading to central problem (poor

sales capacity) In current situation of HSBC project, the solution in supporting fee for each incremental headcount increase seems to good solution and applicable to help TPSA agency turn out shortage sales headcount in short-term Furthermore, this solution might help TPSA agency take the risk of investing in new sales forces and respond to the challenges of Vietnam market for sustainable growth in long-term business

ACKNOWLEGEMENT

I would like to show my gratefulness and special thanks to my supervisor – Dr Le Thi

Thanh Xuan for all her continuous support, advices and instructions during the process

of writing this thesis Without her advises, this master thesis cannot be completed

Needless to say, her guidance and instructions helped me in all the time of writing

thesis Then, I also would like to show my gratitude to my manager, my colleagues at

HSBC Bank who gave me chance to conduct research and also thank you to their time

spending on interviews with me to come up the result of thesis

Lastly, I also send my sincere thankfulness to my parents and friends for their support

and encouragement during the time which I took the master course

CHAPTER 1: INTRODUCTION 1.1 HSBC Group overview:

HSBC is one of international finance organization and banking biggest over the world HSBC serves for than 38 millions of customer via four multi-national business services such as: retail banking and wealth management, commercial banking, global banking and market, global private banking HSBC network covers over 66 countries and territories in Europe, Asia, the Middle East and Africa, North America and Latin America

The name of HSBC is an acronym for The Hong Kong and Shanghai Banking Corporation Limited, the founding member of HSBC, which was constitutive in 1865, with the aim of financing the developing trade among India, China and Europe HSBC puts headquarter in London, United Kingdom Nowadays, HSBC has been considered one of the top organizations with branch network spread out all over the world which provides the service in finance and banking with high quality and security guarantee HSBC positions its brand through the message “The world's local bank” HSBC is headquartered in London, United Kingdom

There are 12 main dates in history timeline of HSBC Group:

– March – April 1865: HSBC established in Hong Kong and Shanghai It was the first bank owned by the local and operated based on the principles of Scottish banking

– By 1875: HSBC appeared in seven countries throughout Europe, North America and Asia It financed the exportation activity from China, India, Philippines and Vietnam

– By 1900: HSBC spread out the network into 16 countries to finance trade around the world The business was surrounding ingot, exchange and trading

– 1910: HSBC broadened the variety of activities in Asia by providing loans

to governments in the locals for projects of modernization and infrastructure

– By the 1920s: Business in Asia began to accomplish again despite of inhibition caused by The First World War and trading in commodity especially rubber and tin increased rapidly

– 1935: New head office was designed by architects Palmer and Turner, applied the popular decorative style of Art Deco

– 1941: During the time of The Second World War, staff in Asia became war prisoners Only branches that ran in London, India and US remained in fully operated condition

– 1950: HSBC played main role in reconstructing Hong Kong’s Economy after war ending by supporting for manufacturing and business

– By the 1970s: HSBC widen its variety of activities in trading by acquiring Mercantile Bank and The Middle East British Bank

– 1992: HSBC’s headquarters were moved to London after acquiring Marine Midland Bank in the US and UK

– 1998: HSBC unified its brand and logo of hexagon to utilize in all branches – 2016: HSBC continued expanding business to growing areas

HSBC Strategies:

HSBC in one of the world’s leading international banks, with exceptional access to high- growth market and a strong balance sheet “We are uniquely placed to help customers around the world achieve their ambitions” (John Flint, HSBC Group Chief Executive)

HSBC values: D-O-C is the core value of HSBC

• D stand for Dependable

• stand for Open – HSBC open to different ideas and cultures

• C stand for Connected – HSBC connect to customers, communities, regulator and each other HSBC aim to building connections, being aware of external issues, collaborating across boundaries

1.2 HSBC Vietnam background & organization structures:

In 1870, HSBC established the first office in Saigon, big city of Vietnam Until

1995, HSBC run into business a branch with full financing and banking service In

2005, HSBC opened another branch and a representative office in Hanoi and Can Tho

City respectively According to HSBC Vietnam Financial Report 2017, total asset of the Bank reaches VND 87,786 billion; revenue in 2017 is VND 2,727 billion and profit after tax takes 65.2% over revenue, increases 23.5% compared to the one in

2016 At the present, HSBC is considered one of the largest foreign-owned banks in Vietnam with regard to investment capital, branch network, wide range of products and services, number of employees and substantial customer data base In Vietnam market, HSBC operated in 4 sectors: RBWM, Wholesales Banking, Global Liquidity and Cash Management, Global Trade and receivable finance and securities services

Figure 1: HSBC Vietnam Organization structure Headquarters:

The Metropolitan, 235 Dong Khoi Street, District 1, Hochiminh city

Awards:

§ Best Foreign Bank in Vietnam 2006 – 2012, 2014, 2015, 2016, 2017, 2018 by

Finance Asia

§ Best Trade Finance Bank in Vietnam 2018 by Euromoney Trade Finance Survey

§ Best IPO by Finance Asia for Vinhomes US$1.349 billion Initial Equity Offering, HSBC is a joint bookrunner

§ Best Deal in Vietnam by Finance Asia for Vinhomes US$1.349 billion Initial Equity Offering, HSBC is a joint bookrunner

§ Best Loan Adviser in Vietnam 2018 by the Asset Triple A

§ Best IPO in Vietnam by the Asset Triple A for Vinhomes US$1.349 billion Initial Equity Offering

§ Best syndicated loan in Vietnam by the Asset Triple A for VinFast Trade and

Production US$400 million syndicated term loan facility

§ Visa Global Award for the Highest International Authorization Approval Rate for Consumer Credit International in 2017

§ Best Foreign Investment Bank in Vietnam 2015, 2017 by Finance Asia

§ Best International Bank in Vietnam 2017 by Asia money

§ Best Domestic Cash Manager 2010 – 2017 by Euromoney Cash Management

2 major cities is Hochiminh and Hanoi with total of 600 employees and 5 Japanese expats MOCAP Joint Stock Company provides wide range of service category from full outsourcing operate to partial support operation such as: dispatching, insourcing and human & facility outsourcing In Vietnam market, MOCAP VN provides outsourcing for 8 projects of Contact Center Operation and 15 projects of Business Process Outsourcing with 4 major clients as: telecom company, Foreign Insurance Company, Foreign Bank, Japanese Company Mocap Joint Stock Company provides outsourcing Call Center Business Line to HSBC Bank in Vietnam follow service types

as Tele-sales (Outbound) This project follows up with business model as B2C (Business to customers) with scales of more than 100 employees in HSBC project MOCAP VN is an external party engaged by HSBC Bank to contact an existing or potential HSBC customers and offer HSBC credit card In generally, MOCAP VN

significantly differentiates ourselves in Vietnam market in term of products types and service to clients Furthermore, with strong support from MOCAP’s Shareholder, MOCAP Joint Stock Company promises to provide high quality services to Clients, ensuring to protect the information assets of Client from all threats, either internal or external, accidental or deliberate As international brand with strong company philosophy, highly commitment and experienced in Vietnam market, MOCAP Joint Stock Company was chosen as Third-Party Sales Agency for HSBC Bank in Vietnam since 2015 with vision to push up HSBC Retail Banking and Wealth Management performance in term of Credit Card product

CHAPTER 2: PROBLEM ANALYSIS 2.1 Symptoms of company:

2.1.1 Background of symptoms:

In Retail Banking and Wealth Management of HSBC Vietnam, credit card plays as key product of retail customers sector In definitions, credit card is an alternative means for making payment This payment is made on credit, means that the cardholder is not required to pay any money immediately for their purchases The credit card issuing bank first pays the merchant for the purchases and the cardholder settles the transaction amount on or before the payment due date Furthermore, a credit card also allows the consumers to “revolve” their balance (means no need to paying the statement as indicated in the credit card monthly statement in full The minimum payment amount stated in the credit card statement must be paid on or before the due date

In detail, Retail Banking and Wealth Management (RBWM) is divided into four channel of distribution strategy There is branch network, mobile sales forces, in-house contact center tele-sales and third-party sales agency channel (names as TPSA channel), following with detail functional as below:

• Branch network focuses on servicing walk-in customers and acquire new sales through services, majority of customers are living in major city where we have HSBC Transaction Officers, such as Ho Chi Minh city, Hanoi, Da Nang and Binh Duong

• Mobile sales focus on activation booths at shopping mall, supermarkets and companies in Ho Chi Minh City and Hanoi

• In-house Contact Center Tele-sales focuses on the Bank’s leads, cross- selling on existing portfolio and member-get-member (customer’s referral) Customers acquired by Contact Center would come from different cities in the approved areas

to sell HSBC Credit Card

• Contact Center TPSAs ( both tele-sales and mobile sales forces) focus on bank card acquisition in approved cities of living The big number of customers acquires by TPSA would be the good portfolio for in-house channel to tap in to cross-sell other product as Personal Instalment Loan, Mortgage, Saving account, etc

Giving the fact that, HSBC is the market leader in Credit Card in Vietnam with over 75,000 credit cards as of Dec 2018 which contributed by four above sales channels Out of 75,000 credit cards acquired in 2018, branch network sales channel demonstrated mainly around 43%, whereas TPSA sales channel contributed at 8% to total sales volume The purpose of thesis is demonstrated and analyzed the efficient of TPSA Sales channel of HSBC in Vietnam market In definition, a TPSA is an external party engaged by the HSBC to contact an existing

or potential HSBC customer and offer products, propositions and services of the Retail Banking Business of HSBC In Vietnam market, TPSAs are engaged by HSBC for simple product and services such as Credit Card TPSA agents authorized

to represent for HSBC to offer HSBC’s product, services to customers, mainly basing by TPSA company database TPSA agents advise the credit card product feature and required documentation through telephone and TPSA has field-sales agents to collect document at customer’s offices HSBC typically pays the agency (TPSA company) based on per unit sale or percentage of value of the product sold

In detail, payment terms between HSBC and TPSA company on monthly basis which concluded variable fee basing on actual cards acquired in the month HSBC pays TPSA companies variable fee on each new credit cards as service fee agreed on service agreements HSBC have operated TPSA channel since 2015 and started with

20 TPSA agents A TPSA agent is an individual appointed by a TPSA by way of an employer-employee relationship As of Dec 2018, HSBC cooperated with TPSA company named as Mocap Vietnam, both of them are global outsourcing services firms, ranked 13th/100 biggest outsourcing companies worldwide The reputation and experiences in outsourcing services will be helpful for two agencies moving fast

in Vietnam market in coming year, growing revenue and turn around the financial situation

2.1.2 Symptoms analysis:

Following up business model, TPSA channel play as a kind of outsourcing services of HSBC Vietnam In HSBC business strategy, TPSA deployement strategy is defined by Vietnam RBWM Management team to ensure it extends the distribution reach whole complementing the existing internal sales channels TPSA actively use

Branch network 32%

Direct sales (mobile sales) 42%

Telesales 18%

TPSA channel 8%

% CONTRIBUTED OF SALES CHANNEL

their own customer database to promote and offer HSBC Credit Card through sales model The credit card product selling guideline provided to TPSA channel is the same guideline applied for all HSBC sales channel in Vietnam The reason for proposing the use of TPSA channel of HSBC RBWM Vietnam are: better access to targeted market and gain additional capacity to grow business, limitation in expanding internal sales forces, diversifying concentration of in-house sales channel Furthermore, according to business strategy in Vietnam, TPSA channel only focus on card acquisition while in-house channel (include: branch network, tele-sales, mobile sales) are selling multiple products The big number of new to bank customer acquires

Tele-by TPSA channel would be the good portfolio for in-house channel to cross-sell other products such as: personal installment loan, mortgage and insurances In HSBC Vietnam, TPSA channel was set up in 2015 with one company (names as Mocap VN) which well-known as international outsourcing agency in customer service and banking products In 2017, HSBC Vietnam achieved more than 26,700 new credit cards which TPSA channel contributed is 6% (around 1,599 cards) to total sales volume However, the annual overall plan in 2018 expected TPSA channel contributed 10% in total sales volume of HSBC Vietnam

Figure 2: Percentage of contribution of RBWM Sales Channel

However, after two year launched and fully operated in Vietnam market, TPSA channel have not achieved the performance expectation of HSBC group to reach out

10% contribution of total RBWM sales volume in HSBC Vietnam Whereas, other house sales channel is exceeded performance expected setting by HSBC group at the beginning of 2018 Below table is Sales Performance Expected of RBWM Vietnam:

in-RWBM Sales Performance in 2018

Channel

Total Sales (credit cards)

% Contributed Plan

% Contributed Actual

% Variance (Actual/ Plan)

Table 2: HSBC Bank – RBWM Sales Performance Contribution in the last 3 years

Actual Plan Actual Plan Actual Plan

Figure 3: Percentage of contribution of RBWM Sales Channel in the last 3 year

On the other hand, HSBC have operated TPSA model as support channel growing sales performance in seven markets of Asia Pacific like Indonesia, Myanmar, Singapore, HBID, MNL, CBH There were 20 TPSA agencies selling Credit Card & Personal Installment Loan for HSBC in seven Asia Pacific markets, as at Dec 2018 Number of agents grew by 8% over first haft of 2017 TPSA contribution to overall Credit Card sales for RBWM grew in 2017 and were significant in INM (24% vs 16%

in 2016), HBID (41% vs 36% in 2016) and MYH (23% vs 19% in 2016) On the other hand, total contributions of TPSA channel to RBWM sales in Vietnam was stable at 6% in two recent year, while as HSBC group expected the contributed maintain at 20% of total sales volume for sustainable growth In Vietnam market, HSBC Vietnam set performance expected for TPSA channel is 10% contributed to total sales volume

of RBWM However, after 3 year launching and fully operated in Vietnam market, HSBC TPSA channel have not reached out 10% contributed to total RBWM sales performance in 2018

Figure 4: Percentage of contribution of TPSA channel in 7 ASIA markets

According to Mr Sabbir (head of Retail Banking & Wealth Management in

HSBC Vietnam) deployed: “TPSA channel play as a priority key to HSBC Retail Banking business in Vietnam market Following up sustainable growth in Vietnam market, HSBC have to focus to develop TPSA channel as supporting sales channel to push-up sales performance of RBWM Vietnam exist target Furthermore, in TPSA channel can be played as low-cost strategy in card acquisition to HSBC in comparison with in-house channel (such as: branch network, mobile sales, tele-sales channel).”

Similar with theory informed about the expectation benefit of banking industry when decided to outsourcing such as: reduce and control operational cost and gain sustainable competitive advantages by achieving an unique winning when combination and maximize the capabilities of in-house sales forces with the outsourcing sales forces as Jain RK & Natarajan (1) advised

Furthermore, as Diromualdo and Gurbaxani (2) stated outsourcing might have organization improve overall performance and enhance customer services also as De Quinn (3) advised Therefore, basing on in-depth interview and theory informed, HSBC TPSA management team have to investigated the root-cause which lead to low sales performance in TPSA channel and find out solutions to push-up percentages of contributed to total RBWM sales performances

% Contributed of TPSA channel in 7 Asia markets

% of RBWM Sales in 2016 % of RBWM Sales in 2017 % of RBWM Sales in 2018

2.2 Problem analysis:

Giving the fact that, TPSA channel still plays as key development of HSBC business in Vietnam, it is important to figure out the reason why TPSA channel cannot achieve percentage contributed to total sales volume of RBWM Furthermore, to investigate and drawing detail TPSA business, 2 in- depth interviews is conducted to two main categories of interviewee group (first group is HSBC site and second group from TPSA company site) In detail, in HSBC site, we conducted in-depth interview with HSBC TPSA Management team Besides, second group presented for TPSA company which included: Top management of TPSA company: Human resource Manager, HSBC project manager, senior team leader and sales agents As the result of all in-depth interview, there are narrowed down 3 potential problems which lead to low sales performance in TPSA channel such as: poor sales capacity in TPSA channel, wrong customer touch to acquire HSBC credit card by TPSA sales agents, ineffective

in HSBC TPSA project organization and operational process

2.2.1 Potential problems 1: Ineffective Project Organization Structures

& operational issues

Giving the fact that, there are two TPSA company with fully operated with around

63 TPSA agents divided into four small team In HSBC project with each TPSA company appointed one project manager and two team leaders, 1 trainer, 1 quality assurance and 1 administrator As interview conducted to TPSA project manager confirm that “Each TPSA company gain tighten control in operation process with sufficient administrative staff.” In overall, HSBC project organization visualize as bellow chart:

Figure 5: HSBC – TPSA project organization chart

As HSBC - TPSA manager declared in the interview: “The scope of control of each TPSA team leader manage maximum 18 agents for effective observation and coaching conducted.” Furthermore, on HSBC site, RBWM has a designated TPSA Management

team to manage and oversight of TPSA operation consisting of one vice president sales department, one HSBC TPSA managers and two TPSA control management

officers As business owner (Vice President of Sales Department) said that: “This team

is critical to ensure effective deployment of TPSA teams, agents training, sales and services quality monitoring, governance and control activities which alignment with updated regulatory requirements.” For operational process of TPSA channel is similar

with other in-house channels of HSBC in term of the process to approve and issued HSBC credit card Because, as the agreement between HSBC and TPSA company, TPSA is mainly in-charge in contacting customer to offer HSBC credit card and then fulfill & collect credit card applications and hand-over to HSBC for further processing

in granting and issued card limit In general, the operation process finalizes the end TPSA sales process as: TPSA sales agents contact customer using TPSA’s company own databases to introduce HSBC credit card The documents are collected

end-to-by TPSA sales agents, then perform checked end-to-by TPSA senior team leader and administrator before they are transferred to HSBC TPSA management team In general, the end-to-end process of applications started from TPSA sales agents calling customer to issued credit card can be finalized as below:

- Collect application

- Verfy customer’s signature (SV)

- Do original sighted (OS) on documents (*) (2)

Agent calls customer to

Customer decline

- Face-to-face meeting with Field Sales to give applications and go through OS & SV process (*) (3)

- Call back customer to get acknowledgement on full understanding on product feature, T&C (5)

Send application to HSBC for verification

& approval process

(6)

Customer agrees

Figure 6: TPSA channel – Credit Card Application Handling

process

As Vice President of Sales Management who oversight both in-house tele-sales

channel and TPSA channel confirmed that: “Actually, with more than three years in operation auditing or management TPSA channel control and governances, so HSBC TPSA management gain strong skill set and excellent problem-solving skill, attention

to detail and ability to work well under high complex environment such as TPSA model But with above knowledge and experiences, there is nil stuck or insufficient process in TPSA operations on daily work.” As theory informed as Pearl Zhu (4) informed the symptom to identify if the organization structure effective or not is that working process is effective or not Furthermore, as in-depth interview, HSBC TPSA

Manager also compared about “the turn-around time (means the length process when submit application to approve & issued credit card) is similar between TPSA channel and others sales channel in HSBC Vietnam” Because all step belong to credit control

and verifications are conducted by HSBC Credit Control department similar with other

sales channel in HSBC Hence, to sum-up, “there is nil finding in potential operational risk or insufficient organization or control and governance in TPSA channel in recent four years relationship” as HSBC TPSA manager confirms

2.2.2 Potential problem 2: Wrong customer segments touching

As service agreement between HSBC and TPSA partners, TPSA companies used their own database and portfolio to acquire new customer which align with HSBC’s requirement As align with HSBC RBWM Vietnam growth strategy, target customers for credit card product have been adjusted to include those with the following characteristics:

- Salaried employees (especially those working for HSBC corporate customers,

or large and reputable companies in Vietnam)

- High educated such as university graduates

- Having an above averages income without a lot of borrowings

- Likely to maintain a long-term customer relationship with potentially higher product ratio

Moreover, potential customers database of TPSA companies will be reviewed by HSBC management team before using The sourcing guideline provided to TPSA channel is the guideline applied for all channel in HSBC Vietnam TPSA company

have to ensure that the database acquired by them must be from legal sources as agreement between HSBC and TPSA partner Besides that, Mocap company have a large customer database which they have built up over many years and we can leverage on their own database to acquire more business Customer’s portfolio of TPSA channel in recent year is medium salary earners who qualified for HSBC card in Classic and Cash Back card customer segments Furthermore, the quality of customer segments acquired by TSPA channel can be shown on the approved rate (the number

of successful applications versus total application submitted by TPSA channel) in compared with other in-house sales channels According to HSBC Credit Control department report, the approval rate of TPSA channel is sustainable around 70%, slightly behind with others sales channel is 73-75%

Table 3: Approval rate of HSBC Credit Card by Channels in 2018

To sum up, as the interview with HSBC TPSA manager declared: “There is no difficulty with TPSA companies in customer segment database alight with HSBC targeted customers Due to the fact that, both TPSA companies have cooperated as outsourcing service for a lot of multi-national companies and they have more experienced in Vietnam market.” Hence, as business owner - HSBC TPSA

management do not find out TPSA companies touching wrong customer segment is the problem lead to TPSA channel cannot achieved performance expected

2.2.3 Potential Problem 3: Poor Sales-forces Capacity

As data in sales performance in 2017, we found that TPSA channel cannot achieved performance expectation setting by HSBC Vietnam to contributed 10% of total sales volume We conduct in-depth interview with Senior management of both

TPSA agent (count) % turn-over rate

HSBC and TPSA companies to find out the reason why TPSA channel cannot meet the performance expectation

Firstly, as the interview with HSBC TPSA Manager who represent for HSBC in managing and oversight TPSA channel to see how does high staff turn-over rate

impact on productivity and sales-forces capacity of HSBC project As HSBC TPSA

Manager declared: “Although we start operated TPSA channel since 2015, sales forces

of TPSA channel have not achieved 70 sales agents as we expected due to impact of high-staff turnover rate, together with the difficulty in headcount optimizing, TPSA channel always have shortage sales agents in compare with resources plan due to high recruitment cost The average staff vintages of TPSA channel is 6 months (including one-month probation), means that after sixth- month work for HSBC project, sales agents will leave the project.” Moreover, high-staff turnover rate will lead to lower

sales performances due to new joiner usually have lower performance and productivity In fact, sales staff have to spend more than four months to gain fully knowledge about banking product and strong portfolio customer database for achieving performance (KPIs) Furthermore, as current data in 2018 shown that TPSA channel have hight staff turn over rate more than 20%

Figure 7: TPSA sales agents resources in 2018

According to her, TPSA agencies have faced with a lot of challenges in human resource management, especially in HSBC project In more than 2 years relationship, HSBC project have not achieved 80 agents (sales staffs) due to high staff turn-over

rate year on year growth The staff turn-overate of HSBC project remain high rate more than 20%, hence lower productivity and lower sales volume as impact of shortage sales agents in HSBC project HSBC aim to expand more than 80 sales agents

in TPSA channel with contributed more than 10% of HSBC Sales performance by the end of 2019

Secondly, we conduct interview with TPSA- HSBC project manager who represent for TPSA company take responsibility in managing sales staff in HSBC project to see that the reason why TPSA channel gain a high staff- turnover rate in

2018 As TPSA Project managers assumed that: “High staff turnover rate maybe because of fixed salary & incentive scheme apply to sales agents” As TPSA Project managers mentioned: “ Giving the fact that, incentive scheme and fixed salary of sales agents is attractive in comparision with local market We are still facing with high- cost in recruitment and training for sales staff knowing about HSBC banking product (especially HSBC credit card) Because banking product is more complicated with other product, the learning curves usually more than two months Hence, in probation times, sales staff only earn fixed base salary, no incentive scheme apply.”

Furthermore, as in-depth interview with human resources manager of TPSA

company commented: “According with local regulatory, we pay fixed salary to sales agent comply with policy However, it’s still under salary range of market Furthermore, the total cost payout for recruiting new staff more than 7 million VND That the reason why in base salary of new joiner usually lower.” Moreover, as Human resource of two TPSA companies deployed: “TPSA agencies are faced with high turn- over rate of sales agents The turnover rate is very high in comparison with the industry average rate is 15% TPSA agencies cannot have ability to recruit more sales agents to optimizing headcount in HSBC project.” Also, as TPSA project manager said that: “The reason why we have trouble with high staff turnover rate is lower fixed salary and lower incentive scheme which cannot retain sales agents work long-term with HSBC project” Furthermore, TPSA model have to used their own database to

acquire new customers to HSBC, hence the cost in purchasing potential customer database costing a huge which impact directly on incentive scheme payout to sales agents

Lastly, we also conduct interview with sales agents who working for HSBC project for understanding about KPIs system and incentive scheme According to sales agent in HSBC project, the incentive scheme and fixed salary is meet their

expectation However, as sales agent mentioned: “It’s hard to achieve sales bonus

scheme or incentives due to high-pressure on target Furthermore, they find it hard to gain career development opportunity not only in improving knowledge, but also about career path for the next 2 year in HSBC project” In general, sales agents said about

incentive scheme was attractive in compare with market, but the pressure in achieved KPIs in project so stressful, together with there is no career path opportunity in long time that the reason they decided to quick-out project

To sum-up, through literature review and in-depth interview, there are three main reasons lead to the percentage contributed of TPSA sales channel to HSBC RBWM have not achieved performance expected setting at 10% are: ineffective HSBC project organization structure and operational process, wrong customer segment touching by TPSA sales agents and poor sales capabilities in TPSA channels In short, initial map from interview of potential problem could be drawn as below:

Figure 8: Initial causes of symptoms and potential problem

2.3 Central problem validation and consequences:

2.3.1 Central problem validation:

As mentioned above, there are three main potential problem which leading to failure in achieving percentage contributed of TPSA channel to total sales volume of HSBC RBWM are: ineffective HSBC project organization structure and operational process, wrong customer segment touching by TPSA sales agents and poor sales capabilities in TPSA channels However, in term of the importance and priority of problem solving, it is essential to identify the central problem potential cause for further investigation and recommendation for prompt implementation Through literature review as Gregg Greenberg (5) citied: “common reasons leading to the failure in sales performance of company usually leading by seven reasons, mainly driving by lack of sales capabilities which represent such as sales agents capacity and sales agent’s productivity” Besides, as Gil Cargill (6) mentioned: “another reason leads into the low productivity and sales capacity is wrong selection at recruitment process.” Moreover, as Mantara (7) agreed that: “sales forces effectiveness represents as an opportunity to improve sales performance and sales revenues of each company.”

Besides, as in-depth interview with HSBC TPSA manager mentioned: “the poor sales capacity and how to develop sales capabilities of TPSA channel is one of key element leading to push up sales performance of TPSA” Furthermore, basing on current

performance statistic of TPSA channel in 2018 shown the averages productivity of TPSA sales agent in 2018 fluctuated around 7.0 cards per agent per month (in the first half 2018), perspective in the second half 2018, averages productivity increase to around 9.0 – 10.0 card per agent per month The reason why productivity in second half 2018 was higher than first half due to the impact of market (high season for banking product), customer’s demand using credit card for purchasing usually increase dramatically from summer season to Christmas season Whereas, the average TPSA sales agent in 2018 was stable at 60 agents, calculating: 60 agent * average productivity 8.0 cards/month = actual 480 cards per month for TPSA channel (versus performance expected was more than 500 cards per month) The shortages in sales forces cause to the shortages in cards which leads TPSA failing in achievement 10% contributed to totals sales volume of RBWM HSBC according to business plan in

2018 Furthermore, as in-depth interview with TPSA project managers concluded that:

“Due to the nature of work and quality of sales agents TPSA channel just only

Sales Channel Card Acquisistion

(credit cards) % Contributed actual

Sales Performance Plan in 2019

maintain averages productivity around 8.0 to 10.0 cards per agent per months, it’s seem too difficult to increase productivity of TPSA sales agents more than 10 cards per months, because it’s take time and huge investments in training skills and knowledge to sales agents For the time being, TPSA company satisfied with setting productivity around 10 cards per agent per month, hence we need to increase sales headcount to optimizing if we want to achieve performance expected as plan in 2019.”

On the other hand, as Vice-President of HSBC Sales Departments shared about HSBC

business plan in 2019 as: “ In 2019, RBWM HSBC still maintain expected 10% contributed of TPSA channel to total sales volume of HSBC Vietnam in credit cards market, in detail more than 770 new HSBC credit cards will be acquired by TPSA channel on monthly basis.” In addition, according to HSBC business plan setting for

2019, it’s pointed out strong and consistent sales forces increasing play as key roles for TPSA channel achieved performances expected If TPSA channels be able to increase and maintain headcount optimizing around 80 sales agents, it’s possible for TPSA contributed total 10% to HSBC RBWM sales in 2019 Basing on calculated: 80 sales agents * averages productivity around 9.6 = 770 cards per months

Table 4: Sales Performance plan of HSBC RBWM in 2019

Therefore, to sum-up as following up with literature review and in-depth interview, the poor sales capabilities in TPSA channel can be seen as central problem leading to low sales performance of TPSA and below expectation in percentages of contribution of TPSA channel to total sales volume of HSBC RBWM in Vietnam market With the purpose to investigate and remediate actions for solving this problem, the cause validation and drawing cause and effect map as follow part will be discussed in detail

2.3.2 Consequences of central problem:

As learning from best practices investment in other countries, HSBC formalized TPSA channel play as key contributors in Credit Card Sales acquisitions because credit card was clarified as low- risk product that the reason why HSBC choosing outsources in acquiring for low-cost acquisition Furthermore, it’s strategy help in-house sales channel focus on others products such as: personal installment loan, mortgages, saving account and life insurances But in reality, TPSA channel still facing with the poor sales capacity issues which pointed out as priorities actions need

to be solved in Retail Banking sector of HSBC, because it leads to many consequences

in HSBC business in Vietnam such as: reducing RBWM Vietnam sales volume, operation loss for TPSA companies, not align with HSBC Group strategy in Retail Banking in Vietnam market In general, the consequences of poor sales capacity in TPSA channel causes two main impact on HSBC business in Vietnam financial market as below:

• Loosing opportunity to capture market share in Credit Card issuer in Hochiminh city:

As strategy in Vietnam market, HSBC utilize TPSA channel as supported sales distributions to help HSBC Vietnam excess target with low-cost card acquisition Furthermore, TPSA channel also help HSBC reduce risky of the existing internal sales channel as business continuity plan in case in-houses channel have issues in resources capacity Poor sales capacity in TPSA channel will leads HSBC loose sustainable competitive advantages in Credit Card market compare with other rivals Following up the mission as HSBC Vietnam commitment to become one of the top three credit cards issuer in Vietnam financial market on the next three years that the reason why HSBC push TPSA channel as support channel to capture market segment in Hochiminh city

As Dibb et al (8) citied: “Market segmentation play as important factor of robust sales channel strategy development.” Moreover, Hochiminh market segment meet all criteria of HSBC credit card in term of: average monthly income, market demographic According to Koushan Dash(9): “ HCM city has the highest the average salary ranking in Vietnam at $US 456 (10.7 million) per month, which gain 38% higher compare with average national wages.” Whereas, HSBC targeted customers

with average monthly income just above 6.0 million is eligible for HSBC credit cards

As E-commerce’s industry in Vietnam of EBVN report(10) forecasted that : “Ho Chi Minh will reach out over 10 million inhabitants by 2030, which occupied around 23%

of Vietnam’s total urban population.”, which seems as potential market segment for TPSA channel catch-up if we gain full-capacity sales forces

• Long-term sustainable growth in Vietnam financial market for both HSBC and TPSA agency (Business to Business):

The relationship between of HSBC and TPSA company is the kinds of B2B (business to business) modern, hence as Chan (11)cited: “The achieving profitable and sustainable growth plays as key success factors for the relaitonship.” As in-depth

interview with Head of RBWM of HSBC Vietnam shared: “HSBC want to maintain long-term relationship with TPSA agency for co-operate growth, HSBC gain more credit card acquisition in Vietnam market through TPSA channel Besides, HSBC expected to support TPSA company not only in financial capacity but also for resources capital for sustainable relationship.” Moreover, in the theory inform, as

Nolan(12) citied: “There are six stages of growth in B2B business such as: stage 1- initiation, stage 2-contagion, stage 3- control, stage 4- integration, stage 5- data administration, stage 6- maturity”, the B2B model of HSBC and TPSA agency is on stage 4 – integration Addition as Chan(11) mentioned: “ Stage 4 in Nolan’s Six Stage

of Growth is stage for business to demand better capacity and control for more efficient co-operation.” Hence if HSBC and TPSA channel have to re-enforce the sales capacity in HSBC project for more sufficient and efficient business on the integration stage Furthermore, according to Vice President of Contact Center Sales &

Management declared: “ If TPSA still maintain poor capacity, it may cause not only huge impact on Sales volumes in HSBC project and but also the operating loss for TPSA company As low-cost provider, TPSA was offered low-price in each card acquisitions for HSBC, that the reason why TPSA company need maintain strong sales-force capabilities for maximizing sales capacities far away from operating loss.”

On the other hand, from TPSA companies sites, TPSA Account Project Manager said

that: “Recently, TPSA company is operating losses in HSBC project due to low sales performances which mainly driven by poor sales capacity If we will not find any