Keys to Cross-Selling Success
One result of the recent and continuing rash of government regulations is a renewed desire on the part of banks and credit unions to drive new sources of revenue and profitability. Yet, where can these be found in today’s sluggish economy? Inevitably, banks are looking at their existing customer base with a renewed interest in cross-selling to deepen customer relationships and expand “share of wallet.”
Cross-selling as a strategy is nothing new. Wells Fargo has been a champion of the concept for decades and claims to sell almost six products to each household. Cross-sell efforts in general have been marginally successful, with the average bank owning just 2.5 financial products out of nearly nine owned per household. Cross selling investment products has been particularly difficult. What are the impediments?
The struggles of cross-selling to customers are two-fold. On the consumer side, there is a natural inclination to believe that one provider cannot offer the best product in all situations. On the bank side, success is hindered by organizational silos and a general failure to appreciate the impact of effective cross-selling on metrics like customer retention.
So, what makes for successful cross-selling? A well-defined strategy is an important but relatively easy answer to the question. Analysis, however, shows that execution is what separates success from also-rans, comprised of four key elements:
So, what will drive the cross-selling success the industry craves? First of all, you need to create a broad-based group from across the firm, including marketing, product, customer intelligence, and channel managers. Each has a piece of the cross-sell success pie, so each must be engaged in the process. Second, shared goals are required to encourage silos to work together for the greater good. At Wells Fargo, cross-sell imperatives are written into the overall corporate goals. This type of top-down approach is required for success.
Finally, financial institutions must see every customer touch point as a potential cross-selling opportunity. The key to success here is analysis with an eye toward relevancy. For example, a customer receiving an email account alert about a low balance is a great candidate for overdraft protection because the service is relevant to the situation. The best institution will dissect all interactions to see if there is a relevant cross-sell fit and ensure that the proper cross-sell offer is made.
Brad Strothkamp is vice president of Cambridge, Mass.-based Forrester Research Inc. This summary is condensed from a more detailed article at BAI’s online publication http://www.bai.org/bankingstrategies. Reprinted with permission.
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