ABA Banking Journal - November 2007 - (Page 44)

Tu r n i n g C ro s s S e l l f ro m a B u z z w o rd Into an Everyday Imperative W hile those of us in the banking industry have been hearing the cross-sell mantra for almost a decade, for the most part banks have barely scratched the surface of cross sell. That is unwise, for in a mature and highly competitive market, cross-selling arguably offers one of the best opportunities for banks to boost revenues. Indeed, there are two essential reasons for banks to improve their cross-selling prowess. First, to increase revenue per customer; secondly, to create the level of “customer stickiness” that will help keep patrons coming back for life. If successful, a further benefit of cross selling is it reduces the costs associated with customer acquisition. Cross selling should not be regarded as a quick fix. Successful cross selling comes not from simply doing one or two things right, but rather results from deliberately doing everything possible to promote it. Banks must build an institutional imperative around the idea of cross selling, cementing it into their culture, pursuing it systematically, and ultimately weaving it into their institutional fabric. That said, there has been some recent progress, with a handful of financial companies having begun to take a disciplined approach to the subject. But many more banks need to follow suit. To get started, banks must know where they fall in the cross-sell spectrum. It is essential, therefore, to perform a ‘Cross-Sell ‘diagnostic that provides an objective look at their cross-sell efforts, assess the results and identify their areas of weakness and strengths. Areas of concern should include whether retail bank customers are choosing products from other banks, whether the bank’s penetration rate in specific products or services trails that of competitors, and in what areas the bank is consistently missing the opportunity to enhance customer value. Starting Point: The Retail Branch Although the financial services landscape offers multiple channels suitable for launching cross-sell initiatives, the retail bank branch is still where most customers begin their relationship, and where cross-selling starts. Unfortunately, many banks still miss the lion’s share of cross-sell opportunities the branch environment provides. First, it is critical to understand how and where to initiate the dialogue with the customer. It is always best to start where a customer need has been identified. A good rule of thumb is always to address the customer’s first concern. If you are serving a customer who is interested in deposits, for example, start there, because that is the customer’s primary need. The most ubiquitous cross-sell combination is the checking account plus card (whether credit or debit), so card products should be an important part of this cross-sell mix. While consumers receive multiple credit card offers each month, the customer is more likely to respond to a phone call, e-mail message or direct mail piece from his or her own financial institution than from an unknown third party. The key is positioning the card as part of the overall existing banking relationship. So, how do you cross-sell a credit product if a customer comes in for a deposit or non-credit product? At MasterCard Advisors, we train bank salespeople to listen for certain cues. There are dozens of possible triggers, including seasonal events such as summer vacations or gift-buying occasions, and life events such as purchasing a home. Each of these triggers has an associated need, so one of the salesperson’s primary tasks is to comprehend their customers’ personal needs and find the link between those needs and the bank’s specific products. Whether it’s a facility for overdraft checking, access to a home equity line of credit, or an auto loan, the goal is to make the products work together, as a continuum. Below you’ll find some best practices that top financial institutions regardless of size should follow to enhance their cross-selling efforts. Make cross-selling a top priority for the whole bank Top-performing financial institutions make cross-selling a priority throughout the enterprise. This goes beyond simply telling staff to cross-sell. Cross-selling goals and key metrics for success need to be established for everyone. The bank’s incentive plan, staff training, marketing efforts and spotlight across all delivery channels must focus on cross-selling. One Southeastern super-regional bank, for example, has established an incentive system that rewards retail sales staffers for focusing their efforts on expanding the customer’s www.ababj.com/subscribe.html 44 NOVEMBER 2007/ABA BANKING JOURNAL http://www.ababj.com/subscribe.html

Table of Contents Feed for the Digital Edition of ABA Banking Journal - November 2007

ABA Banking Journal - November 2007 Contents Editor’s Column Briefing: Good News for Mortgages Sleight of Mind N.Y. Hiring Bonanza May Be Bane Snapshot: A Look at Held-For-Investment Loan Growth ABA Resources ABA Chairman’s Position “The Moose Bank” Thrives on Manufactured Housing Loans Finding the Middle Way for Your Bank’s Retirement Program Pass the Aspirin Cover Story: Self-Service Steps Up DIY U.K. Style Marketing to Millennials Getting Real With “Gen Wired” Ethnic Marketing: Disinterested Banking Getting Good at Global Sourcing Case in Point Turn Compliance on It's Head Banker’s Mart To Advertise/Index of Advertisers The Economy

ABA Banking Journal - November 2007

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