The Important Points of Cross-Selling to Banks
- Traditional banks face competition from new entrants that use technology to provide customers with a range of added-value services. Banks must offer their customers a similar range of services to maintain account profitability and reduce the risk of customer defection. Banks that do not cross-sell additional services may find themselves handling only low-value transaction services.
- Banks have the opportunity to offer retail customers a wide range of services to meet their changing financial needs. Services might include savings accounts, credit cards, mortgages, investment plans, retirement plans, insurance and wealth management. A 2006 study by BenchMark Consulting International found that banks successful at cross-selling used predictive modeling to identify customer needs and make an offer at the most appropriate time.
- A group of industry experts told "Bank Systems & Technology" in 2004 that product silos had proved a major barrier to cross-selling. BenchMark Consulting International reported that one major bank had overcome the silo problem by putting information on all of its retail and corporate banking products in a single web portal, giving both staff and customers full visibility of the complete portfolio.
- Customer retention is a key benefit of cross-selling. By retaining customers and selling them a wider range of products, banks can reduce their customer acquisition, marketing, communication and service costs, while increasing revenue and profitability per customer. Customers with multiple services are also less likely to change banks because of the potential inconvenience.
- To improve cross-selling, banks must ensure integration between all their communication channels and customer touch points. Information from customer records, inquiries, applications and account history provides the data to plan a personalized cross-selling strategy. That information should be available to the telesales and marketing teams to avoid duplication of effort.
- Banks should put audit processes in place to monitor cross-selling activities and ensure compliance with the appropriate regulations. Encouraging staff to cross-sell products with incentives can increase the risk of non-compliance, particularly if banks set staff aggressive targets.